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In re Conservatorship of Didier

IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA


June 30, 2010

CONSERVATORSHIP OF EVELYN E. DIDIER, A PERSON ALLEGED TO NEED PROTECTION.

APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA HONORABLE JANINE KERN Judge.

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

CONSIDERED ON BRIEFS ON MAY 24, 2010

[¶1.] Great Western Bank (Conservator) moved to declare itself the sole trustee of the Evelyn E. Didier Living Trust (Evelyn Trust) and the successor co-trustee of the Nicholas L. Didier Living Trust (Nicholas Trust) in place of Evelyn E. Didier, a protected person. Barbara Didier-Stager (Barbara), Evelyn's daughter and a beneficiary of the trusts, objected. Barbara argued that the Guardianship and Conservatorship Act (SDCL ch 29A-5) does not authorize a conservator to replace a protected person as trustee when the successor-trustee clause of the trust provides for a different successor trustee upon the protected person's inability to act. The circuit court disagreed, authorizing the Conservator to exercise the power of the trustee "in the place and stead of Evelyn" in both trusts. Barbara appeals. We affirm in part, reverse in part, and remand.

[¶2.] Before this trustee dispute, James Didier petitioned for the appointment of a conservator for Evelyn E. Didier's estate and financial affairs. Evelyn was eighty-three years old at the time. There is no dispute that she suffered from memory deficiencies, intermittent confusion, and impaired judgment. The circuit court noted that all parties, including Evelyn, consented or otherwise agreed that she was impaired and lacked the capacity to properly manage her property and financial affairs without assistance or protection of a conservator. Further, financial disputes affecting the trusts had developed between her beneficiary children James and Barbara. The court found that the appointment of a conservator was also necessary to protect Evelyn from neglect, exploitation, and abuse. The court appointed Great Western Bank as Conservator. This trustee dispute developed when the Conservator subsequently moved to act in the place of Evelyn in the trusts.

[¶3.] The Evelyn Trust is a revocable living trust that was last restated in 2008. Evelyn is the trustor, and before this action, she was the sole trustee. The trust has a successor-trustee clause, which provides:

During the Grantor's life, if EVELYN E. DIDIER, is unwilling or unable to serve as Trustee, then [BARBARA] and [JAMES DIDIER] shall act as successor Co-Trustees. If either [BARBARA] or [JAMES DIDIER] is unwilling or unable to serve as Co-Trustees, then the other may serve alone.

Another clause in the trust authorizes Evelyn to change the trustee at any time.*fn1

The beneficiaries of the trust are Evelyn, Barbara, and James.

[¶4.] The Nicholas Trust was created in 1993. Nicholas, who is now deceased, was Evelyn's husband, and Barbara and James's father. Nicholas was the trustor, and before this action, Barbara and Evelyn were co-trustees. The Nicholas Trust has a successor-trustee clause, which provides:

Nicholas [ ] is appointed to serve as Trustee. If the Trustee ceases or is unable to act, [Evelyn] and daughter [Barbara] shall be successor Co-Trustees. In the event of the death or other inability to act as Co-Trustee of either [Evelyn] or [Barbara], then my daughter-in-law, Kathy M. Didier, shall act with the remaining Co-Trustee. In the event of the death or other inability to act as Co-Trustee of both [Evelyn] and [Barbara], then Norwest Bank... shall act as sole Trustee.

The beneficiaries of the trust are Evelyn, James, and Barbara.

[¶5.] There is no dispute that Evelyn is incompetent and the successor-trustee clauses make specific provision for successor trustees other than Evelyn's Conservator upon her inability to act. Nevertheless, the circuit court concluded that SDCL 29A-5-420(3) authorized Evelyn's Conservator to act as the sole trustee of the Evelyn Trust and co-trustee of the Nicholas Trust in the place and stead of Evelyn.*fn2 Barbara argues that the circuit court erred because SDCL 29A-5-420(3) does not authorize conservators to replace trustees in trusts containing successor-trustee clauses that provide for different successor trustees upon the existing trustee's inability to act.

[¶6.] This issue involves statutory construction. Our standard of review and rules of statutory construction are settled:

Questions of law such as statutory interpretation are reviewed by the Court de novo.... The purpose of statutory construction is to discover the true intention of the law which is to be ascertained primarily from the language expressed in the statute. The intent of a statute is determined from what the legislature said, rather than what the courts think it should have said, and the [C]ourt must confine itself to the language used. Words and phrases in a statute must be given their plain meaning and effect. When the language in a statute is clear, certain and unambiguous, there is no reason for construction, and the Court's only function is to declare the meaning of the statute as clearly expressed.

City of Deadwood v. M.R. Gustafson Family Trust, 2010 SD 5, ¶ 6, 777 NW2d 628, 631 (citation omitted).

[¶7.] The relevant portion of South Dakota's Guardianship and Conservatorship Act provides:

Upon petition therefor, the court may authorize a conservator to exercise any of the powers over the estate or financial affairs of a protected person which the protected person could have exercised if present and not under conservatorship, including the powers:

...

(3) To amend or revoke trusts, or to create or make additions to revocable or irrevocable trusts, even though such trusts may extend beyond the life of the protected person;

...

The court, in authorizing the conservator to exercise any of the above powers, shall primarily consider the decision which the protected person would have made, to the extent that the decision can be ascertained.

SDCL 29A-5-420 (emphasis added).

Application to the Evelyn Trust

[¶8.] The circuit court concluded that SDCL 29A-5-420(3) authorized the Conservator to exercise authority as the sole trustee in place of Evelyn. Barbara, however, points out that the Conservator's replacement of Evelyn as trustee conflicted with the successor-trustee clause of the trust. Barbara also points out that even though SDCL 29A-5-420(3) authorizes conservators to amend trusts (which would include amendment of a successor-trustee clause), a conservator may only exercise powers over "the estate or financial affairs" of a protected person that the protected person "could have exercised if... not under conservatorship." See id. Barbara argues that Evelyn's trustee estate and financial affairs before her conservatorship did not involve or include the power to amend the successor-trustee clause. Therefore, Barbara contends that Evelyn -- and the Conservator and court -- had no power to effectively amend the successor-trustee clause by appointing a replacement trustee other than the one designated in that clause. We agree.

[¶9.] Barbara correctly notes that the Conservator was only proposing to act in Evelyn's capacity as a trustee. And, in her capacity as a trustee, Evelyn never possessed any pre-conservatorship power to amend the successor-trustee provision of her trust. "A trustee must fulfill the purposes of the trust as declared at its creation, or as subsequently amended, and must follow all the directions of the trustor given at that time, except as modified by the consent of all parties interested, and upon approval by the court." SDCL 55-3-5. Therefore, when acting in her capacity as a trustee, Evelyn had no pre-conservatorship power to amend the successor clause. And, because SDCL 29A-5-420(3)'s trust amendment authority is limited to powers the protected person could have exercised before the conservatorship, the statute conferred no authority to effectively amend the successor-trustee clause after the conservatorship. We conclude that the statute did not authorize the Conservator and court, when acting for the benefit of Evelyn's estate and financial affairs as trustee, to effectively amend the successor-trustee clause by authorizing a successor trustee other than the one designated in that clause.*fn3

[¶10.] Evelyn, however, was also the trustor of the Evelyn Trust, and Barbara concedes that Evelyn, in her capacity as trustor, had express power to amend the trust before her incapacity. That pre-conservatorship power included the power to change the successor-trustee clause. Because Evelyn had the power to amend the successor clause before her conservatorship, SDCL 29A-5-420(3) authorized the Conservator and the court, when acting for the benefit of the estate and financial affairs of Evelyn in her capacity as trustor, to amend the successor-trustee clause making the Conservator the successor trustee.

[¶11.] Barbara acknowledges Evelyn's trust powers as trustor, but points out that under SDCL 55-3-24,*fn4 all beneficiaries must consent to an amendment, and she does not consent. Assuming for the sake of argument that SDCL 55-3-24 is not preempted by SDCL 29A-5-420(3) in this type of case, the former statute only provides that irrevocable trusts may not be amended or revoked without the consent of all beneficiaries. Because the Evelyn Trust is revocable, SDCL 55-3-24 is inapplicable, and Barbara's consent as a beneficiary was not necessary. See also Restatement (Third) of Trusts § 74(1)(b) (2007) (discussing revocable trusts and noting that "[t]he rights of the beneficiaries are exercisable by and subject to the control of the settlor [trustor]").*fn5

[¶12.] We conclude that Evelyn's pre-conservatorship estate and financial affairs as trustor included the power to amend the successor-trustee clause.*fn6

Therefore, notwithstanding that clause, SDCL 29A-5-420(3) authorized the Conservator to effectively amend the successor-trustee clause by replacing Evelyn as the trustee.*fn7

Application to the Nicholas Trust

[¶13.] The circuit court also concluded that SDCL 29A-5-420(3) authorized the Conservator to replace Evelyn and exercise authority as co-trustee (with Barbara) in the Nicholas Trust. Barbara, however, notes that unlike the Evelyn Trust, Evelyn is not a trustor of the Nicholas Trust. Therefore, Barbara reasserts that Evelyn's powers relating to her estate and financial affairs as trustee did not include the power to amend the successor-trustee clause. And, for that reason, Barbara again contends that SDCL 29A-5-420(3) did not authorize the circuit court to appoint a successor trustee other than the person named in the successor-trustee provision of the trust.

We agree for the reasons previously discussed.*fn8

[¶14.] Conservator, however, argues that the list of powers in SDCL 29A-5-420 is not exclusive, noting that the statute uses the word "including" in referencing enumerated powers. See SDCL 29A-5-420. Conservator argues that the non-enumerated powers include the implied power to step into Evelyn's shoes and exercise her trustee powers. Conservator did not, however, simply seek to step into Evelyn's shoes to make a trustee decision for Evelyn. Conservator moved to declare itself the "successor" trustee "in place of Evelyn" notwithstanding a conflicting successor-trustee clause. Therefore, the pre-conservatorship power to amend the trust was necessary. But, as discussed above, Evelyn's pre-conservatorship estate and financial interests as a trustee did not include the express or implied power to amend the trust.

Conclusion

[¶15.] Regarding the Evelyn Trust, we affirm the circuit court's order authorizing Conservator to exercise authority as the sole trustee in place of Evelyn. We do so because Evelyn was the trustor whose estate and financial interests included the power to amend the successor-trustee clause. As to the Nicholas Trust, we reverse the circuit court's order authorizing the Conservator to become the successor co-trustee. We reverse because there was a conflicting successor-trustee clause, and Evelyn's estate and financial interests as a trustee did not include the power to amend that clause. This matter is remanded for further proceedings consistent with this opinion.

[¶16.] GILBERTSON, Chief Justice, and KONENKAMP, MEIERHENRY, and SEVERSON, Justices, concur.


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