Opinion ID: 1772906
Heading Depth: 1
Heading Rank: 2

Heading: The Agreement to Equalize

Text: On December 7, 1988, Jim, John, and Judy executed an agreement whereby they stated that any indebtedness owing to the trust by any of the trustees as their individual obligation or any such obligation owing to the Warren Bank and Trust Company or any other party, which is secured by property of the Trust, that shall be outstanding and unpaid at the date of distribution of the Trust, shall be counted as and constitute a portion of the share and distribution to which each such Trustee Beneficiary shall be entitled and that such amount, including any interest due, shall diminish the distribution to such beneficiary. The agreement was made, according to its preamble, because the trustees had with the concurrence of the other Trustees and the lifetime beneficiary, used certain trust property as security for certain obligations of the Trustees individually. For their second point on appeal, Jim and John argue that the trial court erred by not requiring Judy to restore to the trust, pursuant to this agreement, any excess disbursements made to herself or her family from income generated by the trust during Mrs. Wisener's lifetime. The plain language of the agreement clearly limits its application to obligations secured by the property of the Trust. We have already determined that the income generated by the trust was the property of Mrs. Wisener and not the property of the trust. Consequently, the terms of the agreement do not apply to the distribution of funds from the income. Furthermore, all three trustees testified at trial that they executed the agreement because they had all received personal loans secured by the trust property, i.e. timberland. The purpose of the agreement, according to the testimony of all three trustees, was to ensure that, when the trust was distributed, any property encumbered by one of their personal loans would be distributed to the one who created the encumbrance and that, if a lien resulted against trust property because of one trustee's failure to make payments on a loan secured by that property, the lien would attach only to that trustee's portion of the trust property upon distribution. The trial court ordered the partition of the trust property and the equalization of post-mortem distributions from the income produced by the real property that had been the trust property. In so doing, the trial court has given effect to the 1988 agreement to equalize to the extent it is applicable to the present situation. Jim and John have offered no authority or convincing argument to support their assertion that the agreement should be extended to require equalization of pre-mortem distributions made from the income reserved to Mrs. Wisener. We hold that the trial court did not clearly err in refusing to order equalization of the pre-mortem distributions pursuant to the 1988 agreement. Affirmed.