In re Estate of Lois Culp

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
March 1, 2016 Session
IN RE ESTATE OF LOIS CULP
Appeal from the Chancery Court for Wayne County
No. 2014PR194 Stella L. Hargrove, Judge
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No. M2015-01421-COA-R3-CV – Filed May 12, 2016
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This case involves the distribution of assets in a testamentary trust. The decedent’s will
provided for her real property to be left in a trust established for the benefit of her children
and grandchildren. After the will was admitted to probate, the trustee filed a petition seeking
judicial authorization to sell the property to avoid reoccurring expenses and prevent waste.
One of the beneficiaries submitted a response in which he asserted that he and all of the other
beneficiaries opposed selling the property. Following a hearing, the trial court entered an
order in which it held that the will granted the trustee unrestricted authority to sell the
property without judicial authorization if, in her best judgment, doing so would be in the
beneficiaries’ best interest. The beneficiary appealed. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
and Remanded
ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which J. STEVEN STAFFORD,
P.J., W.S., and KENNY ARMSTRONG, J., joined.
David W. Camp, Jackson, Tennessee, for the appellant, Donnie J. Culp.
James Y. Ross, Sr., Waynesboro, Tennessee, for the appellee, Estate of Lois Culp.
MEMORANDUM OPINION1
1
Rule 10 of the Rules of the Court of Appeals of Tennessee provides:
This Court, with the concurrence of all judges participating in the case, may affirm, reverse or
modify the actions of the trial court by memorandum opinion when a formal opinion would
have no precedential value. When a case is decided by memorandum opinion it shall be
I. BACKGROUND AND PROCEDURAL HISTORY
Lois Culp passed away on March 4, 2014 at the age of 78 as a resident of Wayne
County, Tennessee. Prior to her death, Ms. Culp executed a will that, in pertinent part,
provided for the distribution of her property as follows:
ITEM III
DISPOSITION OF TANGIBLE PERSONAL PROPERTY
I bequeath to my children, JACKIE N. HOPE and DONNIE J. CULP, all of
my clothing, jewelry, personal effects, automobiles and all of my other tangible
personal property (together with any policies of insurance thereon).
ITEM IV
BEQUEST
I devise and bequeath all the rest of the property that I own at my death to
DIANNE RICH, Trustee, in trust for the following beneficiaries in accordance
with the following provisions:
Jackie N. Hope Thirty-three Percent (33%)
Donnie J. Culp Thirty-three Percent (33%)
Mahon Clay Culp Fourteen Percent (14%)
Monica Rohr Six and 67/100 Percent (6.67%)
Melanie Lamont Six and 67/100 Percent (6.67%)
Belinda Houston Six and 66/100 Percent (6.66%)
...
As the child attains the age of twenty-five (25) years, the Trustee shall
distribute absolutely to the child one-half (1/2) of the then-existing principal of
the child’s share. The remainder of the principal of the share shall be retained
in trust until the child attains the age of thirty (30) years, at which time the trust
shall terminate as to the child and the Trustee shall distribute the balance of the
share to the child absolutely. If the child has attained any of such respective
designated “MEMORANDUM OPINION”, shall not be published, and shall not be cited or
relied on for any reason in any unrelated case.
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ages at the time when a share is to be set apart for the child, the Trustee shall
distribute to the child such part or all, as the case may be, of the share (instead
of holding the same in trust) as directed to be distributed to the child upon
attaining such respective ages.
Dianne Rich, as executor and trustee of the estate and trust, filed a petition to probate
the will in the Wayne County Chancery Court on March 13, 2014. On April 24, 2014, Ms.
Rich filed a petition seeking judicial authorization to sell Ms. Culp’s real and personal
property in accordance with the terms of Ms. Culp’s will “to avoid reoccurring expenditure
and expenses, prevent waste, ensure sufficient funds exist to pay debts and protect the value
of the [estate].” A hearing on the petition to sell was scheduled for May 5, 2014. On May 2,
2014, Ms. Culp’s son, Donnie J. Culp, filed a response opposing the sale. In the response,
Mr. Culp asserted that the beneficiaries unanimously opposed selling the property and
therefore requested that the trial court deny Ms. Rich’s petition. As attachments to the
response, Mr. Culp submitted photocopies of emails from four of the other five beneficiaries
evidencing their opposition to the proposed sale.2 Mr. Culp also filed a motion to continue
seeking additional time to prepare for the May 5 hearing.
The trial court denied Mr. Culp’s motion to continue and held the hearing on Ms.
Rich’s petition as scheduled on May 5, 2014. Following the hearing, the trial court entered
an order confirming Ms. Rich’s authority to sell the estate’s property. The trial court noted
that Ms. Culp’s will expressly authorized Ms. Rich to exercise the powers set forth in
Tennessee Code Annotated section 35-50-110 with respect to all property, real and personal,
at any time forming a part of the trust or her estate.3 Accordingly, the trial court held that
Ms. Rich was not required to seek judicial authorization prior to selling the property.
Nevertheless, it also found that Ms. Rich’s desire to sell the property was consistent with her
duties as a fiduciary because of her inability to get insurance coverage on the property and
the reoccurring expenses associated with maintaining it.
A public auction of Ms. Culp’s real and personal property was conducted as scheduled
on September 19 and 20, 2014. The personal property sold at auction for $55,307.50; the
real property sold for $303,000. Thereafter, Ms. Rich filed a petition to ratify the sales,
2
Emails from Monica Rohr, Belinda Houston, Melanie Lamont, and Mahon Clay Culp were included as
attachments to Mr. Culp’s response.
3
Tennessee Code Annotated section 35-50-110 provides a list of fiduciary powers that may be incorporated by
reference into an instrument. Among other things, the list includes an unrestricted power to sell all or part of
an estate’s property without judicial authorization if doing so, in the fiduciary’s best judgment, would be in the
best interests of the estate’s beneficiaries. Tenn. Code Ann. § 35-50-110(6).
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which the trial court granted following a hearing on February 26, 2015. On June 25, 2015,
the trial court entered an order directing that Ms. Culp’s estate be closed upon the distribution
of the sale proceeds. Mr. Culp filed a notice of appeal on July 23, 2015.4
II. ISSUE AND STANDARD OF REVIEW
The primary issue Mr. Culp raises on appeal is whether the trial court erred in holding
that Ms. Rich was authorized to sell Ms. Culp’s real property. Resolving this issue requires
us to determine whether the trial court erred in its construction of Ms. Culp’s will. The
proper construction of a will is question of law. In re Estate of Snapp, 233 S.W.3d 288, 291
(Tenn. 2007). We review questions of law de novo with no presumption of correctness
accompanying the trial court’s conclusions. In re Estate of McFarland, 167 S.W.3d 299, 302
(Tenn. 2005).
III. DISCUSSION
“In construing a will, the cardinal rule is that the Court must attempt to ascertain the
intent of the testator and to give effect to that intent unless prohibited by a rule of law or
public policy.” Id. The testator’s intent is to be ascertained, if possible, from the natural
meaning of the language used in the will and from the context, scope, and purpose of the
instrument. Id. Furthermore, the testator’s intent is to be ascertained “from the scope and
tenor of the entire will.” Harrell v. Harrell, 321 S.W.3d 508, 512-13 (Tenn. Ct. App. 2010)
(citing In re Estate of Vincent, 98 S.W.3d 146, 150 (Tenn. 2003)). If possible, every word
used by the testator is presumed to have some meaning. Daugherty v. Daugherty, 784
S.W.2d 650, 653 (Tenn. 1990).
First, Mr. Culp argues that Ms. Rich lacked the authority to sell the real property
because it vested in the beneficiaries immediately at Ms. Culp’s death in March 2014. In
support of this argument, he relies on Tennessee Code Annotated section 31-2-103, which
provides in part that “[t]he real property of a testate decedent vests immediately upon death
in the beneficiaries named in the will[.]” While the legislature did not define the term
“beneficiaries,” as it is used in that section, it is our view that the term refers to beneficiaries
of the will, rather than beneficiaries of a trust established by the will. To hold otherwise
would preclude an individual from devising real property into a testamentary trust.
4
Following entry of the trial court’s June 25, 2015 order, Jackie N. Hope, Mahon Clay Culp, Monica Rohr,
Melanie Lamont, and Belinda Houston each filed affidavits declaring that Ms. Rich fully and properly
administered the estate and waiving their right to an appeal. Additionally, Ms. Hope and Ms. Lamont testified
at a January 5, 2015 hearing that they never had been represented by the attorney purporting to represent the
beneficiaries and that they wished for their shares to be distributed and the estate to be closed as soon as
possible.
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Moreover, it would render the provisions of Ms. Culp’s will relating to distribution of the
trust assets meaningless. Ms. Culp’s will named Ms. Rich, as trustee, to receive her real
property. Ms. Rich was therefore the beneficiary named in Ms. Culp’s will, and the real
property vested in her immediately upon Ms. Culp’s death. Mr. Culp’s argument on this
point is without merit.
Next, Mr. Culp contends that because all of the beneficiaries reached the age of 30
prior to Ms. Culp’s death, no trust was created, and the real property was not effectively
disposed of by the will. He maintains that the real property should have therefore passed
directly to Ms. Culp’s heirs through intestate succession. See Tenn. Code Ann. § 31-2-
101(b) (“Any part of the estate of a decedent not effectively disposed of by the deceased’s
will passes to the deceased’s heirs [as provided in Section 31-2-104].”). Ms. Culp’s will
directed the trustee to hold the property in trust and distribute one-half of each beneficiary’s
share to them at age 25 and the remainder at age 30. Trust instruments providing for
distribution of assets in this manner are not unusual and, as we have recognized in the past,
reflect the settlor’s intent to convey assets to an individual while protecting the individual
until he or she reaches an age of full maturity. See First Am. Nat’l Bank v. Cole, 364 S.W.2d
875, 878 (Tenn. 1963) (“When any daughter . . . has attained the age of 30 years, she is
usually regarded as having gained the experience and wisdom of full maturity; and this was
doubtless contemplated by the testatrix; for she directed each daughter’s share to be paid to
her, one-half when she was 25, and the other half when she became 30 years of age.”); see
also Lewis v. Bowers, 392 S.W.2d 819, 822 (Tenn. 1965) (holding that the purpose of a trust
for “protection of my said children two of them being of tender years” was intended to
protect the testator’s children “during their years of inexperience and immaturity”). As Mr.
Culp points out, each of the beneficiaries reached the age of 30 prior to the time the trust took
effect. The fact that the trust’s purpose was accomplished prior to the time the trust took
effect does not, however, mean that the property should have passed to Ms. Culp’s intestate
heirs. Applying that interpretation of the will would result in Ms. Culp’s two children, Mr.
Culp and Ms. Hope, taking equal shares of the real property to the exclusion of the other
named beneficiaries. See Tenn. Code Ann. § 31-2-104(b)(1). Such an outcome would defeat
the clear intent expressed in Ms. Culp’s will to include all of the named beneficiaries in the
division of her real property.
The language used in Ms. Culp’s will is, in our view, straightforward and reflects Ms.
Culp’s clear intent to leave any and all property she owned at the time of her death, other
than tangible personal property, to Ms. Rich, as trustee, in trust for the benefit of the named
beneficiaries until they reached the age of 30. By providing in her will for property to be
transferred to an individual as trustee, Ms. Culp effectively created a trust that came into
being immediately at her death. See Tenn. Code Ann. § 35-15-401(1) (“A trust may be
created by . . . [t]he transfer of property to another person as trustee during the settlor’s
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lifetime or by will or other disposition taking effect upon the settlor’s death.”).5 The real
property Ms. Culp owned at the time of her death was therefore transferred to the trust. The
fact that each of the beneficiaries turned 30 prior to the time the trust took effect did not
render the trust nonexistent; rather, it meant only that the trust’s purpose had been
accomplished. Once a trust’s purpose has been accomplished, the trust terminates. See
Tenn. Code Ann. § 35-15-410 (“[A] trust terminates to the extent . . . no purpose of the trust
remains to be achieved[.]”); see also Atkins v. Marks, 288 S.W.3d 356, 369 (Tenn. Ct. App.
2008) (“[W]here the primary purpose of the trust is to protect named beneficiaries who have
not yet reached a specified age and where, at the time the will takes effect, they have reached
that age, the trust ceases because its purposes have been accomplished.”). However, the
power of the trustee does not end immediately upon termination of a trust. After a trust is
terminated, the trustee’s power continues as appropriate to complete his or her duties in
winding up administration of the trust and distributing the trust’s assets in a manner
consistent with the trust’s terms and the interests of the beneficiaries. Tenn. Code Ann. § 35-
15-816(b)(26); see also RESTATEMENT (SECOND) OF TRUSTS § 344 (1959) (“The powers and
duties of the trustee in the winding up of the trust are similar to the powers and duties of the
trustee in administering the trust[.]”).
Several methods are available to a trustee tasked with distributing real property to
multiple beneficiaries. The trustee may distribute the property by (1) transferring the
property to the beneficiaries as tenants in common, (2) dividing the property into several
parts and transferring the parts in kind to each of the several beneficiaries, or (3) selling the
property and dividing the proceeds among the beneficiaries. See RESTATEMENT (THIRD) OF
TRUSTS § 89 cmt. e(2). The proper method of distribution depends on the terms of the trust.
Except to the extent that it is limited by the terms of the trust, a trustee may exercise all
power over trust property that an unmarried, competent owner would have over individually
owned property. Tenn. Code Ann. § 35-15-815(2)(A). The trustee therefore has broad
discretion in choosing a method of distribution that is fair and reasonable under the
circumstances unless the terms of the trust specify otherwise. In this case, Ms. Culp’s will
did not impose any such limitation on Ms. Rich’s discretion in choosing a method of
distributing the trust assets. In fact, by incorporating the powers set forth in Tennessee Code
Annotated section 35-50-110, Ms. Culp’s will expressly authorized Ms. Rich to sell the
5
In 2004, the Tennessee General Assembly adopted a comprehensive code to govern trusts–the Tennessee
Uniform Trust Code. Tenn. Code Ann. §§ 35-15-101 to 35-15-1206 (2015). The Tennessee Uniform Trust
Code applies to all trusts created before, on, or after July 1, 2004, Tenn. Code Ann. § 35-15-1103(a)(1), and all
judicial proceedings concerning trusts commenced on or after July 1, 2004. Tenn. Code Ann. § 35-15-
1103(a)(2). The Tennessee common law of trusts and principals of equity continue to supplement the
Tennessee Uniform Trust Code. Tenn. Code Ann. § 35-15-106(a).
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property if, in her best judgment, doing so would be in the best interests of the beneficiaries.6
We therefore agree with the trial court that Ms. Rich was authorized as trustee to sell the real
property without first seeking judicial authorization. Moreover, even if Ms. Culp’s will had
restricted Ms. Rich’s authority to sell the real property, a trial court can modify the terms of a
trust if it finds that continuation of the trust on its existing terms would be impractical or
wasteful. Tenn. Code Ann. § 35-15-412(b). Here, based on the evidence presented at the
May 5, 2014 hearing, the trial court found that converting the estate’s property into cash was
necessary to prevent waste and protect the value of the estate. Mr. Culp has filed no
transcript or statement of the evidence from which we can determine whether the evidence
preponderates for or against the trial court’s findings. In the absence of a transcript or
statement of the evidence, we must conclusively presume that the trial court’s findings are
supported by the evidence and are correct. In re M.L.D., 182 S.W.3d 890, 894-95 (Tenn. Ct.
App. 2005) (noting that appellants have the burden to demonstrate on appeal that the
evidence preponderates against the judgment of the trial court). Thus, even if the trust had
not allowed distribution by selling the trust assets and dividing the proceeds, Ms. Rich had
judicial authorization to do so in light of the trial court’s findings.
Ms. Rich contends that this Court should award her damages because this appeal is
frivolous. Tennessee Code Annotated section 27-1-122 (2000) empowers appellate courts to
award damages against parties whose appeals are frivolous or brought solely for delay.
Imposing a penalty for a frivolous appeal is a remedy that is to be used only in obvious cases
of frivolity and should not be asserted lightly or granted unless it is clearly applicable, which
is rare. Henderson v. SAIA, Inc., 318 S.W.3d 328, 342 (Tenn. 2010). Although we have not
decided the issues before us in Mr. Culp’s favor, we are not persuaded that this appeal is
frivolous or taken solely for delay. We therefore decline to impose such a penalty in this
case.
6
In pertinent part, Tennessee Code Annotated section 35-50-110 provides:
Without diminution or restriction of the powers vested in the fiduciary by law, or elsewhere in
the instrument, and subject to all other provisions of the instrument, the fiduciary, without the
necessity of procuring any judicial authorization, or approval, shall be vested with, and in the
application of the fiduciary’s best judgment and discretion in behalf of the beneficiaries of the
instrument shall be authorized to exercise, the powers specifically enumerated in this section:
...
(6) By public or private sale or sales, and for the consideration, on the terms and subject to the
conditions, if any, that in the judgment of the fiduciary are for the best interests of the estate
and the beneficiaries of the estate, to sell, assign, transfer, convey, or exchange any real or
personal property of the estate. . . ;
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IV. CONCLUSION
For the foregoing reasons, we affirm the judgment of the trial court and remand this
case for such further proceedings as may be necessary and are consistent with this Opinion.
The costs of this appeal are taxed against the Appellant, Donnie J. Culp, and his surety, for
which execution may issue if necessary.
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ARNOLD B. GOLDIN, JUDGE
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