Justices: ‘Compromise Chapter’ does not apply to pre-mortem estate agreements

A portion of Indiana code dealing with disagreements arising from the process of probating a will and administering an estate cannot be read to allow for the enforcement of pre-mortem family settlement agreements, a majority of the Indiana Surpeme Court has ruled.

That ruling was handed down Tuesday in In the Matter of the Supervised Estate of Gary D. Kent, Deceased; John David Kent and Kevin Kent, as Co-Personal Representatives of the Estate of Gary D. Kent, Deceased; Nicholas Kent; and David Kent v. Cynthia Kerr, 55S01-1712-ES-00747. The estate dispute between two siblings, John David Kent and Cynthia Kerr, began when their father, Gary, asked them to sign a settlement agreement shortly before his death. Though Gary’s will provided for the equal distribution of his assets, the agreement specified how those assets, including real estate, a coin collection and cash, were to be distributed between his children.

Both David and Kerr signed the agreement, but shortly thereafter he sent a letter to his sister informing her that he was rescinding the agreement. He then filed a petition to probate the will after his father’s death, and the Morgan Superior Court rejected Kerr’s attempt to enforce the agreement.

The Indiana Court of Appeals reversed that decision in August 2017, ruling on a matter of first impression that Indiana code section 29-1-9-1 does not explicitly prohibit the enforcement of pre-mortem family settlement agreements. Kerr’s counsel, Robert Hamlett, made a similar argument to the Indiana Supreme Court during oral argument in February.

But Darla Brown, counsel for David Kent, argued the statute seeks to resolve controversies that arise only after a testator has died. A majority of the justices agreed with that argument, with Justice Christopher Goff writing Tuesday that the statute, known as the Compromise Chapter, is ambiguous and should be interpreted as applying to post-mortem agreements.

“In drafting the Compromise Chapter, the legislature consistently used terms indicating that a contest or controversy can be compromised only after a person dies,” Goff wrote. “For example, in all but one of the categories of contest or controversy subject to compromise, the legislature used or referred to the term ‘decedent.’… A person must die to become a decedent.”

Additionally, Goff noted the purpose of the statute is to “set up a legal machinery whereby parties having an interest in a decedent’s estate may compromise any difference … .” That purpose presumes that someone’s death has led to the difference.

“Notably absent from the text of the chapter is any language whereby it would apply to pre-mortem agreements,” Goff wrote. “We cannot add new words to a statute but are bound to apply statutes as the legislature has written them.”

Thus, the majority ruled that Kerr cannot use the Compromise Chapter to enforce the pre-mortem agreement, but added in a footnote that Tuesday’s opinion does not “(close) the courthouse doors to these types of agreements.” Instead, the ruling only applies to the Compromise Chapter.

But Justice Geoffrey Slaughter dissented from the majority’s holding, writing separately that he would adopt the Court of Appeals’ opinion in full.

“Because the compromise chapter does not expressly prohibit ante-mortem agreements, I would hold that such agreements are valid and enforceable under the chapter,” Slaughter wrote. “On this record, that means Cindy and David, as prospective beneficiaries of their father’s estate, could determine their anticipated interests in his estate even before he died and have their agreement enforced in the probate court with jurisdiction over his estate.”

The majority’s final action in Tuesday’s decision was to decline to rule on enforceability of the agreement or David’s rescission, citing a lack of supporting evidence. Slaughter did not address that decision in his dissent. The case was remanded to the trial court for proceedings.