In Re The Guardianship of Carlton H. Word Timothy W. Word and Tracy L. Wise v. Rance Buehrer, Guardian of Carlton H. Word ( 2013 )

Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of Jul 08 2013, 9:46 am
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEYS FOR APPELLANTS: ATTORNEYS FOR APPELLEE:
DAVID W. STONE IV JAMES O. WAANDERS
Stone Law Office & Legal Research Indianapolis, Indiana
Anderson, Indiana
ALLAN R. STOUT CRAIG T. BENSON
Stout Law Group, P.C. Angola, Indiana
Angola, Indiana
IN THE
COURT OF APPEALS OF INDIANA
IN RE THE GUARDIANSHIP )
OF CARLTON H. WORD )
)
TIMOTHY W. WORD AND )
TRACY L. WISE, )
)
Appellants, ) No. 76A03-1209-GU-395
)
vs. )
)
RANCE BUEHRER )
Guardian of Carlton H. Word, )
)
Appellee. )
APPEAL FROM THE STEUBEN CIRCUIT COURT
The Honorable Allen N. Wheat, Judge
Cause No. 76C01-0711-GU-23
July 8, 2013
MEMORANDUM DECISION – NOT FOR PUBLICATION
MATHIAS, Judge
After Carlton Word’s (“Carlton”) death, a dispute ensued among his surviving
family members concerning the ownership of a property known as the Zimmer Farm.
Carlton’s grand nephew and niece, Timothy Word and Tracy Wise appeal the Steuben
Circuit Court’s order directing the trustee of Carlton’s Trust to distribute the Zimmer
Farm as part of the trust residuary, rather than as a specific bequest under the trust or
pursuant to an undelivered, unrecorded deed.
We affirm.
Facts and Procedural History
On November 21, 2007, Rance Buehrer was appointed Guardian of Carlton’s
financial estate. Carlton, who had no children and died in December 2011,1 had a brother,
Dink Word. Dink had two sons: Roger Word and Johnny Word. Roger Word, who
predeceased Carlton, had two children: Timothy Word and Tracy (Word) Wise. Johnny
Word has one son, Eric Word.
Carlton had numerous assets, most of which were distributed through an inter-
vivos trust. The trust was created in 1991, and contained the following provision relevant
to this appeal:
All real estate held in the Trust to Roger Word, as well as all farm
equipment held in the Trust to Roger Word. The rest, residue and
remainder of the Trust assets shall be divided equally between [nineteen
named individuals]. If any of the above named person die before
distribution of the Trust leaving child, the share of the deceased person
shall go to the children of the deceased person.
1
Carlton’s wife, Lila, died in 2007.
2
Ex. Vol., Respondent’s Ex. A. Carlton also amended the trust that same year to provide
that if “Roger Word should predecease the Settlor any real estate or other property going
to Roger Word under the terms of the Trust shall be divided equally between Tracy Word
and Timothy Word, children of Roger Word.” Id.; Appellant’s App. p. 31.
In 1993, Carlton purchased the Zimmer Farm. Johnny bid on the farm at auction
on Carlton’s behalf and Carlton paid the $72,000 purchase price. Roger, Johnny, and
Timothy worked on the farm in various capacities.
In 1998, Carlton executed his last Will and Testament, which provided that upon
his death any existing non-trust probate assets would “pour over” into his Trust for final
distribution in accordance with the terms of his Trust. At the same time, Carlton
executed a second amendment to his trust:
[T]he Settler hereby provides that in the event Roger Word
predeceases the Settlor, or is not living at the time of distribution of the
Trust, the distribution going to Roger Word shall be divided two-thirds to
Timothy Word and one-third to Tracy Wise.
Roger Word shall further have any livestock, grain in storage and
growing crops.
***
The Settlor further provides that after the death of Settlor and Lila T.
Word, Roger Word shall have the right to purchase from the Trust the
property know as the “Zimmer Farm” for the sum of $72,000.
Appellant’s App. p. 32.
Importantly, the 1998 amendment also provides that “after the distribution to
Roger Word the residue of the Trust” would be distributed to the same nineteen people
listed in the original trust document, but each individual would receive a specific cash
amount. The amendment then provides:
3
In the event there are insufficient cash assets to make the above payments,
the Successor Trustees are hereby directed to make a prorata distribution
among the above named persons of the residue of the Trust and in the event
there are assets in excess of the cash distributions provided for above, the
excess shall be divided on a prorata basis among the residuary beneficiaries
named above.
Appellant’s App. p. 32.
Roger predeceased Carlton in 2005. After Carlton’s death in December 2011,
Johnny Word, acting as co-personal representative of the estate, was inventorying
Carlton’s personal effects when he discovered a warranty deed purporting to transfer the
Zimmer Farm to himself and his son Eric. The deed was never recorded and Carlton held
himself out as the owner of the farm until his death.
On January 20, 2012, Buehrer, who in addition to being the guardian of Carlton’s
financial estate, was also a named trustee of Carlton’s Trust, filed the final report and
accounting for the guardianship. The Zimmer Farm was listed as an asset to be
distributed to Carlton’s estate.
On February 14, 2012, Johnny and Eric filed an objection to the Guardian’s Final
Report and Accounting. Johnny and Eric argued that the Zimmer Farm should not be
distributed to Carlton’s estate because Carlton had executed the 1994 warranty deed
conveying the farm to them.
In response to Johnny and Eric’s objection, Timothy and Tracy entered their
appearance as interested parties and filed a motion for summary judgment requesting that
the court overrule Johnny and Eric’s objection to the final accounting. Timothy and
Tracy argued that Johnny and Eric’s warranty deed is a nullity because it was never
4
recorded or delivered to them. Timothy and Tracy argued that the Zimmer Farm was an
asset of Carlton’s Trust, and under the terms of the trust, the farm was to be distributed to
them.
The trial court denied the motion for summary judgment and a bench trial was
held on August 3, 2012. Shortly thereafter, the trial court issued its findings of facts and
conclusions of law. First, the trial court found that the 1994 warranty deed was never
actually or constructively delivered to Johnny and/or Eric and that it was never recorded
in the Steuben County Recorder’s Office. Therefore, the court concluded that “Johnny
and Eric did not become the co-owners of the Zimmer Farm on May 23, 1994, or, at any
point in time thereafter.”2 Appellant’s App. p. 15. The trial court also concluded that
Timothy and Tracy are not the co-owners of the Zimmer Farm. Specifically, the trial
court rejected their argument that under Carlton’s Trust they became lawful owners of the
farm due to the fact that their father, Roger, predeceased Carlton. The trial court
concluded that “the Zimmer Farm must be distributed as part of the Trust residuary all as
set forth in the second amendment to Carlton’s Trust dated June 4, 1998.” Id. at 17.
Timothy and Tracy now appeal the trial court’s judgment.3
Standard of Review
The trial court entered findings of fact and conclusions of law sua sponte. Our
standard of review under this circumstance is well settled: specific findings control only
2
Johnny and Eric have not appealed the trial court’s order concluding that the 1994 warranty deed was
invalid.
3
On October 2, 2012, the trial court stayed its August 21, 2012 order directing the trustee to dispose of
the Zimmer Farm under the residuary clause under the second amendment of Carlton’s Trust.
5
as to issues they cover, and a general judgment standard applies to any issues upon which
the trial court has not made findings. Jewell v. City of Indianapolis, 950 N.E.2d 773 (Ind.
Ct. App. 2011). We review such findings by determining whether the evidence supports
the findings and whether the findings support the judgment. Id. We will reverse only
when the judgment is shown to be clearly erroneous, i.e., when it is unsupported by the
findings of fact and conclusions entered thereon, or when the trial court applies an
incorrect legal standard. Id.; Fraley v. Minger, 829 N.E.2d 476, 482 (Ind. 2005). We
defer substantially to the trial court’s findings of fact, but we evaluate conclusions of law
de novo. Jewell, 950 N.E.2d at 777.
Discussion and Decision
Indiana Code section 30-4-1-3 provides that the terms of a trust shall be
interpreted and applied “so as to implement the intent of the settlor and the purposes of
the trust.” “If the rules of law and the terms of the trust conflict, the terms of the trust
shall control unless the rules of law clearly prohibit or restrict the article which the terms
of the trust purport to authorize.” Id.The interpretation of a trust document is a pure question of law to be decided by
the court. Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 531 (Ind. 2006).
The primary purpose of the court in construing a trust instrument is to
ascertain and give effect to the settlor’s intention. Indiana follows “the four
corners rule” that “extrinsic evidence is not admissible to add to, vary or
explain the terms of a written instrument if the terms of the instrument are
susceptible of a clear and unambiguous construction.” Accordingly, where
a trust is capable of clear and unambiguous construction, under this
doctrine, the court must give effect to the trust’s clear meaning without
resort to extrinsic evidence.
6
Id. at 532 (internal quotations and citations omitted).
“A document is not ambiguous merely because parties disagree about a term’s
meaning.” Id. The terms of the trust are ambiguous only if reasonable people could
come to different conclusions as to the trust’s meaning. Id.Carlton established his inter vivos trust on March 21, 1991. The inter vivos trust
is a unique legal entity. See Matter of Walz, 423 N.E.2d 729, 732 (Ind. Ct. App. 1981).
Through establishment of an inter vivos trust, “the settlor may transfer property to a
trustee reserving for the life of the settlor the beneficial use of the property with the
remainder to designated beneficiaries.” Id. “Although the settlor enjoys the beneficial
use of the trust property until his death that trust property is not subject to the
administration of his estate.” Id. (citing Leazenby v. Clinton County Bank & Trust Co.,
171 Ind. App. 243, 247-48, 355 N.E.2d 861, 863 (1976)).
Carlton’s Trust unambiguously provides that “[a]ll real estate held in the Trust”
would pass to Roger. Ex. Vol., Respondent’s Ex. A (emphasis added). Approximately
two years after executing the trust documents, Carlton purchased the Zimmer Farm.
Carlton did not transfer the Zimmer Farm into the trust, but owned the property with his
wife, and remained the sole owner of the property after her death. See tr. p. 14.
Several years later, in 1998, Carlton amended the trust to provide that if Roger
predeceased Carlton (which did in fact occur), “the distribution going to Roger Word
shall be divided two-thirds to Timothy Word and one-third to Tracy Wise.” Appellant’s
App. p. 32. Tracy and Timothy rely on this provision to argue that ownership of Zimmer
Farm transfers to them under the terms of Carlton’s Trust. However, these provisions
7
cannot apply to the Zimmer Farm because the farm was never transferred into the trust,
but owned solely by Carlton on the date of his death.
Moreover, Carlton’s treatment of the Zimmer Farm in his trust was distinct from
his other real estate. The trust document provides the following specific provision for the
Zimmer Farm: “The Settlor further provides that after the death of Settlor and Lila T.
Word, Roger Word shall have the right to purchase from the Trust the property known
as the ‘Zimmer Farm’ for the sum of $72,000.” Appellant’s App. p. 32 (emphasis added).
This provision unambiguously would have allowed Roger to purchase the Zimmer Farm
if he survived Carlton and Lila. Under this provision, Roger had no ownership interest in
the farm but was simply granted the privilege of purchasing the farm for a reduced price.
See Lafayette Expo Center, Inc. v. Owens, 531 N.E.2d 508, 511 (Ind. Ct. App. 1988),
trans. denied. Therefore, we agree with the trial court that this provision lapsed when
Roger predeceased Carlton.4
Once again assuming that the Zimmer Farm was placed in the trust, Timothy and
Tracy argue that the provision allowing Roger to purchase the Zimmer Farm conflicts
with the provision providing for distribution of “all real estate held in the Trust” to Roger,
or to Timothy and Tracy if Roger predeceased Carlton. We reiterate that Timothy and
4
See Hinds v. McNair, 413 N.E.2d 586, 596 (Ind. Ct. App. 1980) (quoting Restatement (2nd) of Trusts §
112(f) (stating that “‘[i]f a testator devises property in trust for a person who predeceases him, the devise
of the beneficial interest lapses’”). Although the provision in Carlton’s trust did not grant Roger a
property interest in the Zimmer Farm, but simply the privilege of purchasing the farm, we can logically
conclude that like a provision transferring ownership in property, a provision allowing a specific
beneficiary to purchase the property of the Settlor after his death lapses when that beneficiary predeceases
the Settlor of the trust.
8
Tracy’s argument is unavailing for the simple fact that the Zimmer Farm was never
placed in Carlton’s trust.5
As a non-trust asset, the Zimmer Farm was subject to probate under Carlton’s will.
Carlton’s will specified that any existing non-trust probate assets poured over into
Carlton’s trust for final distribution. Appellant’s App. p. 12. Consequently, the trial
court properly concluded that under the terms of the June 4, 1998 second amendment to
Carlton’s trust, the Zimmer Farm must be distributed as part of the trust residuary. The
judgment of the trial court is therefore affirmed.
Affirmed.
BAKER, J., and MAY, J., concur.
5
Timothy and Tracy’s argument that Carlton clearly intended the Zimmer Farm to pass to Roger, or to
them in the event that Roger predeceased Carlton, is not supported by the unambiguous language of the
trust document. The trust’s terms are unambiguous, so we need not resort to extrinsic evidence to
determine Carlton’s intent. However, we note that the record is replete with other evidence that further
rebuts Timothy and Tracy’s argument as to Carlton’s intent concerning the disposition of the Zimmer
Farm after his death.
9