Opinion ID: 1910412
Heading Depth: 1
Heading Rank: 15

Heading: right of ruth's estate to recover support payments

Text: Part of the county court's order shows it determined, as a matter of law, that a trustee cannot make payments for the beneficiary's last-illness expenses after the beneficiary's death, regardless of whether the medical bills were submitted to the trustee before or after the beneficiary's death. Relying on Smith, [24] the court concluded: [T]he purposes of the Hansen Trust (support of the beneficiary during her life) ended with the death of Ruth. . . . Payment of the medical bills and last illness expenses would benefit the creditors and heirs of the estate of Ruth . . . instead of Ruth. . . . It is clear that the Trustee acted properly, and in good faith, in denying payment of said expenses from the Trust funds. If the county court had correctly determined that a beneficiary's estate could never recover expenses for the beneficiary's last illness after the beneficiary has died, then its further determination that the trustee had not abused its discretion in denying such claims would necessarily follow, even without an evidentiary hearing. We conclude, however, that the county court interpreted our decision in Smith too broadly. In Smith, this court stated that support trusts may be reached by creditors for support-related debts, but that discretionary trusts may not be reached by creditors for any reason. [25] We held that the beneficiary's former wife could not reach two discretionary support trusts when the purpose of the trusts had ceased to exist. The trusts were intended to benefit the settlors' son and his children, in the event their parents were unable to do so. The son owed more than $90,000 in child support arrears, and his ex-wife filed two separate actions to garnish the trust assets for the debt, which actions were consolidated on appeal. In the first action, this court held that the trust assets could not be reached for child support arrears after the children were emancipated: [T]he payment of the child support arrearage would not further the purposes of the trusts, since the children are emancipated. Without a showing that the payment of the arrearage would contribute to the support of the beneficiaries of the trusts, [the trustee] could not be compelled to distribute trust assets. [26] Smith is distinguishable, however, because the person attempting to reach the trust was the beneficiary's creditor. In the first action, she did not show that her claim against the son was support-related or would support his children if the parents were unable, because the children were emancipated. Nor were we dealing with a beneficiary's request for support payments in that action. In contrast to creditors, a personal representative has the same right to enforce a decedent's rights and claims that the decedent had immediately prior to death, where the cause of action survives death. [27] The county court's reasoning that the payment of medical expenses would benefit Ruth's heirs instead of Ruth would also apply if the trustee had failed to make quarterly payments to Ruth from her half of the trust's accrued income. But the general common-law rule is that a beneficiary's estate may recover income of the trust, which is accrued and payable at the time of the beneficiary's death but has not been paid over, [28] unless the trustee had uncontrolled discretion whether to make distributions of income. [29] We agree and note that this rule is consistent with our holding that the estate of a life tenant is entitled to profits accumulated through the life tenant's use of personalty in the life estate, in the absence of the testator's expressed contrary intent. [30] Accordingly, we conclude that Smith does not control here and that Ruth's estate can seek to enforce Ruth's interests in the trust to the extent that Ruth could have enforced her interests immediately before her death. We adopt the standard for an estate's recovery of the beneficiary's last-illness expenses from the Restatement (Third) of Trusts § 50 (2003), which concerns the enforcement of a beneficiary's interests and specifically deals with postdeath obligations. When a beneficiary dies before payment for necessary services are rendered, the Restatement provides: A question may arise, following the death of the beneficiary of a discretionary interest, whether a support or other standard authorizes or requires the trustee to pay the beneficiary's funeral and last-illness expenses and debts incurred by the beneficiary for support. Ultimately, the question is one of interpretation when the terms of the trust are unclear, with the presumption being that the trustee has discretion to pay these debts and expenses. A duty to do so is presumed only to the extent that (i) probate estate, revocable trust, and other assets available for these purposes are insufficient or (ii) the trustee, during the beneficiary's lifetime, either agreed to make payment or unreasonably delayed in responding to a claim by the beneficiary for which the terms of the trust would have required payment while the beneficiary was alive. (A deceased beneficiary's estate may also recover distributions the trustee had a duty to make but did not make during the beneficiary's lifetime.) [31] Obviously, recovery under these factors presents factual issues as to whether the trustee abused its discretion or had a duty to make support payments, and the parties have not yet been given an opportunity to try these issues in an evidentiary hearing. In its order, the county court found that no claims for medical expenses were submitted to the trustee prior to Ruth's death. This finding, however, was contrary to statements made by counsel for Ruth's estate that it would show a request for support payments was made before Ruth's death. The court also found that Ruth was a businesswoman with substantial income at her disposal, although no evidence in the record supports that finding. This court has very recently either reversed or vacated three separate county court orders for lack of competent evidence when the court failed to hold an evidentiary hearing on factual issues. [32] Neither the parties' arguments nor the court's discussions with the parties can substitute for providing the parties an opportunity to support or refute disputed factual issues raised by the pleadings. [33] Our adoption of the Restatement's postdeath obligation standard requires us to once again vacate the county court's order to hold an evidentiary hearing on the relevant factual issues. An appellate court is not obligated to engage in an analysis that is not necessary to adjudicate the case and controversy before it. [34] In light of our conclusion that the county court must conduct an evidentiary hearing to determine whether the trustee abused its discretion or had a duty to make support payments, it is unnecessary for us to reach the remaining assignments of error.