Eagon v. McKeown
2017 ND 243
| N.D. | 2017Background
- Decedent Margie Eagon died in 2011; estate valued over $6 million. Ronald Eagon was appointed personal representative.
- Daughter Elda McKeown held $2 million in a joint bank account with decedent and, under the will, stood to receive more than one-half of the estate; nine siblings would share the remainder.
- Personal representative proposed a distribution; several siblings objected, arguing the proposal would diminish their inheritances while leaving McKeown’s intact.
- District court held federal estate tax ($403,956) must be apportioned among all persons interested under N.D.C.C. § 30.1-20-16(2) (UPC §3-916), not abated under §30.1-20-02.
- Court found proceeds of two $100,000 life insurance policies (beneficiaries: McKeown and Ronald) were intended to pay estate taxes and applied them to reduce the estate tax liability.
- Court awarded objecting beneficiaries $23,549.26 in costs and attorney fees; this judgment was appealed by McKeown.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the will’s boilerplate tax-payment clause displaces statutory apportionment (N.D.C.C. § 30.1-20-16(2)) | McKeown: The will’s direction to pay "federal and state taxes" from estate assets means the statute is inapplicable and taxes should abate per §30.1-20-02 | Personal representative: Will language is boilerplate and does not clearly and unambiguously direct a different apportionment method than the statute | Court: Will language is not a clear, unambiguous directive; apportionment statute controls (affirmed) |
| Whether life insurance proceeds naming beneficiaries should be applied to pay estate tax | McKeown: Insurance proceeds should not be tapped because estate had royalty income sufficient to pay taxes | Personal representative/other siblings: Testimony showed decedent paid premiums and intended proceeds to pay taxes or avoid sale of estate property; implied/oral trust exists | Court: Inferior cash at death and testimony support implied trust; life insurance proceeds may be used to pay estate tax (finding not clearly erroneous) |
| Whether objecting beneficiaries may recover attorney fees from the estate | McKeown: Challengers should not get fees; if awarded, PR should be solely responsible | Objecting beneficiaries: Their litigation benefitted the estate and all beneficiaries by correcting administration | Court: Award of $23,549.26 was an appropriate equitable fee award because challengers’ actions benefited the estate as a whole; no abuse of discretion |
| Whether appellate costs/fees under N.D.R.App.P. 38 should be awarded to challengers | McKeown: (no supporting argument presented on this point) | Challengers: Requested appellate costs/fees | Court: Denied request for appellate costs/fees |
Key Cases Cited
- Bushee v. Bushee, 303 N.W.2d 320 (N.D. 1981) (boilerplate will language directing payment of "taxes" does not clearly and unambiguously displace statutory apportionment)
- McGuire v. Gaffney, 314 N.W.2d 851 (N.D. 1982) (contrasting fact where will expressly and unambiguously directed estate taxes be paid from general assets, displacing the statute)
- Estate of Rohrich, 496 N.W.2d 566 (N.D. 1993) (equitable authority permits award of attorney fees where services benefitted the estate as a whole)
- Estate of Hass, 643 N.W.2d 713 (N.D. 2002) (approving fee awards where contest clarified administration and distribution, and applying abuse-of-discretion review)
- Feickert v. Frounfelter, 468 N.W.2d 131 (N.D. 1991) (property passes on death, not on distribution; devisees hold interests subject to administration)