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Stacy v. Stacy

Appeals Court of Massachusetts, Barnstable

November 8, 2019

DEBORAH A. STACY, personal representative, [1]& others [2]
v.
IANAA. STACY. [3]

          Heard: March 1, 2019.

         Petition for probate of a will filed in the Barnstable Division of the Probate and Family Court Department on February 26, 2014.

         A petition to render an inventory and account, filed on April 7, 2016, was heard by Robert A. Scandurra, J., on a statement of agreed facts.

          Complaint in equity filed in the Barnstable Division of the Probate and Family Court Department on July 23, 2015. The case was heard by Robert A. Scandurra, J.

          R. Alan Fryer for the plaintiffs.

          Heidi A. Grinsell for the defendant.

          Present: Green, C.J., Neyman, & Henry, JJ.

          HENRY, J.

         At the heart of these cases is the proper distribution of the assets of the decedent, David E. Stacy, in light of a premarital agreement executed by him and his wife, Iana Stacy (Iana or wife), [4] and the fact that his will did not provide for his wife and expressly excluded his son from a prior marriage. These issues have arisen in the context of two separate cases: (1) a petition brought by the wife against the personal representative of the estate to render an inventory and account (in 18-P-871, which we shall call the inventory action), and (2) an equity action commenced by the personal representative to recover items belonging to the estate that are in the wife's possession (in 18-P-872, which we shall call the estate asset recovery action). Because our de novo review of the premarital agreement differs from that of the Probate and Family Court judge, which in turn impacts the outcome of the decedent's estate plan, we vacate and modify portions of the judgment and decree and remand for further proceedings as necessary.

         Factual background.

         The decedent died on February 12, 2014. He was survived by his wife of approximately six years, Iana, and his minor son from a prior marriage. He was also survived by his biological mother, Elaine Kelley (Elaine); his sister, Deborah Stacy (Deborah); and his adoptive mother, Joan Bentinck-Smith, who adopted the decedent in 1995 when he was thirty-four years old.

         1. The decedent's last will and the David E. Stacy Revocable Trust of 2001.

         The decedent executed his last will on August 19, 2003 (decedent's will), and nominated Deborah as the executor of his will. Subsequently, she was appointed personal representative of his estate. The decedent's will bequeathed all of his property to the trustee of the David E. Stacy Revocable Trust of 2001 (2001 Trust). The decedent expressly omitted from his will his son, a former wife, and his adoptive mother, Bentinck-Smith.

         As amended in 2003, the 2001 Trust named as sole beneficiary the decedent's biological mother, Elaine. The decedent also excluded from the 2001 Trust his son, former wife, and adoptive mother as beneficiaries. The 2001 Trust, as amended, appointed Deborah as trustee.

         The wife is not named as a beneficiary in either the decedent's will or the 2001 Trust, which were both executed prior to their 2008 marriage.

         2. The premarital agreement.

         The decedent and the wife entered into a premarital agreement on July 18, 2008. The parties dispute the interpretation of this agreement. However, it is undisputed that the premarital agreement enumerated the parties' separate property owned by each of them at the time of the marriage.[5] The decedent included in his list of assets something called "Pigeon Trust." Bentinck-Smith created the Pigeon Trust, an irrevocable life insurance trust, naming as "the beneficiaries" only one beneficiary: David E. Stacy, the decedent. Article VI of the Pigeon Trust, identifying the decedent as the beneficiary, did not expressly identify the decedent's estate as a beneficiary should he predecease the donor, although other provisions did identify the decedent's estate. The decedent's list of assets in the premarital agreement described the Pigeon Trust, (a) identifying himself as the beneficiary, (b) identifying the successor beneficiary as "___," (c) stating the principal value of this asset as of July 14, 2008, and (d) noting there would be no distribution of trust principal until the death of the donor, who was his adoptive mother, Bentinck-Smith.[6]

         As already stated, Bentinck-Smith survived the decedent. The surrender value of the life insurance policy held by the Pigeon Trust as of December 5, 2016, was $1, 648, 879.45.

         We reserve recitation of additional terms of the premarital agreement and the Pigeon Trust for discussion below.

         Procedural background.

         The largest asset in dispute is the Pigeon Trust. Thus, before turning to the two lawsuits on appeal, we first address an earlier action that the personal representative filed concerning disposition of the Pigeon Trust.

         1. Litigation regarding the Pigeon Trust.

         In May 2015, Deborah, as personal representative of the decedent's estate, filed a petition to terminate the Pigeon Trust early. Later, the trustees of the Pigeon Trust (Pigeon trustees) filed a petition for instructions as to whether the rightful beneficiary of the trust was the decedent's estate or the decedent's descendant.[7] The court consolidated these two petitions. After mediation, Deborah, individually and in her dual capacities as personal representative of the decedent's estate and as trustee of the 2001 Trust; the Pigeon trustees; a guardian ad litem for Bentinck-Smith; and a guardian ad litem for the decedent's son eventually came to a "Non-Judicial Settlement Agreement" (settlement agreement). This settlement agreement essentially called for dividing the trust res in half, minus fees, and distributing one half to a trust for the son's benefit, and the other half to Deborah, as trustee of the 2001 Trust, the remainder beneficiary of the decedent's will.

         The wife objected to only so much of the settlement agreement as called for distribution of Pigeon Trust principal to Deborah as trustee of the 2001 Trust, rather than to Deborah as personal representative of the decedent's estate. The judge approved the settlement agreement, reserving, with Deborah and the wife's agreement, the question whether the Pigeon Trust distribution to Deborah should be in her capacity as personal representative of the decedent's estate or in her capacity as trustee of the 2001 Trust. This question was to be resolved in the inventory action.

         2. Estate asset recovery action.

         On July 23, 2015, Deborah, in her capacity as personal representative, filed an equity complaint alleging that the wife had taken from the marital home personal property belonging either to the estate or to Elaine and her husband, David Kelley (David). The amended complaint asserted claims against the wife for constructive trust, conversion, unjust enrichment, and violation of G. L. c. 190B, § 3-709.[8] The complaint also sought a declaratory judgment interpreting the premarital agreement as it related to the wife's interest in the estate's assets and the wife's obligations to return property, as well as the wife's liability for the value of any property taken and all damages caused to the estate. The amended complaint included the decedent's mother, Elaine, and her husband, David, as plaintiffs seeking to recover their property from the wife. The wife also filed a counterclaim asserting that the personal representative committed a breach of her fiduciary duty toward the wife.

         After a trial, the judge deemed the premarital agreement null and void upon the decedent's death and concluded that it "shall have no applicability relative to the estate of David E. Stacy." Additionally, the judge found that the wife possessed certain enumerated pieces of the decedent's personal property worth $76, 875 and additional property of unknown value, and credited the wife's denial that she possessed other items. Per the personal representative's request, the judge ordered that the wife return all of the decedent's property to the personal representative. However, sua sponte, the judge also ordered that if the wife did not return the property, the personal representative could deduct the value of assets in the wife's possession from the wife's share of the estate.

         The judge further found that the personal representative's claims of conversion, unjust enrichment, and violation of G. L. c. 190B, § 3-709, and request for imposition of a constructive trust were based on the assertion that the premarital agreement applied in the event of death and took precedence over the otherwise applicable provisions of G. L. c. 190B, §§ 2-102, 2-301, 2-403 (a.), and 2-404 (a.) . Given his conclusion that the premarital agreement was null and void, the judge concluded that those claims failed. Finally, the judge dismissed the wife's counterclaim, finding that the personal representative had not breached her duty toward the wife. In this matter, all parties appealed.

         3. Inventory action.

         On April 7, 2016, the wife brought a petition to order the personal representative of the estate to render an inventory and account. As noted above, consolidated with this petition was the issue of the capacity in which Deborah would receive the distribution of the Pigeon Trust settlement agreement proceeds: as personal representative of the decedent's estate or as trustee of the 2001 Trust.

         Based on the parties' legal briefs and an agreed statement of facts, to which the Pigeon Trust and its multiple amendments were attached, the judge determined that the Pigeon Trust settlement agreement proceeds should be distributed to the decedent's estate. The judge also allowed the personal representative's account, with the judge's amendments, and concluded that the wife "as surviving spouse is entitled to the first $100, 000 plus one-half of the balance of the decedent's probate estate."[9] The judge further concluded that after the wife received her share, the remainder of the estate assets would pour over into the 2001 Trust. In this matter, the wife and personal representative both appealed.

         Discussion.

         In 2008, the Legislature overhauled the law governing the probate process by adopting nearly the entire Uniform Probate Code (code). See St. 2008, c. 521, §§ 9 and 44, as amended by St. 2011, c. 224, and made effective March 31, 2012; G. L. c. 190B. As relevant here, G. L. c. 190B, § 2-301 (a.), of the code provides that where a surviving spouse married the testator after the testator executed a will, as occurred here, "the surviving spouse is entitled to receive, as an intestate share, no less than the value of the share of the estate the spouse would have received if the testator had died intestate as to that portion of the testator's estate, if any, that neither is devised to a child of the testator who is born before the testator married the surviving spouse and who is not a child of the surviving ...


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