Brakke v. Bell State Bank & Trust
2017 ND 34
| N.D. | 2017Background
- Bradley and Timothy Brakke were farming brothers; Timothy managed the farm and claimed an oral agreement that he or his daughter (Alanna Rerick) would receive half of Bradley’s property on Bradley’s death.
- Bradley executed a 2009 will leaving residue to Vicki (life estate) then equally to Kari Headington and Rerick; in 2013 Bradley executed a new trust (Nov. 11, 2013) leaving residue to Bell State Bank as trustee and effectively disinheriting Rerick in favor of Headington; Bradley also executed a power of attorney.
- Bell State, acting under the POA, restated the trust on March 12, 2014 to add a limited distribution (15 acres) to Headington and Rerick; Bradley died April 5, 2014.
- Rerick assigned her estate claims to Timothy, who filed a petition (Aug. 26, 2014) challenging Bradley’s capacity to create the 2013 Trust and seeking to reinstate the 2009 will; separate counsel appeared for other family members.
- The district court denied trustee’s summary-judgment motion, allowed amendment to challenge the 2014 restatement, approved a family settlement (giving Rerick additional acreage), and dismissed Timothy’s petition. Bell State appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether nonjudicial trust-settlement statute (UTC § 111 / N.D.C.C. § 59-09-11) governs the settlement | Brakke: judicial petition invoked court jurisdiction; nonjudicial provisions inapplicable | Bell State: UTC procedures should control and block settlement if inconsistent with trust's material purpose | Court: Petition made it a judicial proceeding; UTC nonjudicial-settlement provision inapplicable here |
| Whether probate compromise statutes (N.D.C.C. §§ 30.1-22-01/02) may be used to approve a settlement in litigation challenging settlor capacity | Brakke: Probate compromise statutes apply to settle controversies about governing instruments and may be applied here | Bell State: Uniform Trust Code controls; probate compromise cannot be used to alter trust’s residuary beneficiaries inconsistent with material purpose | Court: Probate compromise provisions apply to judicial proceedings challenging capacity; court properly used them to review settlement |
| Whether the challenge to settlor capacity was made in good faith (required to approve compromise) | Brakke: Allegations (chronic alcoholism, hospitalization, cognitive impairment) created a good-faith controversy over capacity | Bell State: No good-faith dispute; claims frivolous | Court: Sufficient factual allegations and context supported a finding of a good-faith controversy |
| Whether the compromise was just and reasonable and binding without signatures from all beneficiaries (including life tenant) | Brakke: Settlement prevents estate dissipation, is fair, signed by affected residuary parties; life tenant’s interest (life estate) unaffected | Bell State: Settlement alters residuary distribution and is inconsistent with settlor intent; not all beneficiaries signed (life tenant did not) | Court: Settlement was just and reasonable to prevent litigation waste; residuary beneficiaries and Rerick consented; Vicki’s life estate unaffected, so her signature not required; court properly approved compromise |
Key Cases Cited
- Hector v. City of Fargo, 2012 ND 80, 815 N.W.2d 240 (statutory interpretation fully reviewable)
- Amerada Hess Corp. v. State ex rel. Tax Comm’r, 2005 ND 155, 704 N.W.2d 8 (statutory construction principles)
- In re Estate of Allmaras, 2007 ND 130, 737 N.W.2d 612 (interpret uniform laws uniformly)
- Erickson v. Olsen, 2014 ND 66, 844 N.W.2d 585 (testamentary capacity standard)
- Matter of Estate of Stanton, 472 N.W.2d 741 (N.D. 1991) (capacity claims and proof)
- Muhlhauser v. Becker, 76 N.D. 402, 37 N.W.2d 352 (law favors family compromise of estate disputes)
- Schroeder v. Buchholz, 2001 ND 36, 622 N.W.2d 202 (life tenant rights)
- Wilson v. Dallas, 743 S.E.2d 746 (good-faith and just-and-reasonable standards for probate compromises)
- Denny v. Deutsche Bank AG, 443 F.3d 253 (appellate review of settlement-approval issues)
- In re Estate of Hedstrom, 472 N.W.2d 454 (N.D. 1991) (agreements on record bind parties)