In re Estate of Barger, 931 N.W.2d 660

Background

Joan J. Barger executed a 2006 will disposing of her property and exercising a power of appointment over assets of the Barger Family Irrevocable Trust (created 1991). The will favored son Steven and included a no-contest clause (Article V).
In July 2006 a majority of trustees (Joseph and Steven) and Joan executed documents terminating the trust; a state court found the trust “effectively terminated.” Trustees were obligated to wind up and transfer trust assets but did not complete all transfers before Joan’s death in January 2012.
In 2012 William filed a will contest alleging lack of testamentary capacity and undue influence by Steven; Elizabeth, Joseph, and Brendon funded, assisted, and testified in support of that contest. The county court admitted the 2006 will after trial; the Court of Appeals affirmed.
After Joan’s death Elizabeth petitioned to construe the will, arguing terminated-trust assets therefore belonged to Joan individually and should be distributed under the residual clause (Article III) to four children equally rather than under the Article IV trust-appointment distributions.
Steven and Shane sought a ruling that Elizabeth, Joseph, and Brendon were barred by the no-contest clause from taking under the will. The county court found (1) the trust had been terminated predeceasing Joan, (2) the will’s Article IV distributions reflected Joan’s intent irrespective of the trust’s status, and (3) contesting parties had probable cause so the no-contest clause was unenforceable. The Nebraska Supreme Court affirmed.

Issues

Issue	Plaintiff's Argument (Appellants Elizabeth & Brendon)	Defendant's Argument (Appellees Steven & Shane)	Held
Did Article V’s no-contest clause bar Elizabeth, Joseph, Brendon from taking after their involvement in the 2012 will contest?	Their participation was not a prohibited contest or, alternatively, they had probable cause to support the contest.	Their payments, meetings, testimony and support amounted to instigating or aiding the contest; Article V should disinherit them.	Court: They aided the contest but there was probable cause to institute the contest (undue influence/capacity evidence); Article V unenforceable as to them.
Was the Barger Family Irrevocable Trust terminated before Joan’s death, and did termination revert trust assets to Joan individually?	Trust termination occurred in 2006 by majority trustee resolution and Joan’s consent; assets reverted to Joan even if formal transfers were incomplete.	Trust property remained in trust because trustees did not complete transfers; Joan lacked power to appoint those assets at death.	Court: Trust was effectively terminated in 2006; trustees’ duty thereafter was winding up and distributing assets to Joan, so trust terminated before Joan’s death.
If the trust terminated, should property described in Article IV be distributed under Article III residual clause (as Joan’s individually owned property) or under Article IV (power-of-appointment distributions)?	Because Article IV purports to exercise a trust power, and the trust had terminated, Article IV shouldn’t control; treat listed assets as Joan’s and distribute under Article III equally.	Article IV expresses Joan’s clear intent to allocate those specific assets to particular beneficiaries; distributions should follow Article IV regardless of trust status.	Court: There was latent ambiguity about whether Article IV distributions depended on trust status; extrinsic evidence showed Joan intended Article IV distributions to apply regardless; therefore Article IV governs.
Was the trial court’s use of extrinsic evidence to interpret the will permissible?	Extrinsic evidence improperly considered because the will was not ambiguous.	Extrinsic evidence was necessary to resolve latent ambiguity created by trust termination and misidentification of assets.	Court: Latent ambiguity existed; extrinsic evidence was admissible and properly used to determine Joan’s intent.

Key Cases Cited

In re Estate of Etmund, 297 Neb. 455 (probate review principles)
Martin v. Ullsperger, 284 Neb. 526 (no-contest clause may be violated by aiding/instigating another’s challenge)
McKinney v. Okoye, 287 Neb. 261 (probable cause standard in civil malicious-prosecution context)
In re Estate of Clinger, 292 Neb. 237 (undue influence proof and inference from circumstances)
In re Estate of Hedke, 278 Neb. 727 (trust termination and trustee winding-up duties)
In re Estate of Odenreider, 286 Neb. 480 (wills speak from date of death; ambulatoriness of wills)
Burnett v. Maddocks, 294 Neb. 152 (rules on will construction and intent)
In re Estate of Mousel, 271 Neb. 628 (latent ambiguity and admissibility of extrinsic evidence)