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Keywords

contractplaintiffattorneyestate planningtrustwill
contractplaintifftrialtrustwill

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Reznik v. McKee, 216 Kan. 659, 534 P.2d 243

Facts

H. W. Cardwell and Katherine S. Cardwell executed separate revocable trusts in 1960, which were used as will substitutes for their estate planning. Each trust excluded certain heirs while explaining the omissions by referencing provisions made in the other’s trust. After Katherine's death, H. W. amended his trust, significantly reducing the benefits for their grandchildren, which led to the grandchildren suing to enforce the original provisions made for their benefit.

On August 12, 1960, Mr. and Mrs. Cardwell executed separate instruments denominated the ‘Katherine S. Cardwell Revocable Trust’ and the ‘H. W. Cardwell Revocable Trust’. Their entire combined estate was settled in these two trusts.

Issue

Whether the provisions made for the benefit of the plaintiffs in the H. W. Cardwell Revocable Trust were made pursuant to an agreement or contract that can be enforced as a claim against the estate of H. W. Cardwell.

The underlying question is whether the provisions made for the benefit of the plaintiffs in the H. W. Cardwell Revocable Trust as amended January 17, 1962, later cancelled by an amendment to that trust dated May 31, 1965, after the death of Katherine Cardwell, were made pursuant to an agreement or contract, which can be enforced as a claim against the estate of H. W. Cardwell, deceased.

Rule

The law in Kansas relating to contractual wills applies to inter vivos revocable trusts used as will substitutes, indicating that such trusts may be enforceable as contracts against the estate of the settlor breaching them.

Where inter vivos revocable trusts executed by a husband and wife, making disposition of the major portion of their estates, are effectively used as will substitutes in an overall estate plan, the law in Kansas relating to contractual wills is applicable in determining whether such inter vivos trusts were executed pursuant to a contract, which is enforceable as a claim against the estate of the settlor breaching it.

Analysis

The court found that the execution of the trusts and their amendments, along with the mutual exclusions of heirs, indicated a contractual agreement between the Cardwells. The evidence showed that both parties intended for their grandchildren to inherit, and the unilateral amendment by H. W. Cardwell after Katherine's death constituted a breach of that agreement.

After considering all of the evidence this Court is compelled to find that the provision made by Mr. Cardwell in his revocable trust of August 12, 1960, for the benefit of the plaintiffs herein, as amended in January of 1962, was made pursuant to agreement with Mrs. Cardwell.

Conclusion

The court affirmed in part and reversed in part, holding that the provisions for the grandchildren were enforceable and that H. W. Cardwell had breached the agreement with his wife. The court ruled that attorney fees incurred by the plaintiffs were not chargeable against the decedent's estate.

Judgment affirmed in part and reversed in part.

Who won?

The plaintiffs (grandchildren) prevailed because the court found that the provisions made for their benefit were enforceable as a contractual agreement between the decedent and his wife.

The trial court found that based on the evidence contained in the answers to interrogatories the 1962 amendment amounted to a substantial reduction in the property Mr. Cardwell was providing for the grandchildren.

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