In re Estate of Akerson
309 Neb. 470
| Neb. | 2021Background
- Nelda M. Akerson executed a 2011 will leaving $875,000 “to HAMILTON MANOR . . . for its unrestricted use, as determined by its Board of Directors,” and described the devises as charitable.
- Hamilton Manor was a county-owned nursing home operated by a statutorily appointed board of trustees (Hamilton County owned the facility); a separate nonprofit corporation had been formed in 2009 but never operated the facility.
- On December 1, 2016 Hamilton County and the board entered a Consulting and Bed Transfer Agreement with Quality Care Solutions (QCS) to build a new facility and transfer bed licenses; Hamilton Manor continued operating on June 6, 2017 (Akerson’s date of death) and closed in April 2018 when the transfer occurred.
- Personal representative Ronald Akerson initially listed the $875,000 as a charitable bequest on tax filings, then filed a petition in Sept. 2019 asking the probate court to construe the will and declare the bequest failed so the amount would pass to the residuary.
- The county court held the bequest lapsed and ordered distribution to the residuary; Hamilton County and the board appealed to the Nebraska Supreme Court.
- The Nebraska Supreme Court reversed: it held the devise vested at Akerson’s death, directed distribution to Hamilton County/board, and awarded interest at 12% per annum from January 5, 2019.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the $875,000 charitable bequest to Hamilton Manor lapse before vesting? | Ronald: Agreement with QCS made Hamilton Manor unable to carry out the charitable purpose; the bequest therefore failed. | Hamilton County/board: Hamilton Manor was operating at decedent's death and could receive/use the gift; vesting occurred at death. | Reversed: gift vested at death and did not lapse; Agreement did not defeat the charitable devise and §30-2342.01 favors saving charitable gifts. |
| If the bequest failed, should funds be distributed to residuary or saved via cy pres/alternative charity? | Ronald: Treat the bequest as failed and distribute to residuary (per his petition). | Hamilton County/board & State: Apply cy pres or give to county/board as intended charitable recipient. | Not reached: court found gift valid and did not apply cy pres; ordered distribution to Hamilton County/board. |
| Are Hamilton County/board entitled to interest on the pecuniary devise, and at what rate/commencement? | Ronald: Interest claim is qualified; delay caused by construction of legal proceedings may excuse interest. | Hamilton County/board: Interest under Neb. Rev. Stat. §30-24,102; personal representative caused delay by petition. | Held: Award interest at legal rate (12% per annum) from Jan 5, 2019 (one year after PR appointment) because delay was caused by Ronald’s petition. |
Key Cases Cited
- In re Estate of Harrington, 151 Neb. 81, 36 N.W.2d 577 (1949) (governs when nonfunctioning charity may be unable to carry out will's purpose)
- In re Estate of Barger, 303 Neb. 817, 931 N.W.2d 660 (2019) (a will "speaks" at the testator's death; property vests at death absent contrary provision)
- Allebach v. City of Friend, 118 Neb. 781, 226 N.W. 440 (1929) (distinguishes conditional gifts/conditions subsequent and forfeiture for failure to perform charitable purpose)
- Wood v. Lincoln General Hospital Ass'n, 205 Neb. 576, 288 N.W.2d 735 (1980) (evidence of general charitable intent and judicial preference to effectuate charitable devises)
- In re Boston Regional Medical Center, Inc., 410 F.3d 100 (1st Cir. 2005) (authority on continuity of charitable organizations and gifts despite operational changes)