In re Estate of Lakin
310 Neb. 271
| Neb. | 2021Background:
- Charles E. Lakin died in 2016 with a large estate and a revocable trust naming the Charles E. Lakin Foundation as primary beneficiary; Thomas Pribil (longtime employee) and William Kilzer (grandson) were appointed co-personal representatives and cotrustees.
- In 1984 Lakin and Pribil executed a written instrument titled "Promissory Note" that described $1.2M (plus $50k/yr thereafter) as additional compensation payable on Pribil’s 60th birthday or at Lakin’s death; parties treated it as deferred compensation.
- Pribil did not file a creditor’s claim in probate. With Kilzer’s consent but without court approval, Pribil caused liquidation of trust assets and paid himself approximately $6.95M (net ≈ $3.7M) in September 2016.
- The Foundation sued to suspend/remove and surcharge the representatives/trustees and sought distribution/accounting; the county court granted summary judgment for Pribil and Kilzer, finding payment lawful and no fiduciary breach.
- The Nebraska Supreme Court held the payment was unauthorized because Pribil failed to present a claim to the estate under the nonclaim statute and reversed the grant of summary judgment on the Foundation’s fiduciary-duty claims, remanding for further proceedings.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Characterization of the 1984 instrument | The instrument is a promissory note (debt) not mere deferred compensation | It is deferred compensation for services (substance controls over form) | Court: substance shows deferred compensation; affirmed characterization |
| Statute of limitations | Demand occurred at Pribil’s 60th birthday (2007); SOL expired before payment | As deferred compensation, SOL runs only when work completed (upon decedent’s death in 2016) | Court: SOL did not run until employment ended at death; payment not time‑barred |
| Requirement to present a claim in probate | Debt arose during Lakin’s life so a formal claim was required; none filed => payment barred | Payment was for post‑death wages/administrative expense so no claim required | Court: debt was for wages earned during decedent’s life; formal claim was required and none was filed; payment was unauthorized |
| Fiduciary breach / summary judgment | Payment of a barred claim, lack of notice, no court approval, and liquidation of trust assets breached duties; removal/surcharge appropriate | Representatives acted within their discretion, followed trust terms and professional advice | Court: genuine issues of material fact exist on breach/surcharge/removal and other procedural issues; summary judgment reversed and remanded |
Key Cases Cited
- J.R. Simplot Co. v. Jelinek, 275 Neb. 548, 748 N.W.2d 17 (2008) (mere notice to a representative does not satisfy the probate nonclaim statute)
- In re Estate of Muncillo, 280 Neb. 669, 789 N.W.2d 37 (2010) (denial of appointment of special administrator is a final, appealable order)
- In re Estate of McKillip, 284 Neb. 367, 820 N.W.2d 868 (2012) (probate proceedings are special proceedings under appeal statutes)
- In re Estate of Feuerhelm, 215 Neb. 872, 341 N.W.2d 342 (1983) (requirements for sufficiency of a presented claim under the nonclaim statute)
- Marcovitz v. Rogers, 276 Neb. 199, 752 N.W.2d 605 (2008) (equity looks to substance over form; definition of promissory note)
- Trieweiler v. Sears, 268 Neb. 952, 689 N.W.2d 807 (2004) (trustees’ duties and liability for breach of trust)