Opinion ID: 2823814
Heading Depth: 4
Heading Rank: 2

Heading: Equitable Award Based on Reasonable Rate of Return to Undistributed Balance of the Elective Share

Text: Â¶36Â Â Â Â Â Â The probate courtâs equitable authority can also include an award to compensate a surviving spouse for delay in the elective shareâs distribution. The Probate Code plainly indicates the General Assemblyâs policy choice in favor of prompt distribution of the elective share. However, final disposition of an estate may involve delay caused by the necessity to address issues other beneficiaries raise in the case. Here, the delay in calculating and distributing the elective share prevented Mrs. Beren from utilizing the cash and/or in-kind assets to which she was legally entitled. While interest is usually a creature of statute, the probate court may use its equitable authority to ensure that a party receives the true value of her or his elective share when distribution has been unduly delayed. Â¶37Â Â Â Â Â Â In this case, the probate court was justified in concluding that an exercise of equity was necessary to âcompensate a party for an inordinate delay in receiving a distribution to which she is entitled.â If not for the objections and ensuing litigation, theÂ court found the estate âcould have been administered and distributed after 4 yearsâ but instead took almost fifteen years. 11 The court specifically recognized the delay caused by the four sons in its orders addressing its exercise of equity. For example, in its December 15, 2003 order, the court found that âthe lack of cooperation of the [four sons] was an impediment to the administration of the estateâs assets.â The court concluded that â[i]t would represent a windfall to the other devisees, all of whom participated in the litigation that has delayed the final settlement and distribution, to have the entire benefit of [the estateâs appreciation and income] allocated to their distributions.â Notably, the court never found that the delay was the result of any action on the part of Mrs. Beren. Â¶38Â Â Â Â Â Â If the estate had been settled on a timely basis, there would not have been sufficient cash to fulfill Mrs. Berenâs elective share. The means that her elective share could have been satisfied through a combination of cash and oil and gas assets that would have shared in the same appreciation and income the estate experienced during probate. Because years of litigation concerning the elective-share calculation delayed its distribution, Mrs. Beren was not able to benefit from investing the cash and/or enjoying the benefit of the in-kind assets she would have received. Her elective share was not separated from the rest of the estate, so she was a de facto investor, whoâunder the court of appealsâ analysisâwould have been unable to reap the benefit of herÂ investment. The record supports the probate courtâs finding that, without an equitable remedy, the children would have been unjustly enriched at the expense of their mother because they hindered the distribution of her elective share and then used that amount to further benefit the estateâs assets and, ultimately, their own financial well-being. Â¶39Â Â Â Â Â Â Coloradoâs Probate Code is based on uniform law. Case law from other jurisdictions that have also adopted the UPC informs our decision regarding the probate courtâs equitable authority to award interest on an elective share when distribution has been unduly delayed. For example, a New York court concluded that its law authorized an award of interest to compensate a surviving spouse for delay in the distribution of her elective share, relying on principles of equity to reach the just result. See In re Kasenetz, 196 Misc. 2d 318, 320 (N.Y. Sur. Ct. 2003) (â[T]he delay in distribution [of the elective share] inures to the benefit of the residuary beneficiaries and the loss of use of the money inures to the detriment of the spouse. There is neither equity in this position nor is there incentive for the fiduciaries to distribute to the surviving spouse what the law determines to be hers in an expeditious fashion . . . .â). That court reasoned that refusing to supplement the pecuniary elective-share amount with statutory interest âwould unjustly enrich the estate and diminish the value of the elective share.â Id. at 321.Â Â¶40Â Â Â Â Â Â In the case before us, the Probate Code does not provide for statutory interest on a delayed elective-share distribution. 12 But the probate courtâs authority to ensure that a party receives the full value of the money it is legally due is not restricted to an award of statutory interest. See, e.g., Farmers Reservoir & Irrigation Co. v. City of Golden, 113 P.3d 119, 132â33 (Colo. 2005) (observing that the doctrine of moratory interest relied on the concept of interest as damages and unjust enrichment as a basis for awarding common law interest rather than statutory interest); Bankers Trust Co. v. Intâl Trust Co., 113 P.2d 656, 665 (Colo. 1941) (allowing interest to be assessed as damages when interest was not recoverable by statute). The court of appeals determined that the equitable adjustment was not justified as an award of moratory interest because the probate court did not make the requisite finding of wrongful withholding. Estate of Beren, Â¶ 39. However, even in the absence of a wrongful withholding, the probate courtÂ made sufficient findings to justify an equitable remedy to compensate for the excessive delay that deprived her of property to which she was legally entitled. Â¶41Â Â Â Â Â Â The statutory interest rate has traditionally functioned as a legislative policy choice regarding the value of money, in order to avoid prolonged factual disputes in each and every case coming before our courts. See Rodriguez v. Schutt, 914 P.2d 921, 929 (Colo. 1996) (recognizing that statutory interest is meant to preserve the time value of money). The 17.46% interest rate the probate court selected as an equitable adjustment was based on the overall performance of the augmented estateâs assets during probate administration and, therefore, cannot be the basis for an equitable remedy on remand. This does not mean, however, that the probate court cannot make an equitable award based on the reasonable rate of return on the undistributed portion of Mrs. Berenâs elective share during probate administration. Tying an equitable award to the statutory rate of interest that the General Assembly already recognizes is within the trial courtâs discretion. See, e.g., Roberts v. People, 130 P.3d 1005, 1010 (Colo. 2006) (noting that the criminal restitution statute did not require any specific prejudgment interest rate, but that the civil interest rate of eight percent, while not controlling, appeared reasonable and appropriate under the circumstances). Accordingly, on remand, the probate court may grant Mrs. Beren an equitable award based on a reasonable rate of return on the assets to which she was entitledâthe undistributed portion of her elective share.