In Re Marjorie Q. Ward Revocable Trust
265 P.3d 1260
Mont.2011Background
- In 1989 Jack and JW Enterprises borrowed $100,000 from Joan Camp; debt carried promissory note with 10% interest and no payments were made.
- In 1992 Marjorie Ward created the Revocable Trust, providing equal residue to Jack and James, with Joan receiving a $100,000 specific bequest.
- The 1998 trust amendment directed that, before Jack’s distributions, his share be reduced by the amount he owed Joan at Ward’s death, with funds paid to Joan first.
- Jack filed Chapter 7 bankruptcy in 2005, discharged his debt; by Ward’s death in 2009, the debt to Joan totaled $298,356.16.
- In 2010 the Trustee sought a court determination of distributions; the District Court reduced Jack’s share by the $298,356.16 debt; Jack appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the district court comply with Rule 52(a)? | Ward argues Rule 52(a) findings were not in the written order | Ward contends oral findings on the record suffice under Rule 52(a) | Yes; oral findings satisfied Rule 52(a) for meaningful review |
| May Jack's share be reduced for a debt discharged in bankruptcy? | Jack owed Joan at Ward’s death, debt offsets his share per the Trust | Debt discharged in bankruptcy eliminates liability; offset is improper | Yes; reduction valid; trust language controls over bankruptcy discharge |
Key Cases Cited
- In re Bair Family Trust, 183 P.3d 61 (MT 2008) (interpretation of trust terms and Rule 52(a) findings for appellate review)
- In re Marriage of Lawrence, 112 P.3d 1036 (MT 2005) (standards for interpreting trust and statutory review)
- Estate of Bolinger, 943 P.2d 981 (Mont. 1997) (trust language interpreted in ordinary sense; intent controls)
- Estate of Firebaugh, 897 P.2d 1089 (Mont. 1995) (offsetting a devise by a debt owed to a devisee despite bankruptcy)
- Estate of Watson, 965 P.2d 409 (Okla. Civ. App. 1998) (testator may offset bequests by loans, regardless of discharge in bankruptcy)
- In re Clowney, Bankr.M.D.N.C. 1982 (Bankr. D. Md. N.C. 1982) (bankruptcy discharge bars collection of discharged debts from debtors)
- In re Holzapfel, MT 2011 (2007 MT 257, 262 P.3d 1114) (dissenting view on bankruptcy discharge and estate distributions)
- Estate of Lucile B. Snyder, 2009 MT 291 (Mont.) (interpretation of trust provisions and intent)