COA reversal: Trial court error would have doubled estate’s obligation

A trial court order in an intergenerational trust dispute was reversed Tuesday by the Indiana Court of Appeals, which held the court clearly erred in a ruling that would have obligated an estate to pay twice the amount it received from a prior trust.

Gary Stahl’s father, William, created a revocable trust in 1991, from which Gary received $80,000 before his father died in 2011. Gary’s daughters, Beth Ann Davis and Amy L. Westerman, were appointed co-successor trustees of William’s trust and a residuary trust established for Gary.

Parties to the estate signed a family settlement agreement in 2012 that liquidated William’s estate and transferred Gary’s $80,000 obligation to the residuary trust for him to repay. Gary died in 2016, and he had disinherited Beth and Amy from his will. The daughters then filed a claim seeking from Gary’s estate the $80,000 he owed to the residuary trust, plus interest.

The trial court adopted verbatim Beth and Amy’s proposed findings of facts and conclusions and awarded $114,638. On appeal, Gary’s estate relies on the settlement statement as an accord and satisfaction for his prior debts to William’s trust.

“We agree there is an accord and satisfaction — but for different reasons than those asserted by Gary’s Estate,” Judge Margret Robb wrote in Judy K. Harris, Personal Representative of the Estate of Gary W. Stahl v. Beth Ann Davis and Amy L. Westerman,

http://www.in.gov/judiciary/opinions/pdf/10241701mgr.pdf

77A01-1612-PL-2773.

Under the family agreements the panel called “confusing and inartfully drafted,” Gary was to satisfy the settlement agreement by consenting to his sister, Rita, receiving the first $80,000 in assets from William’s trust, after which the remainder would be divided between them.

“A decision in favor of Beth and Amy would require Gary to repay twice the amount the parties intended,” Robb wrote for the panel. “Therefore, because the parties only intended for Gary to repay $80,000, and that intent was satisfied when Rita received the first $80,000 from William’s Trust, we conclude Gary’s Estate has met its burden of proving the defense of accord and satisfaction and the trial court erred in concluding otherwise.”