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Brandon A. Purcella and Millicent Julynn Jones, Trustees of the v. Cynthia R. Purcella

August 26, 2011

BRANDON A. PURCELLA AND MILLICENT JULYNN JONES, TRUSTEES OF THE PURCELLA MARITAL TRUST, APPELLANTS (PLAINTIFFS),
v.
CYNTHIA R. PURCELLA, INDIVIDUALLY AND AS TRUSTEE OF THE PURCELLA MARITAL TRUST, APPELLEE (DEFENDANT).



Appeal from the District Court of Sheridan County The Honorable John G. Fenn, Judge

The opinion of the court was delivered by: Kite, Chief Justice.

Before KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.

NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made before final publication in the permanent volume.

[¶1] Burt A. Purcella established a trust into which he transferred his assets, including his fifty percent ownership in a self storage business. He acted as trustee but named his wife, Cynthia Purcella (Wife), and his adult children from a prior marriage, Brandon Purcella and Millicent Julynn Jones (Children), as successor trustees. Upon Mr. Purcella's death, the successor trustees were to divide the remaining trust assets between two separate trusts, the Purcella Family Trust (Family Trust) and the Purcella Marital Trust (Marital Trust). Wife is the income beneficiary of the Marital Trust. Children are the beneficiaries of the Family Trust and remainder beneficiaries of the Marital Trust.

[¶2] After Mr. Purcella's death, differences arose between Wife and Children. They entered into an agreement to resolve those differences. Problems continued and Children filed an action against Wife, claiming she breached her fiduciary obligations as trustee by depositing funds the Marital Trust received from the business into her personal account.

[¶3] Both parties moved for summary judgment and, after a hearing, the district court entered summary judgment enjoining Wife from depositing funds from the business into her personal account, holding her responsible for any tax consequences or expenses resulting from the deposit and finding the parties had agreed that 87.05% of "all income" received from the business would be allocated to the Marital Trust and distributed to Wife.

[¶4] Children appeal, claiming the intent of the initial trust and their subsequent agreement was that only "net income," rather than "all income," received from the business would be distributed to Wife from the Marital Trust. We reverse the district court's holding that Wife is entitled to "all income" the Marital Trust receives from the business. We hold that Wife is entitled to payment of income the Marital Trust receives from the business less any expenses incurred in administering the Marital Trust.

ISSUE

[¶5] The issue for our determination is whether the district court correctly held that Wife was entitled to distribution of "all income" the Marital Trust received from the business.

FACTS

[¶6] In 2005, Burt A. Purcella established the Purcella Family Trust. He acted as trustee and transferred substantial assets to the trust, including one-half of the stock in a self storage business, Stor-A-Way, Inc, which he owned with another individual. Mr. Purcella provided in the trust that upon his death certain personal property was to be distributed according to written instructions and his remaining assets were to be divided between two separate trusts, the Family Trust and the Marital Trust. Mr. Purcella named Children as beneficiaries of the Family Trust. He named Wife as income beneficiary of the Marital Trust and Children as remainder beneficiaries. Part III, Section IV, paragraph B of the original trust provided:

1. (a) If Settlor's wife survives Settlor . . . the Trustee shall, as of the date of Settlor's death, allocate to [the Marital Trust] . . . an amount equal to the maximum marital deduction allowable to Settlor's estate as finally determined for federal estate tax purposes, less the value so determined of all other property interests passing to Settlor's surviving wife which are includible in Settlor's gross estate for federal estate tax purposes and which qualify for such marital deduction; and less such further amount, if any, required to increase Settlor's taxable estate to the largest amount that will result in no federal estate tax payable to Settlor's estate, after taking into account all allowable credits and all property passing in a manner resulting in a reduction of the federal estate tax unified credit available to Settlor's estate. In satisfaction of the above bequest to Settlor's wife there shall be first distributed the personal property of Settlor's estate and such real estate, including partnership interests in real property [other than farms]. The remaining amount, if any, of this devise shall be satisfied by the distribution of real property, including tracts of real estate or fractional interests in real estate, or partnership interests in real property, not otherwise passing to Settlor's wife as shall be selected in the sole discretion of Settlor's personal representative.

(c) The Trustee shall allocate the balance of the trust property . . . to [the Family Trust].

2. (a) After dividing the trust estate as hereinabove provided, the Trustee shall pay to Settlor's wife, in at least quarterly or other convenient installments, all of the net income from the [Marital Trust] during her lifetime. If at any time, Settlor's spouse should for any reason be in need of funds for her health, maintenance and support, the Trustee may pay to her or apply for her benefit, in addition to the payments hereinabove provided for her, such amounts from the principal of the [Marital Trust], up to the whole thereof, as the Trustee may from time to time deem necessary for her health, maintenance, support and benefit. Upon the death of Settlor's wife after Settlor's death, the [T]rustee shall distribute any accrued or undistributed income of the [Marital Trust] to the estate of Settlor's wife and shall add the principal of the [Marital Trust], as then constituted, to the [Family Trust] to be held and distributed as if it had been an original part of the [Family Trust]; except that the [T]rustee ...


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