This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA

IN COURT OF APPEALS

A15-0539

In the Matter of the Estate of: Mitzi M. Olson,

a/k/a Mitzi Marie Olson,

Decedent.

Filed December 7, 2015

Affirmed in part and reversed in part

Stauber, Judge

Washington County District Court

File No. 82-PR-12-3406

Robert D. Maher, Sarah E. Crippen, William R. Asp, Best & Flanagan, L.L.P., 

Minneapolis, Minnesota (for appellant/cross respondent Hillsdale College)

Kay Nord Hunt, Phillip A. Cole, Lommen Abdo, P.A., Minneapolis, Minnesota (for 

respondents/cross-appellants Michael G. Kula, et al.)

Daniel W. Boerigter, Yost & Baill, L.L.P., Minneapolis, Minnesota (for respondents 

Jamie Olson Craggs, et al.)

Rodney J. Mason, Regina D. Sabbia, Kimberly A. Mason, Rodney J. Mason, Ltd., 

St. Paul, Minnesota (for respondent First Lawyers Trust Company)

Considered and decided by Stauber, Presiding Judge; Kirk, Judge; and Willis, 

Judge.



 

 

 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to 

Minn. Const. art. VI, § 10.
2

U N P U B L I S H E D O P I N I O N

STAUBER, Judge

Appellant challenges the district court’s order affirming the personal 

representatives’ apportionment of estate taxes under decedent’s will. By notice of related 

appeal, respondent personal representatives assert that the district court erred when it 

concluded that appellant’s petition for declaratory relief was timely. We reverse the 

district court’s order as to the timeliness of the petition, but affirm the district court’s 

construction of the will’s tax-apportionment provisions. 

FACTS

Mitzi M. Olson (decedent) died in May 2012, leaving an estate valued at more 

than $18 million. In her 2010 will, decedent appointed her long-time attorney, Michael 

Kula, and Diane M. Zais, who had been her personal assistant since 1986, to be copersonal representatives.

The parties here include appellant and cross-respondent Hillsdale College 

(Hillsdale) of Michigan, a direct beneficiary under the will and the remainder beneficiary 

of two charitable remainder unitrusts (CRUTs)

1

set up for decedent’s son, Todd Olson, 

and her daughter, Wendy Olson; respondents and cross-appellants Kula and Zais in their 

capacity as personal representatives of the estate (personal representatives); respondents 

 

1

“A charitable remainder trust creates a life estate . . . and conveys the remainder interest 

to a qualified charitable organization.” In re Wells, 448 B.R. 909, 913 (Bankr. W.D. Tex 

2011). The estate can take a tax deduction on the fair market value of the remainder. Id.; 

see 26 U.S.C.A. § 2055 (2012).
3

Jamie Craggs (Craggs), decedent’s daughter, and her children; and respondent First 

Lawyers Trust Company as trustee for Wendy Olson’s son.

Decedent made a number of special bequests, including (1) $2 million to Craggs; 

(2) $1 million to Hillsdale; (3) $2 million to a CRUT for Todd Olson; and (4) $1.5 

million to a CRUT for Wendy M. Olson, as well as other special bequests to relatives, 

employees, and charitable organizations. Hillsdale is the charitable remainder 

beneficiary of both CRUTs. 

Several provisions of the will deal with the issue of estate taxes. In Article I, the 

personal representatives must

pay from the residue of my estate the expenses of my last 

illness and funeral, valid debts, expenses of administering my 

estate, including non-probate assets, and any estate or other 

death taxes, except to the extent paid from other sources, 

provided that to the extent the residue of my estate is not 

sufficient to pay said estate taxes, the portion of said estate 

taxes for which the residue of my estate is insufficient shall 

be paid by my Personal Representatives and allocated and 

apportioned in accordance with the provisions of Article XV 

hereof. 

Article III makes various special bequests “[s]ubject to the apportionment of estate taxes 

as set forth in Articles I and XV.” In Article V, decedent acknowledges that she made 

adequate provision for her children through special bequests, but adds, “Nevertheless, I 

give, devise and bequest the rest, residue and remainder of my estate (if there remains a 

residue after payment of those items set forth in Article I, including estate taxes)” in onethird shares to the two CRUTs and Craggs. (Emphasis added.) In Article VI, 6.1.5, and 
4

Article VII, 7.1.5., decedent directs that no federal or state estate taxes “shall be allocated 

to or recoverable from the trust[s].” 

Article XIII sets forth decedent’s acknowledgement regarding estate taxes:

I have been advised, and I acknowledge, that 

substantial federal and/or state estate taxes will be occasioned 

as a result of my death due to the size and extent of my estate 

and the distribution plan that I have made herein. 

Nevertheless, this Last Will and Testament is the product of 

my careful and thoughtful consideration and it completely 

and accurately reflects my personal wishes regarding the 

distribution of my estate.

Article XIV states that “[t]o the extent the residue of my estate is insufficient to 

pay all of the expenses set forth in Article I hereof, including estate taxes occasioned by 

my death, said estate taxes shall be apportioned and paid as [set forth in Article XV].” 

Article XV provides:

(1) No such taxes shall be apportioned against or paid 

from any property or interest in property passing under this 

instrument or otherwise that qualifies for the charitable 

deduction, including [the CRUTs];

(2) All such taxes that are not apportioned pursuant to the 

preceding provisions of this Section shall be apportioned 

against and paid from the interests in property generating 

such taxes in the proportion that the value of each such

interest in property bears to the total value of all such interests 

generating such taxes. The values used in determining such 

taxes shall be used for that purpose. In making such 

apportionment, allowances shall be made for any exemptions 

granted, any classification made of persons interested in my 

estate and for any deductions and credits allowed by the law 

imposing such taxes. Any exemption or deduction allowed 

by reason of the relationship of any person to me, by reason 

of the purposes of a transfer made by reason of my death, or 

by allocation to the transfer (either by election by the 

Personal Representative or the Trustee or by operation of 
5

law), shall inure to the benefit of the person bearing such 

relationship or receiving the transfer.

(3) The provisions of this instrument relating to the 

apportionment and payment of estate taxes shall supersede all 

contrary provisions of any other instrument in effect as of the 

date of my death (other than any such instrument that 

specifically refers to this instrument and specifically directs 

that such taxes be apportioned and paid in a manner contrary 

to the provisions of this instrument).

My Personal Representatives shall require any 

transferee or other person to reimburse my estate for any 

payments made pursuant to this Article; however, my 

Personal Representatives are authorized to withhold from the 

assets otherwise distributable to a beneficiary under this 

instrument an amount sufficient to pay any estate taxes 

apportioned against such assets.

In November 2012, the personal representatives filed the first interim account and 

petition for partial distribution. Included in the petition was a reserve for state and 

federal estate taxes in the amount of $5.75 million. The proposed partial distribution 

comprised all of the special bequests, including those to the two CRUTs2, and the 

outright bequests to Craggs and to Hillsdale College. The petition stated that there were 

sufficient funds in the estate after these distributions to pay all of the outstanding costs, 

expenses, and estate taxes. No allocation for estate taxes was made against any of the 

special bequests.

 

2

The will directed the personal representatives to make certain deductions from the 

bequests to the CRUTs equal to the amounts decedent had advanced prior to her death to 

Todd Olson and Wendy Olson. Therefore, Todd’s CRUT was funded with $1,998,500 

rather than $2 million and Wendy’s CRUT was funded with $1.152 million instead of 

$1.5 million.
6

The district court held a hearing on December 18, 2012; all interested parties 

received notice of this hearing. The district court filed an order for partial distribution on 

December 28, 2012, permitting the personal representatives to pay the special bequests, 

and finding that “[t]here are sufficient funds in this estate available . . . to pay, settle or 

dispose of expenses of administration, taxes, claims and all other obligations of the Estate 

after distribution of the property described above.” 

In May 2013, the personal representatives filed an amended petition to reflect the 

amount to be paid to Wendy Olson’s CRUT after certain deductions; the district court 

held a hearing in June and issued an amended order for partial distribution. Shortly after 

this hearing, Hillsdale’s attorney informed the personal representatives by letter that the

estate taxes should not be paid out of the estate residue, but should be allocated to the

special bequests. Because of the favorable tax status of the CRUTs, this would result in 

more money being placed in the CRUTs with a potentially larger remainder for Hillsdale. 

The other effect of this would be that all of Cragg’s outright bequest and her residuary 

share would be forfeited, and she would receive nothing under the will. The special 

bequests to individuals would be reduced by about 51%. 

The personal representatives disagreed by return letter. In August 2013, they filed 

and paid the federal and state estate taxes. On March 17, 2014, Hillsdale filed a petition 

for declaratory relief, asking the court to interpret the taxation provisions of the will. The 

personal representatives challenged the district court’s jurisdiction and Hillsdale’s 

standing, and argued that the will unambiguously directed them to pay estate taxes out of 

the estate residue. 
7

After hearings in June and October 2014, the district court issued its order on 

January 20, 2015. The district court granted Hillsdale’s request for a declaratory 

judgment that the will’s no-contest clause was not triggered by its request for 

construction of the will and denied the personal representatives’ motion to dismiss for 

lack of jurisdiction and standing. But the court also denied Hillsdale’s request “to find 

that the personal representatives misinterpreted the estate tax apportionment provisions of 

the Will.” The district court concluded that the unambiguous language of the will 

directed the personal representatives to pay the estate taxes out of the estate residue 

before it was divided among the two CRUTs and Craggs. 

Hillsdale filed a notice of appeal on the issue of estate-tax apportionment; the 

personal representatives filed a notice of related appeal challenging jurisdiction and 

standing.

D E C I S I O N

I.

For their related appeal, personal representatives argue that the district court erred 

by concluding that Hillsdale’s petition was not time-barred. The personal representatives 

argue that the petition was filed after a six-month limitations period set forth in Minn. 

Stat. §§ 525.71; .712 (2014). The district court concluded that the petition was timely 

because it “does not necessarily require an amendment of the Interim Order for Partial 

Distribution.” 

An appellate court reviews de novo the application of a statute of limitations. Sipe 

v. STS Mfg., Inc. 834 N.W.2d 683, 686 (Minn. 2013). “Statutes of limitations are both 
8

procedural and substantive because they regulate when a party may file a lawsuit and 

when a lawsuit is barred.” Mercer v. Anderson, 715 N.W.2d 114, 119 (Minn. App. 

2006). “The effect of a statute of limitations is an issue separate from subject matter 

jurisdiction and personal jurisdiction. But some interplay exists between the two 

doctrines.” Id. (quotation and citations omitted). “The purpose of a statute of limitations 

is to prescribe a period within which a right may be enforced and after which a remedy is 

unavailable for reasons of private justice and public policy.” Miernicki v. Duluth Curling 

Club, 699 N.W.2d 787, 788 (Minn. App. 2005) (quotation omitted), review denied (Minn. 

Sept. 20, 2005). 

Minn. Stat. § 525.71 sets forth which probate orders may be appealed to this court. 

An order directing or refusing to direct the payment of a bequest or distributive share, if 

the amount in controversy is more than $100, is appealable, as is “an order, judgment, or 

decree relating to or affecting estate taxes.” Minn.Stat. § 525.71(a)(8), (16). An appeal 

must be taken within six months after the filing of the order, if no written notice is 

served. Minn. Stat. § 525.712. The personal representatives argue that the district court 

filed orders for partial distribution on December 28, 2012, and July 16, 2013, and, 

therefore, Hillsdale’s March 17, 2014 petition was untimely. Hillsdale argues that the 

partial-distribution orders did not reveal the personal representatives’ proposed taxapportionment method and thus Hillsdale’s best remedy was to petition the district court 

for amendment of the prior orders.

Although the petitions for partial distribution do not specifically apportion taxes 

against a particular part of the estate, they include (1) a reserve for estate taxes; (2) a 
9

statement that the residuary estate was sufficient to permit payment of the taxes without 

allocation from the beneficiaries; and (3) no apportionment of estate taxes against any of 

the special bequests. A representative of Hillsdale attended at least some of the hearings 

at which the partial distribution was discussed. 

Further, Minn. Stat. § 525.71(a)(8) states that an order directing or refusing 

payment of a bequest or distributive share is appealable. Hillsdale is disingenuous when 

it describes its petition as a mere request for interpretation; the petition is entitled 

Hillsdale College’s petition for declaratory relief and 

for instruction from the court and to construe and/or enforce 

will’s terms and personal representatives’ duties regarding 

estate tax apportionment, calculation and distribution of 

probate shares, treatment of QPRT property, attorney fees 

invoices, an accounting and to amend the court’s interim 

orders for partial distribution dated December 21, 2012 and 

July 16, 2013.” (Emphasis added.)

This request encompasses more than mere interpretation.

Hillsdale argues that its petition was timely under Minn. Stat. § 524.1-304 (2014). 

This statute permits the court to modify orders outside of the time limitations of section 

525.712 in order to correct clerical or judicial errors, in the case of fraud or 

misrepresentation, or for excusable neglect, inadvertence, or mistake, if such claims are 

made with due diligence. Minn. Stat. § 524.1-304(b). We review the district court’s 

order denying a request to vacate for mistake or fraud for an abuse of discretion. In re

Estate of Weber, 418 N.W.2d 497, 502 (Minn. App. 1988) (citing the predecessor statute 

to Minn. Stat. § 524.1-304), review denied (Minn. Apr. 4, 1988). Hillsdale raises mistake 

and fraud.
10

A party asserting mistake must demonstrate (1) a reasonable claim on the merits; 

(2) a reasonable excuse for failure to act; (3) due diligence; and (4) no substantial 

prejudice to another party. Lund v. Pan Am. Mach. Sales, 405 N.W.2d 550, 552 (Minn. 

App. 1987). Hillsdale claims a mistake because the interim orders do not reveal the 

apportionment method. The petition for an interim distribution does not specify how 

estate taxes would be paid. But it sets forth the specific bequests; discloses an estimated 

amount for estate taxes; requests permission to distribute the specific bequests without 

making an allocation of taxes; and avers that there are enough estate assets to pay taxes 

“after distribution of the property described above.” Hillsdale closely followed the 

probate action and was represented at the hearings by an attorney, making it unlikely that 

Hillsdale was mistaken about the personal representatives’ proposed apportionment.

The standard for fraud is similar to that in Minn. R. Civ. P. 60.02. See In re 

Sivert’s Estate, 271 Minn. 152, 163, 135 N.W.2d 205, 212 (1965); Barrett v. Macdonald, 

264 Minn. 560, 565, 121 N.W.2d 165, 169-70 (1963). “Fraud on the court exists when a 

court is misled as to material circumstances, or its process is abused, resulting in the 

rendition of a judgment which would not have been given if the whole conduct of the 

case had been fair.” In re Welfare of Children of R.A.J., 769 N.W.2d 297, 303 (Minn. 

App. 2009) (quotation omitted). “Fraud sufficient to vacate a judgment occurs when a 

party intentionally misleads or deceives the court as to material circumstances.” Id.

(quotation omitted). While not describing in detail how they intended to apportion the 

estate taxes, the personal representatives did not mislead the district court as to material 

circumstances to such a degree that its judgment was changed.
11

The district court did not address fraud or mistake in its order; rather, it 

determined that Hillsdale was not challenging its order for partial distribution, but was 

asking for clarification on the payment of taxes. But Hillsdale’s petition is effectively a 

challenge to the partial distribution approved by the district court. We conclude that 

Hillsdale’s petition was time-barred, and the district court did not have the authority to 

hear Hillsdale’s petition.3 

II.

Because of our decision, we need not address Hillsdale’s claim that the district 

court erred in its interpretation of the will, but we nevertheless do so in the interests of 

judicial economy. Hillsdale argues that the district court erred in its interpretation of the 

will’s tax-apportionment provisions. The district court concluded that 

[i]t is clear from the terms of the Will that the [personal 

representatives] are to distribute the specific bequests, pay the 

estate taxes from the remaining assets, if possible, then, if any 

assets remain, divide those assets among the three children. 

This does not violate the restrictions placed on the payment of 

taxes from the CRUTs set forth in Articles VI and VII. The 

[personal representatives] have followed the provisions of the 

Will with respect to the payment of estate taxes. 

Hillsdale, the personal representatives, and the district court all agree that the will’s 

language is unambiguous, but Hillsdale reaches a different conclusion as to interpretation 

of the will.

 

3

The personal representatives also assert that Hillsdale lacks standing. The definition of 

“interested party” in Minn. Stat. § 524.1-201(32) (2014) is sufficiently broad to 

encompass Hillsdale. See In re Estate of Pawlik, 845 N.W.2d 249, 251 (Minn. App. 

2014), review denied (Minn. June 25, 2014).
12

An appellate court reviews the district court’s interpretation of an unambiguous 

will or trust agreement de novo. In re Estate and Trust of Anderson, 654 N.W.2d 682, 

687 (Minn. App. 2002), review denied (Minn. Feb. 26, 2003). If a will is unambiguous, 

the testator’s intent must be discerned from the document, and a court may not consider 

extrinsic evidence. Id. A court’s interpretation of a will or trust should consider the 

document as a whole, not “isolated words.” In re Stisser Grantor Trust, 818 N.W.2d 

495, 502 (Minn. 2012) (quotation omitted). 

Hillsdale argues that the specific language of paragraphs 6.1.5 and 7.1.5, which 

state that estate taxes “shall not be allocated to or recoverable from the [CRUTs],” 

together with other will language about estate taxes and allocation contained in Articles I, 

V, and XV, precludes payment of taxes from the residue left after payment of specific 

bequests. Hillsdale contends that decedent intended that two-thirds of the residue was to 

be distributed to the CRUTs, and, therefore, the estate taxes should be apportioned to the 

noncharitable specific bequests.

Hillsdale offers a strained interpretation of the will that does not take the entire 

document into consideration. In Article I, decedent directs the personal representatives to 

pay estate taxes from the residue of her estate. “Residue” or “residuary estate” is defined 

as “[t]he part of a decedent’s estate remaining after payment of all debts, expenses, 

statutory claims, taxes, and testamentary gifts (special, general, and demonstrative) have 

been made.” Black’s Law Dictionary 629 (9th ed. 2009). In this article, decedent states 

that, if the residue is insufficient to pay the estate taxes, then the personal representatives 

shall pay the taxes in accordance with the provisions of Article XV. Article III includes 
13

the special bequests “[s]ubject to the apportionment of estate taxes as set forth in Articles 

I and XV.” Referring to Article I, apportionment occurs if the residue of the estate is 

insufficient to pay the taxes. Article V notes that decedent provided for her children by 

special bequests, but in addition to the special bequests, the residue is to be divided in 

thirds, with one third going outright to Craggs and the other thirds going to the two 

CRUTs. But this article also states that the residue is to be disposed of in this manner 

only “if there remains a residue after payment of those items set forth in Article I, 

including estate taxes.” Thus, until all the debts, expenses, and estate taxes are paid, the 

residue is not available for division; the residue will be divided among Craggs and the 

CRUTs only after payment of the items set forth in Article I, including estate taxes. 

This is similar to a condition precedent in contract. “A condition precedent . . . is 

one which is to be performed before the agreement of the parties becomes operative.” 

Nat’l Union Fire Ins. v. Schwing America, Inc., 446 N.W.2d 410, 412 (Minn. App. 1989)

(quotation omitted). “When a contract contains a condition precedent, a party to the 

contract does not acquire any rights under the contract unless the condition occurs.” Id. 

Similarly here, the personal representatives are required to pay debts, expenses, and 

estate taxes before the residue of the estate can be divided among Craggs and the two 

CRUTs. Decedent acknowledges in Article XIII that she could have avoided some taxes 

by using a different distribution plan; as Hillsdale argues, putting more money into the 

CRUTs would reduce the estate taxes payable because of the charitable deduction. But 

decedent rejected this option.
14

Decedent reiterates in Article XIV that estates taxes are to be paid from the 

residue. Article XIV states: “To the extent the residue of my estate is insufficient to pay 

all of the expenses set forth in Article I hereof, including estate taxes occasioned by my 

death, said estate taxes shall be apportioned and paid [in accordance with Article XV].” 

Article XV discusses methods of apportioning estate taxes and prohibits allocating 

taxes against the CRUTs and any other charitable bequests. This is the basis for 

Hillsdale’s claim that the taxes cannot be paid from that portion of the estate left after the 

special bequests because the residue will ultimately be placed in the CRUTs. But the 

portion of the estate left after special bequests is not to be placed in the CRUTs until after 

debts, expenses, and taxes are paid; payment is made to the CRUTs (and Craggs) only if 

a residue remains after payments of these items.

Taken together, the language of the will is unambiguous and the provisions 

regarding estate taxes are reconcilable: decedent intended that estate taxes would be paid 

from the portion of the estate left after payment of special bequests; the residue after 

payment of taxes and expenses would be divided among the CRUTs and Craggs. The 

additional bequests to the CRUTs are merely conditional until a residue remains after 

payment of all debts, expenses, and estate taxes. Because the will is unambiguous, we 

need not consider extrinsic evidence.

Finally, Hillsdale’s reliance on Minn. Stat. § 524.3-916 (2014) is misplaced. This 

section governs apportionment of estate and generation-skipping taxes and directs 

apportionment of taxes among all persons interested in the estate “in proportion [to] the 

value of the interest of each person . . . bears to the total value.” Minn. Stat. § 524.3-916
15

(b)(1). But this apportionment is made only if the will or other governing instrument 

does not provide for a method of allocating estate taxes. Id. at (b). Decedent included a 

method for apportionment of taxes in the will. The district court did not err in its 

interpretation of decedent’s will.

Affirmed in part and reversed in part.