In re the Estate of Stephan

566 N.E.2d 1084, 1991 Ind. App. LEXIS 218, 1991 WL 22390
CourtIndiana Court of Appeals
DecidedFebruary 21, 1991
DocketNo. 45A03-8908-CV-340
StatusPublished

This text of 566 N.E.2d 1084 (In re the Estate of Stephan) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Estate of Stephan, 566 N.E.2d 1084, 1991 Ind. App. LEXIS 218, 1991 WL 22390 (Ind. Ct. App. 1991).

Opinions

STATON, Judge.

Margaret Stephan appeals from a trial court order resulting from a petition to construe the will of her deceased husband, Clarence A. Stephan.

Margaret presents three issues on appeal which we restate as:

1. Whether the trial court correctly construed the disposition of an inter-vivos trust, incorporated by reference into the will?
2. Whether the trial court should have considered the affidavit of John F. Beckman, the attorney who drafted Clarence Stephan's will, in order to determine intent?

We affirm.

This appeal arose from a Petition to Construe Will filed by First National Bank of East Chicago, Indiana, as Successor Executor of the estate of Clarence A. Stephan. Clarence’s widow, Margaret, and his son, Gregory, each filed a memorandum on the Petition to Construe Will. The parties disagree on the disposition of a trust which was incorporated into the will by reference. The trial court ordered as follows:

1. The Successor Executor shall forthwith exercise the power of discretion, devolved upon it by operation of the Trust Agreement, to direct the Trustee to convey the Trust res to the Estate of the decedent, submit a final accounting and terminate the trust.
2. Upon title to the Trust res being perfected in the Estate, the Successor Executor shall cause that property to pass to Gregory and Jerelee pursuant to the terms of the residuary clause of the decedent’s Will.
3. The specific bequest to Margaret in the Decedent’s Will of one-half of his beneficial interest comprises only one-half of the first $1,500.00 per month rent from and after May 14, 1984. All sums [1085]*1085monthly in excess of $1,500.00 shall pass directly to Gregory and Jerelee pursuant to the terms of the Property Settlement Agreement and the Decree incorporated into the- Trust Agreement.
4. A constructive trust is hereby imposed upon all funds received by the Estate from the lessee of the Trust res from and after March 15,1984, for which the Estate shall account in writing to the Court, and which funds it shall then distribute, with accrued interest, in accordance with the preceding rhetorical paragraph of this Order.

Record at 309-310. Margaret appeals from this Order.

I.

Trust

The issue in dispute concerns the disposition of an inter-vivos trust incorporated by reference into Clarence A. Stephan’s will. The trust was created in compliance with a property settlement agreement between Clarence and his ex-wife, Geraldine Stephan. Geraldine and Clarence were divorced on May 9, 1972; they had two children, Gregory and Jerelee. A property settlement agreement was incorporated into their divorce decree and provided for the creation of a trust as security for Clarence’s payment to Geraldine of $216,000.00 over a twelve year period. On the same day that the divorce decree was issued, May 9, 1972, Clarence executed a trust agreement designated as Trust No. 1200 (Trust). The trust consisted of property which was leased to C.E. Stephan, Inc. The First Bank of Whiting, as trustee, was given legal title to the property and was assigned the lease.

The dispute between the parties revolves around the disposition of the trust property. We must first look to the trust agreement which clearly sets out its purpose as follows:

The land trust created by this agreement is established for the purpose of providing security for the payment of alimony to GERALDINE STEPHAN in the total sum of Two Hundred Sixteen Thousand Dollars ($216,000.00) in equal monthly installments of One Thousand, Five Hundred Dollars ($1,500.00) each over a period of twelve (12) years, first payment being due and payable on the 15th day of May, 1972, and this agreement shall at all times be construed accordingly. Said alimony is provided for by a certain property settlement agreement between Geraldine Stephan and Clarence A. Stephan, which agreement has been approved and incorporated as part of their divorce decree....

Record at 66.

The trust agreement designated Geraldine and Clarence as beneficiaries. It defines their interest as:

The following named persons shall be entitled to the earnings, avails and proceeds of said real estate as follows, to-wit:

1. Geraldine Stephan, the first Fifteen Hundred Dollars ($1,500.00) each month in accordance with paragraphs 3(d) and (e) of a certain property settlement agreement between GERALDINE STEPHAN and CLARENCE STEPHAN, a copy of the pertinent paragraphs of said agreement being attached hereto and made a part hereof.
2. CLARENCE A. STEPHAN, the balance of all earnings, avails and proceeds.

Record at 63. Section 3(e) of the property settlement agreement incorporated into the trust made Gregory and Jerelee beneficiaries by providing that:

Any income received by the Trustee in excess of the Fifteen Hundred Dollars ($1,500.00) per month shall be paid to Husband, and upon his death, such excess shall be paid to the parties (sic) two children in equal shares.

Record at 298 (our emphasis).

Although the trust agreement has no single termination clause it discusses termination under several scenarios. The intent behind each of these scenarios is to insure that the payments to Geraldine required by the property settlement agreement are [1086]*1086made. These scenarios allow termination of the trust once that purpose has been achieved. The trust agreement does not discuss termination if payments are made on the twelve year schedule; however, it is clear from the terms of the trust that once Geraldine received the full amount set out by the property settlement, the purpose of the trust was accomplished.

Termination of a trust, when not occurring through the terms of the document, is governed by IC (1971) 30-4-3-24 (Burns Code Ed., Supp.1990), which provides in relevant part:

(a) On petition by a trustee or beneficiary, the court may, in its discretion, terminate the trust:
(1) if the purpose of the trust has been fulfilled or has become illegal or impossible of fulfillment....
(b) the court shall include in its order under subsection (a) of this section a provision making such a distribution of the trust estate as the court deems most nearly in conformance with the settlor’s intent.

Clarence died on March 9, 1983. A little over a year later, on April 15, 1984, the final payment to Geraldine was made. At this time the trust purpose was satisfied. Indiana law requires that the purpose of a trust be reasonably ascertainable. IC (1971) 30-4-2-1 (Burns Code Ed., Supp. 1990). When the trust purpose has been satisfied the trust may be terminated. The trial court properly terminated the trust.

With this in mind we turn to the provisions of Clarence’s will. Two clauses of the will are the source of the disagreement between the parties. Those clauses provide:

ARTICLE V.
Specific Requests
I give and bequeath to my Wife, MARGARET L. STEPHAN,

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Related

Forth v. Forth
409 N.E.2d 1107 (Indiana Court of Appeals, 1980)

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Bluebook (online)
566 N.E.2d 1084, 1991 Ind. App. LEXIS 218, 1991 WL 22390, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-estate-of-stephan-indctapp-1991.