Estate of Beals
2017 MT 150N
| Mont. | 2017Background
- W.E. “Dude” Beals died in 1994; his wife Cleo died in 2007. Dude’s will left property to Cleo with remainder to their three children; many assets passed outside the will (life insurance, joint tenancy).
- Cleo’s will named the three children equally; Bob was appointed personal representative and submitted estate accountings.
- Bus and Bonny objected that Bob omitted seven accounts (transferred to Bob by non-testamentary means from Dude) and sought inclusion of those accounts or their “reasonably expected earnings” in the estate.
- In Dec. 2012 Judge Hegel ordered the seven accounts placed in a constructive trust “or their values,” listing values consistent with the time of Dude’s death and directing payment into the estate with 10% interest from Cleo’s date of death until paid (Hegel Order); this order was affirmed on appeal.
- After remand Bob filed a Supplemental Accounting in Dec. 2013, paid amounts equal to the listed values plus interest through that date, and later filed a Final Accounting in May 2016; Bus and Bonny sought discovery and an expert on post-Dude-date increases, which Judge Huss quashed and struck in June 2014.
- Judge Hayworth in Oct. 2016 denied Bus and Bonny’s remaining objections (including that Bob owed additional value increases and unpaid interest and breached fiduciary duty by holding funds in a low-yield checking account) and accepted the final accounting; this appeal followed and the Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument (Bus/Bonny) | Defendant's Argument (Bob/Estate) | Held |
|---|---|---|---|
| Proper valuation date for the seven accounts | Hegel Order listed account names only; values should be calculated as of Cleo’s death (2007), not Dude’s death (1994) | Hegel Order fixed the accounts or their values as of Dude’s death; parties failed to appeal that ruling | Court: Hegel Order is law of the case; values (or accounts) as reflected at/near Dude’s death control; Huss did not err |
| Entitlement to “reasonably expected earnings” or post-Dude increases | Entitled to increases/proceeds from time of Dude’s death to Cleo’s death; expert evidence should be considered | Hegel Order rejected that relief; res judicata and law of the case bar relitigation | Court: previous order denied that remedy; discovery and expert were properly struck |
| Whether Bob owed interest beyond Dec. 2013 per Hegel Order | Interest accrues “from Cleo’s date of death until paid”; Bus/Bonny interpreted “until paid” to mean distribution in 2016, so interest continued | Bob paid into the estate in Dec. 2013 the values plus interest accrued through that date; that satisfied the Hegel Order’s requirement to pay such sums into the estate | Court: plain language shows payments into the estate in Dec. 2013 satisfied the interest obligation; no further interest due after that payment |
| Breach of fiduciary duty for holding estate funds in low-interest account 2013–2016 | Holding $662,663.20 in a checking account was imprudent; Bob should have invested to earn higher interest or partially distributed earlier | Bob reasonably held funds in readily-distributable checking account after attempting distribution in Dec. 2013 while litigation continued; partial distribution was discretionary | Court: Bob acted prudently under the circumstances and did not breach fiduciary duty; partial distribution not required by statute |
Key Cases Cited
- McCormick v. Brevig, 338 Mont. 370, 169 P.3d 352 (Mont. 2007) (law-of-the-case doctrine binds parties who failed to appeal earlier ruling)
- In re Estate of McDermott, 310 Mont. 435, 51 P.3d 486 (Mont. 2002) (standard of review for district court findings and conclusions)