In re Estate of Lakin
310 Neb. 271
| Neb. | 2021Background:
- Decedent Charles E. Lakin died in March 2016 leaving a large estate and a revocable trust that named the Charles E. Lakin Foundation, Inc. as primary beneficiary and nominated Thomas Pribil and William Kilzer as copersonal representatives and cotrustees.
- In 1984 Lakin and long‑time employee Pribil executed a written instrument titled “Promissory Note” describing $1.2 million (plus $50,000/year thereafter) as deferred compensation payable on Pribil’s 60th birthday or at Lakin’s death; parties later disputed an alleged oral modification (interest rate and demand date).
- Pribil did not present or file a claim in the probate proceedings. Nonetheless, with Kilzer’s consent and without court approval, the copersonal representatives/cotrustees liquidated trust assets and paid Pribil approximately $6.95 million (gross) in September 2016.
- The Foundation filed petitions to suspend/remove and surcharge Pribil and Kilzer and sought distributions; the county court granted summary judgment for Pribil and Kilzer, ruling the note was deferred compensation but payment and administration were proper.
- The Nebraska Supreme Court held the payment was barred by the probate nonclaim statute because the debt arose before death and no timely claim was filed; it reversed summary judgment on fiduciary‑duty claims and remanded for further proceedings.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Character of the 1984 instrument: promissory note vs. deferred compensation | The instrument is a promissory note enforceable as written. | Substance shows compensation for employment; it is deferred compensation. | Court: substance controls—instrument is deferred compensation. |
| Statute of limitations on the claim | Limitation ran from the 60th birthday (2007) so suit/time bar applies. | As deferred compensation, limitations run after work fully performed (at death/cessation). | Court: limitations did not run until Pribil ceased working (Lakin’s death), so not time‑barred. |
| Necessity and effect of filing a claim under probate nonclaim statute (§ 30‑2483/30‑2485) | No claim was required because payment was an administrative expense or wages after death. | Payment was authorized under probate/trust powers; notice/email sufficed. | Court: debt arose before death as deferred wages; claimant must present a claim—Pribil did not properly file one and thus the estate payment was barred. |
| Fiduciary duty / surcharge for paying the barred claim | Paying a barred claim and liquidating trust assets without notice/court approval breached duties and warrants surcharge/removal. | Personal reps/trustees acted within discretion and upon professional advice and trust terms; payment followed decedent’s directions. | Court: existence of breach is a factual question; summary judgment improper—material disputes remain; remanded. |
| Appealability / notice of appeal defect | — | Misidentification of appellant on one notice is jurisdictional defect. | Court: order was final and appealable; scrivener error in notice did not defeat jurisdiction. |
Key Cases Cited
- Sundermann v. Hy‑Vee, 306 Neb. 749, 947 N.W.2d 492 (Neb. 2020) (summary judgment standards)
- Marcovitz v. Rogers, 276 Neb. 199, 752 N.W.2d 605 (Neb. 2008) (equity looks to substance over form for instruments styled as notes)
- Dooling v. Dooling, 303 Neb. 494, 930 N.W.2d 481 (Neb. 2019) (deferred compensation principles)
- Weiss v. Weiss, 179 Neb. 714, 140 N.W.2d 15 (Neb. 1966) (statute of limitations on deferred compensation runs after performance completes)
- In re Estate of Muncillo, 280 Neb. 669, 789 N.W.2d 37 (Neb. 2010) (orders in probate special proceedings can be final and appealable)
- J.R. Simplot Co. v. Jelinek, 275 Neb. 548, 748 N.W.2d 17 (Neb. 2008) (mere notice to personal representative does not satisfy nonclaim statute)
- Hearst‑Argyle Prop. v. Entrex Comm. Servs., 279 Neb. 468, 778 N.W.2d 465 (Neb. 2010) (notice defects that do not mislead parties may not be jurisdictionally fatal)
- Trieweiler v. Sears, 268 Neb. 952, 689 N.W.2d 807 (Neb. 2004) (trustee duties and liability for breach of trust)