Sandstead-Corona v. Sandstead—Implied Trusts—
2018 CO 26
Colo.2018Background
- Auriel Sandstead placed farm-sale proceeds into a multi-party Wells Fargo account with daughters Vicki (Sandstead) and Shauna (Corona) as signatories to avoid probate; Vicki later moved about $200,000 into Citizens Bank accounts that Corona could not access.
- Auriel died; Vicki was appointed personal representative of the probate estate and later transferred remaining funds into an estate account.
- Corona sought surcharge remedies alleging Vicki misused the funds; the probate court found an implied (constructive) trust and surcharged Vicki for misappropriation.
- The 2000 Will and a revocable Trust (which contained a no-contest clause) were discovered; Corona challenged the Trust and Will as revoked.
- The probate court upheld the Trust and enforced the Trust’s no-contest clause against Corona for contesting the Will; the court of appeals reversed the surcharge but affirmed enforcement of the no-contest clause.
- The Colorado Supreme Court granted certiorari and reversed the court of appeals: it upheld the implied trust and surcharge authority but held the no-contest clause did not apply to the pour-over will.
Issues
| Issue | Plaintiff's Argument (Corona) | Defendant's Argument (Sandstead) | Held |
|---|---|---|---|
| Whether a court sitting in probate had jurisdiction to impose an implied trust on funds moved from a multi-party account | Probate court has jurisdiction because resolution of whether funds are estate assets is essential to estate administration | Funds passed outside probate under the multi-party account statute, so probate court lacked jurisdiction | Court had jurisdiction under §13-9-103(3)(b) because the question was logically related to estate administration |
| Whether an implied (constructive) trust could be imposed on the funds Sandstead moved to Citizens Bank accounts | Implied trust appropriate because Vicki was in a confidential family relationship and abused it by misusing funds intended to be shared with Corona | No implied trust: funds became Sandstead’s by operation of the multi-party account statute | Constructive trust proper: confidential relationship existed and was abused; multi-party statute does not apply to fiduciary/trust relationships established outside account terms |
| Whether the probate court could surcharge Sandstead for wrongful acts before her appointment as personal representative under the fiduciary oversight statute | Surcharge permitted because the implied trust falls within the probate statute’s definition of "estate," and the court acquired jurisdiction over the fiduciary | Surcharge improper for pre-appointment acts and because funds were non-estate assets | Surcharge permitted: implied trust is an "estate" under §15-10-501 and probate court may surcharge a fiduciary for breaches under §15-10-504 |
| Whether the Trust’s no-contest clause (incorporated by reference into the pour-over will) barred Corona’s challenge to the 2000 Will | No-contest clause applies only to challenges to the Trust, not to challenges to the Will | Incorporation by reference brings the Trust’s no-contest clause into the Will, barring the contest | No-contest clause did not apply to the Will; it prohibits only challenges to the Trust, so enforcement against Corona was erroneous |
Key Cases Cited
- Page v. Clark, 592 P.2d 792 (Colo. 1979) (distinguishes resulting and constructive trusts and recognizes constructive trusts for abused confidential relationships)
- Mancuso v. United Bank of Pueblo, 818 P.2d 732 (Colo. 1991) (constructive trust is remedial to prevent unjust enrichment)
- Weeks v. Esch, 568 P.2d 494 (Colo. App. 1977) (upholds constructive trust where joint-account funds were intended to be shared among heirs)
- Lewis v. Lewis, 189 P.3d 1134 (Colo. 2008) (confidential relationships among family members can justify equitable relief)
- In re Estate of Lembach, 622 P.2d 606 (Colo. App. 1980) (probate courts may exercise jurisdiction to impose trusts related to estate administration)
- Meier v. Denver U.S. Nat'l Bank, 431 P.2d 1019 (Colo. 1967) (construction of written instruments is a question of law)
- Kempter v. Hurd, 713 P.2d 1274 (Colo. 1986) (defines judicial admission)
- Denver Found. v. Wells Fargo Bank, N.A., 163 P.3d 1116 (Colo. 2007) (trust interpretation is a question of law)