County: King. Docket No(s): 94-2-17022-8-SEA. Judgment or other matter being reviewed: Final judgments. Judge signing: Michael J. Fox. Date entered: 1/10/96.
Written by: Kennedy, Acj. Concurred in by: Agid, J.; Grosse, J.
The opinion of the court was delivered by: Kennedy
KENNEDY, A.C.J. -- Wilma Boyden, individually and as personal representative of the estate of Wilma Cooley, appeals the trial court's order on summary judgment enforcing the 1967 agreement to devise executed by Mrs. Cooley and her husband Percy Cooley. Ms. Boyden contends that the trial court erred in concluding that by executing the 1988 will which devised her estate in a manner other than that contemplated by the 1967 agreement, Mrs. Cooley breached the agreement thus entitling Dolores Todd and Constance Hedlund, who were beneficiaries of that agreement, to specific performance. Ms. Todd and Ms. Hedlund cross-appeal, contending that the court erred in concluding that they were not entitled to one-half of the inter vivos cash gifts made by Mrs. Cooley to Ms. Boyden in the three years preceding Mrs. Cooley's death. Because the inter vivos trust executed by the Cooleys' in conjunction with the 1967 agreement granted Mrs. Cooley the right to revoke the trust with respect to her share, she did not breach the agreement by making the 1988 will. Neither did she breach the agreement by making inter vivos cash gifts during her lifetime. We thus reverse in part and affirm in part.
Wilma and Percy Cooley were married in 1935. They had one daughter together, the appellant/cross-respondent Wilma Boyden. In addition, Percy had two daughters from a previous marriage, the respondents/cross-appellants Dolores Todd and Constance Hedlund.
On February 13, 1967, the Cooleys executed three documents pertaining to the administration and distribution of their estates. The first was entitled "Agreement as to Distribution of the Estate of Percy P. Cooley and Wilma R. Cooley." The agreement was based on the Cooleys' desire for "a determination of how their estates should pass to their children and step-children." Clerk's Papers at 38. Its express purpose was "to avoid any problems and/or confusion that may arise in the distribution of the estates of the parties based on the fortuitous circumstance of which party would be the first to pass away and which party would be the survivor." Clerk's Papers at 38. In consideration of the mutual promises contained in the agreement, the Cooleys agreed that their property would pass, when both were deceased, one-quarter to Dolores Todd, one-quarter to Constance Hedlund, and one-half to Wilma Boyden. The agreement provided, however, that the manner in which the parties' property would pass was specifically set forth in their wills and in an inter vivos trust executed the same day. The Cooleys each agreed "not to change the method of distribution to Constance Hedlund, Dolores Todd and Wilma Boyden set forth in those documents without the written consent of the other." Clerk's Papers at 38.
The second document executed by the Cooleys on February 13, 1967, was an inter vivos trust. The trust was revocable until the death of either Percy or Wilma Cooley. Upon the death of the first to die, the trust was to be divided into two equal shares: the decedent's trust, which became irrevocable, and the survivor's trust, which remained revocable by the surviving spouse. Article V of the trust, governing amendment and revocation, provided:
While both Trustors are living, either Trustor shall have the right, without the consent or participation of the Trustees or of any beneficiary of this trust, or of the other Trustor, to revoke, amend or modify this trust, in whole or in part, as to that Trustor's community interest placed in trust and any separate property placed in the trust by that Trustor, by instrument in writing, signed and delivered to the Trustees at least 30 days prior to the effective date of revocation. The surviving Trustor shall have the right to revoke, amend or modify the surviving trustor's trust in like manner. Upon any such revocation as provided herein, in whole or in part, the Trustees shall have ninety days after the effective date of revocation within which to transfer the assets of this trust, provided that the Trustees at their option may transfer within a shorter period.
Clerk's Papers at 167 (emphasis ours).
Although the decedent's trust and the survivor's trust were to be equally funded, the surviving spouse was granted "the sole and exclusive right to select what particular assets shall pass to each trust". Clerk's Papers at 161. Article I-C(1)(b) of the inter-vivos trust granted the surviving spouse the right to withdraw all or any part of the survivor's trust:
At any time the surviving Trustor is not incapacitated, he shall have the right to withdraw all or such part of his above designated trust as he may request in writing. The Trustees, after the receipt of any such request, shall be allowed a reasonable time to convert assets into cash, and any part thereof not so withdrawn by the surviving Trustor during his life shall remain in and be distributed as an integral part of his trust.
Clerk's Papers at 161. In addition, the surviving spouse was entitled to the income of the decedent's trust as well as a percentage of the principal of the decedent's trust, each year. Upon the surviving spouse's death, Article I-E of the trust provided for the following distribution:
Both of said trusts then remaining shall be distributed by the Trustees as each respective trust shall be appointed as set forth in Article I-C, or, in the event of no appointment, the trusts shall be combined, administered, and distributed as follows:
One-fourth of both trusts to Constance Hedlund, if alive; one-fourth of both trusts to Dolores Todd, if alive; and one-half of both trusts to Wilma Boyden, if alive; each child being referred to as distributees herein.
Clerk's Papers at 163 (emphasis added).
Finally, the Cooleys also executed wills on February 13, 1967. After providing that the parties' personal property would pass first to the surviving spouse and then upon his or her death to Ms. Boyden, the wills stated:
Fourth: All the rest, residue and remainder of my estate I give, devise, bequest, IN TRUST, to the trustees named in that certain trust instrument executed by my husband and me on the 13th day of February, 1967. In the event that that trust is non-existent at the date of my death or is invalid for any reason, then I direct that the rest, residue and remainder of my estate pass as it would have under the provisions of ...