Estate of Dower - Case Law

09/28/2021

DA 21-0012
Case Number: DA 21-0012

IN THE SUPREME COURT OF THE STATE OF MONTANA
2021 MT 245

ALE
IN THE MATTER OF THE ESTATE OF
DOUGLAS C. DOWER, SEP 2 8 2021
Bowen Greenwood
Clerk of Supreme Court
Deceased. State of [VIontana

APPEAL FROM: District Court of the Eighth Judicial District,
In and For the County of Cascade, Cause No. BDP-20-003
Honorable Elizabeth A. Best, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Laura E. Walker, Heather M. Starnes, Jardine, Stephenson, Blewett &
Weaver, PC, Great Falls, Montana

For Appellee:

Liza L. Dennehy, Frank J. Joseph PC, Butte, Montana

For Amicus Business, Estates, Tax, Trust, and Real Property Section of the
Montana State Bar:

Justin M. Bryan, Bryan Law Firm, PC, Bozeman, Montana

Drew Moore Gaertner, McLean, Younkin & Willett, PLLC, Bozeman,
Montana

Molly S. Considine, Patten, Peterman, Bekkedahl & Green, PLLC, Billings,
Montana

Submitted on Briefs: August 12, 2021

Decided: September 28, 2021

Filed:

Clerk
Justice Laurie McKinnon delivered the Opinion of the Court.

Linda Dower (Linda) appeals an order entered in the Eighth Judicial District Court,

Cascade County, denying her motion for partial summary judgment wherein she

maintained that certain trust assets should be included in the estate for purposes of

satisfying her statutory allowances. We affirm.

¶2 We restate the issues as follows:

1. Whether the District Court erred when it concluded that trust assets were
nonprobate assets and could only be used to satisfy Linda's statutory allowances
when and to the extent the probate estate is insufficient.

2. Whether the District Court erred when it determined the probate estate was
sufficient to satisfy Linda's statutory allowances through the abatement of her
specific devises.

3. Whether the District Court abused its discretion by denying Linda's motion to
remove Lux as personal representative.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 Douglas Dower (Douglas) was married to Alyce Dower (Alyce) for 52 years until

her death in 2008. The couple had four children, including Jayne Dower Lux (Lux).

During their rnarriage, Douglas and Alyce executed a revocable living trust (Trust) on

February 1, 1997, and transferred certain property to that Trust as part of their estate to

preserve assets for their children. The Trust's terrns provided that one-half of the Trust

property becarne irrevocable upon the death of Alyce. The other half remained revocable

for Douglas's benefit during his lifetime and became irrevocable upon his death. Douglas

also executed his will (Will) on February 1, 1997. The Will named Lux as the

Personal Representative of the estate.

2
¶4 Douglas and Linda married in 2011. At some point during their marriage, the couple

adopted a daughter, Destiny. The Trust's terms were amended in 2015 to include Destiny

on the list of children. The Trust amendment did not mention Linda. Douglas also

executed a codicil to his Will to include Linda and Destiny. The Will specifically devised

all of Douglas's tangible personal property to Linda. The couple also executed a power of

attorney giving Dan, Douglas's son, the power to act on Destiny's behalf Following

Douglas's death, Destiny has remained in Dan's care.

¶5 Douglas died in Decernber 2019. At the tirne of Douglas's death, Lux totaled

Linda's assets, including joint assets transferring to her by survivorship and Douglas's

nonprobate transfers to her, at $103,898.74. Linda initially filed for a spousal elective

share, which Lux calculated at $62,163.29, but Linda subsequently withdrew the petition

because the value of her assets exceeded the calculated amount due based on the eight-year

marriage and the statutory elective share minimum of $75,000.

¶6 As of October 2020, the estate has disbursed personal property valued at $24,030 to

Linda. Linda also received $11,800.14 in mortgage payments and rental value, bringing

the total she has received to $35,830.14.1 In addition to this disbursal, Linda claimed a

farnily allowance of $27,000, allocating 75 percent to her ($20,250) and the remaining 25

percent ($6,750) to Dan for Destiny's care. Linda also claimed a full statutory homestead

allowance totaling $22,500 and a full exempt property share of $15,000. In sum, Linda

claimed allowances of $57,750 in addition to the nonprobate transfers and specific devises.

The District Court's Order erroneously totaled the amount as $35,844.14.
3
¶7 At some point during the probate process, the relationship between Linda and

Douglas's adult children turned acrimonious. In August 2020, Linda filed a petition to

remove Lux as the Personal Representative (Petition), arguing that Lux's alleged behavior

breached her fiduciary duty to the estate. The parties also filed cross motions for partial

summary judgment in August 2020. The District Court held a hearing on the Petition and

the cross motions for summary judgment on October 27, 2020. The District Court denied

the Petition on October 28, 2020, finding no facts to support Lux's rernoval as

Personal Representative, and issued its Order on Cross Motions for Summary Judgment

(Order) on December 1, 2020. The District Court's Order granted the estate's motion for

partial summary judgrnent and concluded that the Trust assets were nonprobate assets and

unavailable to satisfy Linda's statutory claims. The Order also concluded that the probate

estate was insufficient to pay all expenses and disbursements and Linda's specific devises

through the Wi11 must abate to satisfy her statutory allowances. Linda appeals the

District Court's Order.

STANDARD OF REVIEW

¶8 We review a district court's findings of fact to determine whether those findings are

clearly erroneous. In re Estate of Berthot, 2002 MT 277, ¶ 21, 312 Mont. 366,

59 P.3d 1080. We review a district court's conclusions of law to determine whether that

court's interpretation of the law is correct. In re Estate of Berthot, ¶ 21.

DISCUSSION

¶9 Preliminarily, the parties do not contest whether Linda is entitled to the statutory

allowances. Rather, the parties contest how those allowances rnay be satisfied, and

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particularly, what constitutes the "estate." With that distinction in mind, we turn to our

analysis.

¶10 I. Whether the District Court erred when it concluded that trust assets were
nonprobate assets and could only be used to satisfy Linda's statutory allowances when and
to the extent the probate estate is insufficient.

¶11 "In interpreting a statute, we first look to the plain meaning of the words used. When

the language of a statute is plain, unambiguous, direct and certain, the statute speaks for

itself and no further interpretation is required." In re Maynard, 2006 MT 162, ¶ 5,

332 Mont. 485, 139 P.3d 803. In addition, we interpret the statute by viewing it in the

statutory context in which it appears. In re Maynard, ¶ 5. The principle of noscitur a

sociis, meaning that a word is known by the company it keeps, aids courts to

"avoid ascribing to one word a meaning so broad that it is inconsistent with its

accornpanying words." Yates v. United States, 574 U.S. 528, 543, 135 S. Ct. 1074,

1085 (2015) (citations oinitted).

¶12 Montana has enacted the Uniform Probate Code (UPC) as chapters 1 through 5 and

chapter 16, part 6 of Title 72, Montana Code Annotated. The UPC governs the

administration of probates, guardianships, and conservatorships. Section 72-1-103, MCA,

provides the applicable definitions for chapters 1 through 6.2 The UPC defines the term

"estate" to include "the property of the decedent, trust, or other person whose affairs are

subject to chapters 1 through 5 as originally constituted and as it exists froin tiine to time

during adininistration." Section 72-1-103(15), MCA.

2 Chapters 1 through 5 are included in the UPC, while chapter 6 addresses nonprobate transfers.
5
¶13 Trusts, on the other hand, are governed by chapter 38 of Title 72, Montana's

Uniform Trust Code (UTC). Section 72-38-505(1)(c), MCA, provides that a revocable

trust rnay be subject to claims of the settlor's creditors, costs of administration of the estate,

the expenses of the settlor's funeral, and any statutory allowances to a surviving spouse

and children to the extent the settlor's probate estate is inadequate to satisfy those claims,

costs, expenses, and allowances. The official comments to the UTC further provide that

"in accordance with traditional doctrine, the assets of the settlor's probate estate must

normally first be exhausted before the assets of the revocable trust can be reached."

Section 72-38-505, MCA, Annotations, Official Cornments (2014).

¶14 Montana's statutory scheme governing estates and trusts further reinforces the UTC

comrnents. Specifically, § 72-6-112(2), MCA, provides that a transferee of a nonprobate

transfer remains liable to any probate estate of the decedent for statutory allowances to the

decedent's spouse and children to the extent the estate is insufficient to satisfy those claims

and allowances. Further subsections of § 72-6-112, MCA, indicate that our statutory

scherne distinguishes between probate estates, as used in chapters 1 through 5, and

nonprobate assets, as used in chapter 6. Section 72-6-112(1) defines a nonprobate transfer

as:

a valid transfer effective at death, other than a transfer of a survivorship
interest in a joint tenancy of real estate, by a transferor whose last domicile
was in this state to the extent that the transferor immediately before death
had power, acting alone, to prevent the transfer by revocation or withdrawal
and instead to use the property for the benefit of the transferor or apply it to
discharge claims against the transferor's probate estate.

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Section 72-6-112(3), MCA, further provides the following order of liability for any

insufficiency:

(a) a transferee designated in the decedent's will or any other governing
instrument, as provided in the instrument;
(b) the trustee of a trust serving as the principal nonprobate instrument in the
decedent's estate plan as shown by its designation as devisee of the
decedent's residuary estate or by other facts or circumstances, to the extent
of the value of the nonprobate transfer received or controlled;
(c) other nonprobate transferees, in proportion to the values received.

¶15 Our statutory provision providing for abatement under the UPC supports the

distinction further. Section 72-3-901(1), MCA, states the following:

(1) Except as provided in subsection (3) and except as provided in connection
with the share of the surviving spouse who elects to take an elective share,
shares of distributees abate, without any preference or priority as between
real and personal property, in the following order:
(a) property not disposed of by the will;
(b) residuary devises;
(c) general devises;
(d) specific devises.

Thus, § 72-3-901(1), MCA, provides that shares of a distributee of an estate abate in

connection with a spouse who elects to take an elective share. In this context, a

"distributee" is defined as

any person who has received property of a decedent from the decedent's
personal representative other than as a creditor or purchaser. A testamentary
trustee is a distributee only to the extent of distributed assets or increment to
distributed assets remaining in the trustee's hands. A beneficiary of a
testamentary trust to whorn the trustee has distributed property received frorn
a personal representative is a distributee of the personal representative. For
purposes of this provision, 'testamentary trustee' includes a trustee to whom
assets are transferred by will, to the extent of the devised assets.

Section 72-1-103(14), MCA.

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A testamentary trust, as considered by § 72-1-103(14), MCA, is a trust created under a will

and therefore would not include inter vivos trusts created during the settlor's lifetime.

¶16 Here, Linda correctly points out the word "trust" is included in the definition of

"estate" provided by § 72-1-103(15), MCA. Linda further argues, in essence, that because

the statutory definition of "estate" includes trusts, Douglas's estate necessarily must

include the Trust. Lux contends that Linda's definition of estate ignores the statutory

scheme and rnisconstrues the context of the word "trust" in § 72-1-103(15), MCA. We

agree with Lux. The statutory scheme governing estates and trusts does not support Linda's

argument. First, the plain language of the statutory definition provides the scope of its

application. As § 72-1-103(15), MCA, indicates, the definition of "estate" includes the

property of the decedent, trust, or other person whose affairs are subject to chapters 1

through 5. The Trust is not subject to chapters 1 through 5. The portion of the Trust that

became irrevocable upon Alyce's death is governed by the UTC, while the portion that

reinained revocable upon Douglas's death is subject to the UTC and chapter 6 of Title 72,

which governs nonprobate transfers. The Trust then, simply cannot fall within the

definition of "estate" as Linda suggests.

¶17 Second, and notwithstanding this distinction, in some instances, nonprobate assets

may be reached to satisfy claiins against the estate. However, the statutory language of

§§ 72-6-112 and 72-38-505(1)(c), MCA, plainly provides that nonprobate assets may only

be reached when and to the extent the probate estate is insufficient to satisfy claims and

allowances. The probate estate must be insufficient for those provisions to apply. Absent

this prerequisite, nonprobate assets rernain untouchable to satisfy claims. For the purposes

8
of our analysis here, we incorporate our conclusion in Part 2, infra, and conclude the estate

is sufficient to satisfy Linda's statutory allowances through the abatement of her specific

devises. Sections 72-6-112 and 72-38-505(1)(c), MCA, have no application here.

¶18 Finally, the abaternent statute set forth in § 72-3-901, MCA, does not apply to the

Trust. This statute applies to testamentary trusts created under a will, not inter vivos trusts.

The Trust was created during Douglas's lifetime and accordingly, is an inter vivos trust.

This distinction results in the Trust being governed by the UTC, not chapters 1 through 5

of Title 72, MCA. The Trust is not a distributee as considered by § 72-1-103(14), MCA.3

Thus, the Trust falls outside the scope of § 72-3-901, MCA, and cannot abate to satisfy

Linda's statutory allowances.

¶19 In sum, Linda is correct that the definition of estate includes "trust." However, we

construe the entire statutory scherne to evaluate the context and to avoid ascribing too rnuch

importance to one term in a manner inconsistent with its accornpanying words. See Yates,

574 U.S. at 543, 135 S. Ct. at 1085. The District Court correctly concluded the Trust was

a nonprobate asset that could not be used to satisfy Linda's statutory allowances.

¶20 2. Whether the District Court erred when it determined the probate estate was
sufficient to satisfy Linda's statutory allowances through the abatement of her specific
devises.

¶21 Linda contends abatement only applies if the estate lacks sufficient funds to pay all

claims and that, if the estate includes the Trust as she argues, there is sufficient property to

3 Amicus notes that the Trust could be a distributee and thus subject to abatement to the extent that
it received assets from the pour-over Will. However, the assets at issue here are those which the
Trust owned prior to Douglas's death.
9
pay all claims and accordingly no need to abate Linda's devises. The estate argues that

only non-Trust assets are subject to estate and spousal clairns and the specific devises to

Linda must abate to satisfy her statutory allowances.

¶22 The general provisions governing probate administration provide that "Whe power

of a person to leave property by will and the rights of creditors, devisees, and heirs to the

person's property are subject to the restrictions and limitations contained in this code to

facilitate the prompt settlement of estates." Section 72-3-101(1), MCA. These general

provisions further provide that, at a person's death, their real and personal property

"devolves to the persons to whom it is devised by the decedent's last will . . . subject to

homestead allowance, exempt property, and family allowance, to rights of creditors,

elective share of the surviving spouse, and to administration." Section 72-3-101(2), MCA.

¶23 The purpose of statutory allowances such as the exempt property, homestead, and

family allowances is to "ensure that a surviving spouse was not left penniless and

abandoned by the death of a spouse." In re Estate of Martelle, 2001 MT 194, ¶ 16,

306 Mont. 253, 32 P.3d 758 (citations omitted). We have previously recognized these

allowances are "absolute" entitlements for the surviving spouse. In re Estate of Martelle,

rif 20, 37. We liberally construe the allowances to effectuate their purpose of

"protect[ing] the surviving family of the decedent." In re Estate of Martelle, ¶ 26. In

Martelle, we concluded that the "sole statutory condition" for the receipt of the homestead

allowance is to "survive the decedent by 120 hours." In re Estate of Martelle, ¶ 22.

¶24 Notwithstanding our holding in Martelle, § 72-2-415, MCA, provides guidance on

the sources to fund these statutory allowances. This section provides that "[i]f the estate is

10
otherwise sufficient, property specifically devised rnay not be used to satisfy rights to

homestead allowance or exempt property." Section 72-2-415(1), MCA.

¶25 Abatement applies when insufficient assets exist in the probate estate to satisfy all

expenses and disbursements. In re Estate of Barber, 239 Mont. 129, 138, 779 P.2d 477,

483 (1989). Montana's abatement statute is set forth in § 72-3-901, MCA, which provides,

pertinently, the following order of priority for abatement:

Limited exceptions apply to the statutorily mandated abaternent order. First, a surviving

spouse who elects to take an elective share operates as an exception to abatement.

Section 72-3-901(1), MCA. Second, if the will, testamentary plan, or express or implied

purpose of the devise would be defeated by the order of abaternent in subsection (1), the

shares abate as necessary to give effect to the testator's intent. Section 72-3-901(3), MCA.

¶26 Relying on our holding in Martelle, Linda contends that her statutory allowances

are an absolute right that takes priority over all other claims against the estate. We

distinguish Martelle from the instant case. In Martelle, the Court addressed the issue of

whether a surviving spouse was entitled to a homestead allowance in addition to residential

property received by right of survivorship. In re Estate of Martelle, ¶ 3. Analyzing this

issue, the Court concluded a surviving spouse was entitled to the homestead allowance as

11
a matter of law. In re Estate of Martelle, ¶ 37. Implicit in this analysis, and seemingly

uncontested in Martelle, was that the probate estate in Martelle was sufficient to satisfy the

homestead allowance. In contrast, the issue here hinges on the sufficiency of the probate

estate to satisfy the statutory allowances. If the estate is insufficient, specific devises may

abate pursuant to § 72-3-901, MCA.

¶27 Douglas's estate consists entirely of personal property devised to Linda. Linda

rernains entitled to the statutory allowances totaling $57,750, without her specific devises

abating, so long as the estate is solvent. As of August 2020, the estate has been rendered

insolvent in the amount of $5,807.50. Accordingly, the abatement analysis under

§ 72-3-901, MCA, is invoked.

¶28 Douglas died testate. The only assets subject to estate administration consist of

tangible personal property specifically devised to Linda. None of the exceptions to

abaternent provided for in § 72-3-901, MCA, apply here. Linda withdrew her petition for

an elective share. Likewise, neither the Will nor the Trust contain a provision addressing

abaternent, and the record contains no evidence that Douglas's intention was contrary to

the statutory order of abatement. No intestate assets exist, rendering

§ 72-3-901(1)(a), MCA, inapplicable. No assets subject to the residuary clause of the Will

exist, rendering § 72-3-901(1)(b), MCA, inapplicable. Section 72-3-901(1)(c), MCA, does

not apply, as there are no general devises. The only assets available for abatement consist

of the tangible personal property specifically devised to Linda and subject to abatement

under § 72-3-901(1)(d), MCA. Accordingly, these specific devises must abate as necessary

to satisfy Linda's statutory allowances.

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¶29 Of course, we note the Trust may still be subject to the claims, costs, expenses, and

statutory allowances of the settlor in limited circumstances. However, the statutory

language makes clear that the settlor's probate estate must be inadequate for those

circumstances to arise. Here, the probate estate remains sufficient to satisfy Linda's

allowances through the abatement of her specific devises. Accordingly, the District Court

did not err when it concluded that Linda's specific devises must abate to satisfy her

statutory allowances.

¶30 3. Whether the District Court abused its discretion by denying Linda's motion to
remove Lux as personal representative.

¶3 1 Linda contends that, given the fractured nature of her relationship with Lux and the

rest of the family following Douglas's death, the District Court erred when it denied her

Petition to remove Lux as personal representative.

¶32 M. R. App. P. 6(4)(a) provides that, in estate, guardianship, and probate matters, an

order granting or refusing to grant, or revoking or refusing to revoke, letters testamentary

or of administration or guardianship is considered final, and a failure to immediately appeal

results in a waiver of the right to appeal. In civil cases, a party rnust file a notice of appeal

with the clerk of the supreme court within 30 days from the date of entry of the judgrnent

or order from which the appeal is taken. M. R. App. P. 4(5)(a)(i).

¶33 Linda's Notice of Appeal, filed on Decernber 31, 2020, designates one issue for

appeal: the District Court's Order entered on December 1, 2020. Linda's Notice of Appeal

on the Order was timely filed. The District Court's order denying Linda's Petition was

filed on October 28, 2020. The Petition sought to revoke Lux's letters of adrninistration.

13
Linda failed to appeal the order denying her Petition within 30 days and raises the issue for

the first time in her opening brief. The issue was not properly preserved for appeal, and

we decline to address the merits.

CONCLUSION

¶34 The District Court correctly concluded Trust assets are nonprobate assets and not

part of the probate estate. The District Court further correctly concluded that because the

probate estate was insufficient to satisfy Linda's statutory allowances and no other property

or devises are available, Linda's specific devises must abate and be used to satisfy the

allowances. The District Court's order is affirmed.

We concur:

Chief Justice

A:20.
Justices