In re McDowell Revocable Trust

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In re McDowell Revocable Trust

Case Number
S-16-0071
Call Date
January 5, 2017
Court Number
Custer
Case Summary

S-16-0071 In re Robert L. McDowell Revocable Trust

Custer County Court, Judge Tami K. Schendt

Attorneys: Richard A. DeWitt, David J. Skalka (Croker Huck Kasher DeWitt Anderson & Gonderinger LLC) (for Appellee/Cross-Appellant Roger R. Stockall, Trustee) ---John M. Lingelbach, James Tews, Minja Herlan (Koley Jessen PCLLO) (Appellant Sandra K. Stockall) --- Brian S. Koerwitz, Kend E. Endacott (Endacott Peetz & Timmer PCLLO) (for Jane O. Hornung, Petitioner/Appellee)

Civil: Action to Declare Rights under the Nebraska Uniform Trust Code

Proceedings below: Petitioner/Appellee Hornung filed a Petition for Instrictions and Actions to Declare Rights and determine the rights of beneficiaries under the Robert L. McDowell Revocable Trust. Sandra K. Stockall filed a counter-petition, and Roger Stockall, as successor Trustee, filed a counter-petition. After a trial, the court issued an Order declaring the rights and issuing instructions to the Trustee of Robert's Trust. The court found Betty McDowell's attempted exercise of the power of appointment given to her by Robert in his trust was ineffective and ordered Roger, as successor Trustee, to recover all assets which were distributed from Robert's Trust to Betty's revocable trust, and instead distribute them according to the residue provision of Robert's Trust. Appellant filed a Petition to Bypass the Court of Appeals which was granted by the Nebraska Supreme Court.

Issues: Appellant argues: 1. The County Court erred by finding that Betty's exercise of the power of appointment granted to her under Robert's Trust was ineffective. 2. The County Court erred by finding that Betty exceeded the power granted to her with language expressly requiring the Trust "A" assets to be merged with the assets held by Betty's Trust and to be administered as one. 3. The County Court erred by finding that the "merged" assets (i.e, those assets appointed from Robert's Trust and those assets that originally constituted Betty's own assets) were used to pay taxes and creditors of Betty's estate, 4. The County Court erred by finding that by merging the Trust "A" assets with her Trust, Betty benefitted herself, her estate, her creditors, and the creditors of her estate. 5. The County Court erred by finding that Neb. Rev. Stat. ' 30-3850(a)(3) would allow Betty's creditors to reach the assets Betty appointed from Robert's Trust to her Trust. 6. The County Court erred by finding that Betty's appointment of the Trust "A" assets from Robert's Trust to her Trust caused the appointed assets to be taxable as a part of Betty's gross estate under 26 U.S.C. ' 2041. 7. The County Court erred by finding that Betty did not designate a "permissible appointee" in her Will and instead opted to appoint the property to her Trust.

Cross-Appeal: Roger argues: 1. The trial court erred in ordering Roger Stockall, Trustee, to recover all assets, income, and principal attributable to Trust 'A' of Robert's Trust and thereafter distribute in accordance with Article Fourth, paragraph (E)(2) of Robert's Trust; 2. To the extent the trial court, within its determination that Betty's exercise of the power of appointment was invalid, determined that transfers by Robert's Trust and Betty's Trust are void, it erred in so holding because it had no subject matter jurisdiction to do so.