Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions


Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.

 

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Purcella v. Olive Kathryn Purcella Trust (4/18/2014) sp-6894

Purcella v. Olive Kathryn Purcella Trust (4/18/2014) sp-6894

         Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER .  

         Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

         303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

                                                                                        

         corrections@appellate.courts.state.ak.us.  



                    THE SUPREME COURT OF THE STATE OF ALASKA  



OLIVE KATHRYN PURCELLA,                                 )  

                                                        )        Supreme Court No. S-14770  

                            Appellant,                  )  

                                                        )        Superior Court No. 3AN-10-12346 CI  

         v.                                             )  

                                                        )        O P I N I O N  

OLIVE KATHRYN PURCELLA                                  )  

TRUST,                                                  )        No. 6894 - April 18, 2014  

                                                        )  

                            Appellee.                   )  

                                                        )  



                   Appeal from the Superior Court of the State of Alaska, Third  

                                                                 

                   Judicial District, Anchorage, Mark Rindner, Judge.  



                   Appearances:  Ted Stepovich, Law Office of Ted Stepovich,  

                                                                               

                   Anchorage,  for  Appellant.             Jonathon  A.  Katcher,  Pope  &  

                                                                                            

                   Katcher, Anchorage, for Appellee.   



                   Before:  Fabe, Chief Justice, Winfree, Stowers, and Bolger,  

                                                            

                   Justices.  [Maassen, Justice, not participating.]  



                   BOLGER, Justice.  



         I.        INTRODUCTION  



                   Olive Kathryn Purcella (Kathryn) filed a petition in the Anchorage superior  

                                                                   



court to reform or terminate the Olive Kathryn Purcella Trust (the trust).  The superior  



court held, after trial, that Kathryn had not shown by clear and convincing evidence that  

                                                            



she did not intend to execute an irrevocable trust or that the trust was the product of undue  

                 


----------------------- Page 2-----------------------

influence.  It accordingly denied her petition.  Kathryn appeals, arguing that the factual  

                                                                    



findings on which the superior court predicated its ruling were clearly erroneous.  We  

                                                                        



affirm the judgment of the superior court because Kathryn has not established that the key  



factual findings on which the superior court based its conclusion were clearly erroneous.  



II.       FACTS AND PROCEEDINGS  

      



          A.       Facts  



                   Kathryn is the widow of Tony Purcella.  She has five sons: Danny, Rick,  

                                          



Gorden, Steve, and Mark.  



                   Before Tony Purcella's death in 2000, he and Kathryn owned 52% of the  

                                                                                                               



stock in Anchorage Roofing and Contracting, Inc. (Anchorage Roofing), a closely held  

                                                                                                              



family corporation.  Although Kathryn was the devisee of Tony's shares, Rick, acting as  

                                                                                                                   



the  personal  representative  of  Tony's  estate,  transferred  those  shares  back  to  the  



corporation without informing Kathryn or obtaining her consent.  Kathryn sued Rick and  

                              



Anchorage Roofing, claiming breach of fiduciary duties and conversion.  The parties  



submitted their dispute to binding arbitration.  In an April 15, 2008 decision, the arbitrator  



found for Kathryn and ordered Rick, among other things, to pay Kathryn $3,500 per  



month  and  to  quitclaim  certain  real  property  to  her.    A  substantial  portion  of  these  

                                                 



obligations have not been met.  



                    Sometime in 2007, Donna, Steve's wife and Kathryn's daughter-in-law,  



began helping Kathryn pay her bills.  At first, Donna helped Kathryn organize the bills  

                                                        



and mail the checks.  When Kathryn began to have difficulty writing and signing the  

                                                                      



checks because of a hand tremor, however, she set up a joint account with Donna so that  

                                                                                                    



Donna could write and sign the checks herself.  Once the joint account was in place, at  

                                                                                                         



Kathryn's request all of her bills were sent directly to Donna's home.  



                   Donna  testified  that  she  discovered  that  Mark  was  "going  through  vast  



sums" of Kathryn's money; she testified that he spent "about a hundred thousand dollars  

                                               



                                                             -2-                                                       6894
  


----------------------- Page 3-----------------------

in one year."  Mark made "constant, aggressive, and unreasonable demands for money"  



from Kathryn and, later, from Donna.  Witnesses testified that Mark even orchestrated  



elaborate cons to convince Kathryn and Donna to give him money.  



                    At some point in 2008, Bill Ingaldson, Kathryn's attorney in the Anchorage  

                                                                            



Roofing  litigation,  began  discussing  with  Kathryn  the  possibility  of  creating  a  trust.  



Ingaldson testified that the trust came up in the context of a discussion about the money  

                                   



Kathryn was to receive through the Anchorage Roofing arbitration decision, Kathryn's  

                                                     



future medical expenses, and Mark's frequent requests for money.  But it was disputed  

                                                                                                   



whether Ingaldson or Donna first suggested a trust to Kathryn.  The record suggests that  

                                                  



Donna wrote an email to Ingaldson in August 2008, raising similar concerns about Mark  

                         



and about Kathryn's medical care.  There was also testimony that Donna had several one- 

                                                                                               



on-one conversations with Ingaldson about Mark's demands for money.  



                    As a result of his conversations with Kathryn, Ingaldson recommended that  

                                        



she meet with John Colver, who had done estate planning work for Kathryn and Tony in  

                                                                       



the past.  On August 10, 2008, Kathryn, Ingaldson, Donna, and Danny met with Colver.  



The group talked about "the Mark problem extensively."  Colver testified that, during this  



meeting, he "mentioned that probably an irrevocable trust was a good idea," both as a  



means to protect Kathryn from Mark and as a Medicaid planning device.  He also testified  



that he explained to Kathryn what an irrevocable trust was and how the trust would  



operate.  Ingaldson confirmed that the group talked about the "general idea of a trust,  



whether [Kathryn] wanted to set up a trust, what we'd put in the trust, [and] how a trust  

                                                                                                       



would work."  Colver testified that, at the end of the meeting, Kathryn told him that an  

                                                         



irrevocable trust "looked good to her." So, after the meeting, Colver wrote up a draft trust  

                                                                                                   



for Kathryn.  



                    The family met with Colver again in December 2008 to talk about the draft  



trust. Colver testified that, during that meeting, he "went through the express provisions"  

          



                                                             -3-                                                        6894
  


----------------------- Page 4-----------------------

of the trust instrument.  There was testimony that Ingaldson asked Colver questions about  

                                                                           



the draft and helped translate some of its provisions into layman's terms to make sure that  

               



Kathryn  understood their legal effect.  Both Ingaldson and Colver testified that they  



explained  to  Kathryn  that  the  trust  was  irrevocable  and  that  the  trustee  would  have  

                                                                                                                    



complete discretion over the distribution of trust funds.   



                     Kathryn  executed  the  trust  in  February  2009.    Before  she  signed  the  

                                                         



instrument, she met privately with Colver.  Colver testified that he explained to Kathryn  

                                                                                                  



at that meeting that "when you put all your money into this irrevocable trust, you can't  

                                



get it back.  It's gone."  He asked her whether she "really want[ed] to" create a trust and  

                                      



told  her  that  she  was  not  obligated  to  sign  the  trust  instrument.    According  to  his  

                             



testimony, Kathryn confirmed that she wanted to create an irrevocable trust and signed  

                                                                                            



the document.  



                     Colver testified that Kathryn "listened intently" during all of these meetings  

                                                                                                             



and that she confirmed many times that she understood what an irrevocable trust is and  

                                               



that she wanted to create one.  Ingaldson, Donna, and Danny all agreed that Kathryn  



actively  participated  in  the  trust  discussions  and  spoke  up  when  she  had  questions.  

                                                                               



                     However,  Kathryn  testified  at  trial  that  she  never  intended  to  put  her  

                                                                                                                           



property into a trust and that she did not know what an irrevocable trust was at the time  

                                                                                                        



the trust instrument was drafted.  She testified that, had she known that once she put her  

                                                                                                                      



property in the trust she could not get it back, she would never have executed the trust.  



                     The trust instrument states explicitly that the trust is irrevocable.  Consistent  

                                                                                    



with Colver's recommendations, the trust appoints Donna trustee and provides that "[t]he  



Trustee shall manage [the trust] for the use and benefit of [Kathryn,] as primary lifetime  

                                                                                                          



Beneficiary of the trust."  The trustee has "sole and absolute discretion" over the amount  

                                         



and frequency of payments to Kathryn.  



                                                                 -4-                                                          6894
  


----------------------- Page 5-----------------------

                    Upon Kathryn's death, the remaining principal is to be distributed to Danny,  

                                                                                             



Steve,  and  Mark.    The  trust  provides  for  no  distribution  to  Rick  or  Gorden.    This  

                                                                                           



arrangement is consistent with a will Kathryn  drafted in 2002, which provided for a  

                                                                        



similar distribution of property.  



                    During her tenure as trustee, Donna had some conflicts with Kathryn over  

                                                                                 



the administration of the trust.  For example, although Donna paid many of Kathryn's cell  

                                                                                                           



phone bills, there was one bill that she failed to pay.  Donna testified that Mark, who was  

                                                                              



on the same cell phone account, continuously accrued large charges on the account, and  



that she discussed this problem with Kathryn every month.  Donna tried to decrease the  

                                                                                           



charges by changing to a different phone plan, but the bills continued to run into the  

                                                                                                                 



hundreds of dollars.  The last bill, which Donna refused to pay, cost, according to her  



testimony, between $500 and $800.  



                    Kathryn also frequently asked Donna for money while Donna was trustee.  

                                         



Donna  testified  that  Kathryn  always  wanted  money  for  Mark;  she  never  wanted  for  



money for herself.  Each time Kathryn requested money, Donna would explain that there  



were  not  enough  funds  in  the  trust  to  both  satisfy  the  request  and  meet  Kathryn's  



outstanding expenses.  Donna testified that, whenever she had these conversations with  

                                                           



Kathryn, they would discuss Donna's role as trustee.  



                    Meanwhile,  because  of  the  Anchorage  Roofing  litigation,  Kathryn  was  



estranged from Rick and his wife Kathy at the beginning of 2010.  However, in the spring  



of that year, Rick and Kathy started to invite Kathryn to lunch.   During the summer,  

                                                                                                    



Kathryn spent time on the Kenai River with Rick and his family and, in August, Kathryn  

                                                                                     



moved  in  with  Rick  and  Kathy.    There  was  testimony  that  Kathryn's  other  family  



members had trouble contacting Kathryn after the move.  Ingaldson testified that he tried  

                                                                                      



to  reach  Kathryn  in  2010  to  discuss  the  dispute  over  her  trust,  but  was  told  by  Ted  

               



Stepovich, Kathryn's attorney in this lawsuit, that Kathryn did not want to speak with  

                                                                                                      



                                                               -5-                                                         6894
  


----------------------- Page 6-----------------------

him.  However, Rick's wife Kathy denied that she had isolated Kathryn from the rest of  

                         



her family.  Kathryn testified on cross-examination that she was not aware that Donna,  

                                                                                      



Danny, and Steve had tried to contact her, and said that if she had known they wanted to  

                                                                                                              



spend time with her, she would have seen them.  



                    Starting in June 2010, Kathryn began making demands for a copy of the  

                                                                     



trust  from  Donna  and  Colver.    Although  Donna  allowed  Kathryn  to  read  the  trust  



instrument, she would not give Kathryn a copy of the instrument or allow her to take the  

                                                                                                               



original home.  Donna testified that she thought Mark was pressuring Kathryn to get a  

                                                                                          



copy of the instrument, and she was afraid of what Mark would do if he obtained a copy  

                                                                                                        



of the trust.  



                    On July 26, 2010, Danny, Donna, and Kathryn went to Colver's office to  

                                                                                                     



address Kathryn's concerns about the trust.  When Colver spoke with Kathryn alone, she  

                                                                                       



told  him  that  she  was  upset  because  Donna  had  not  paid  some  bills.    On  Colver's  



suggestion, Kathryn asked Donna to resign, and Danny succeeded her as trustee.  Colver  



agreed that Kathryn did not indicate at that time that she felt "she had been hoodwinked  

                                                                                            



into signing an irrevocable trust that she never understood."  



          B.        Proceedings  



                    On November 23, 2010, Kathryn filed a petition to terminate or reform the  

                                                          



trust in the Anchorage superior court.  She argued that the trust should be reformed "to  

                                                                             



conform to her intentions due to a mistake of fact or law in the expression of the trust  

                                                                                        



and/or inducement to create the trust."  She alleged that "[i]t was not anticipated by Mrs.  

                              



Purcella that the circumstance would arise where she would have no control as to when  

                                                                 



or  if  her  bills  would  be  paid,  or  when  or  how  her  money  was  to  be  spent"  and  that  



"[m]isrepresentations were made by Donna Purcella, Danny Purcella, and Michael Steven  



                                                               -6-                                                         6894
  


----------------------- Page 7-----------------------

                                                                                                              

Purcella  to  Mrs.  Purcella  in  regard  to  the  nature  and  purpose  of  the  documents  she  

signed."1  



                                                                                                                                

                     Kathryn's petition was tried without a jury in May and August 2011.  On  



                                                                                                                   

September 22, 2011, the court issued a decision denying Kathryn's petition.  It found that  



                                                                                                   

Kathryn had not shown by clear and convincing evidence that she "made mistakes in  



                                                    

establishing  the  Trust"  or  "had  an  intention  which  was  contrary  to  that  which  she  



manifested  in  the  Trust  documents."    The  court  also  concluded  that  Kathryn  had  



"presented no evidence to support a claim of undue influence."  



                     Kathryn appeals.  



III.      STANDARD OF REVIEW  

                     We review the superior court's findings of fact for clear error.2  

                                                                                                                      "Findings  



                                         

are clearly erroneous if a review of the entire record in the light most favorable to the  



                                                    

party prevailing below leaves us with a definite and firm conviction that a mistake has  

been made."3  

                      We "grant particular deference to the trial court's factual findings when  



                       

they are based primarily on oral testimony, because the trial court, not this court, performs  



                                                                                                                                    4  

                                                                              

the function of judging the credibility of witnesses and weighing conflicting evidence." 



          1          The  superior  court  construed  the  latter  allegation  as  stating  an  undue  



influence claim.  



          2         Alaska R. Civ. P. 52(a) ("Findings of fact shall not be set aside unless   



clearly erroneous . . . ."); Stewart v. Elliott, 239 P.3d 1236, 1239-40 (Alaska 2010).  



          3          Thea G. v. State, Dep't of Health & Soc. Servs., 291 P.3d 957, 961-62  

                                                                                                                  

(Alaska 2013) (internal quotation marks omitted).  



          4         Day  v.  Williams ,  285  P.3d  256,  260  (Alaska  2012)  (internal  quotation  



marks omitted); see also Alaska R. Civ. P. 52(a) ("[D]ue regard shall be given to the  

opportunity of the trial court to judge the credibility of the witnesses.").  



                                                                -7-                                                          6894
  


----------------------- Page 8-----------------------

                                                                    

                    However, the superior court's  application of law to fact is reviewed de  



         5  

novo.   Therefore, we independently review the superior court's conclusion that, based  

on its factual findings, trust reformation was not warranted under the applicable law.6  



IV.       DISCUSSION  



                               

          A.        Trust Reformation  



                    On appeal, Kathryn argues that reformation is warranted because the trust  



                                                      

instrument does not conform to her original intent, because unanticipated circumstances  



                                                                                                    

have arisen since the trust was executed, and because she, as "both . . . the settlor and sole  



life beneficiary of the trust," has the power to modify the trust by consent.  We address  



each of these arguments in turn.  



                         

                    1.        Reformation to conform to the settlor's intent  



                    Alaska Statute 13.36.350(a) provides that  



                                                            

                    [o]n petition by a trustee, settlor, or beneficiary, a court may  

                                                                                                  

                    reform  the  terms  of  an  irrevocable  trust,  even  if  the  trust  

                    instrument  is  not  ambiguous,  to  conform  to  the  settlor's  

                                                                              

                    intention if the failure to conform was due to a mistake of fact  

                                                                              

                    or law, whether in expression in the trust or inducement to  

                                                  [7] 

                    create the trust . . . .  



          5         Reed v. Parrish , 286 P.3d 1054, 1057 (Alaska 2012);                             Riddell v. Edwards ,  



76 P.3d 847, 852 (Alaska 2003).  



          6         Cf.  Diblik  v.  Marcy,  166  P.3d  23,  25  (Alaska  2007)  ("Whether  a  



misrepresentation is material is a mixed question of law and fact."); Beavers v. State , 998  

                                                                                    

P.2d 1040, 1044 (Alaska 2000) ("We review the trial court's determination concerning  

the voluntariness of [a] confession as a mixed question of law and fact.").  



          7  

                                                                                                         

                    Although Kathryn seeks to have the trust terminated, AS 13.36.350(a) only  

permits trust  reformation, not termination. However, it is possible the trust could be  

reformed to make it revocable rather than irrevocable.  



                                                               -8-                                                         6894
  


----------------------- Page 9-----------------------

                                                                                                  

                    To reform a trust under this provision, the petitioner must prove the settlor's  



                                                               8 

intent by "clear and convincing evidence."   A fact is established by clear and convincing  

evidence if "the truth of the asserted fact[] is highly probable."9  



                    On appeal, Kathryn argues that the trial court clearly erred when it found  



                                                                                

"that Kathryn intended to create an irrevocable trust, that she understood the terms of the  



                                                    10  

trust and the fact that it was final."                  She notes that, in her own testimony, she "clearly  



                                                                                                      

stated that she never intended to transfer all of her property into a trust," that "nobody  



                                    

ever explained to [her] and she did not understand that once she put her property into a  



                                                                                               

trust, she no longer owned or had control of that property," and that, "[h]ad she been told  



                                                                               

that once she signed property over to the trust, she no longer owned that property, she  



would not have signed the property over or created the trust."  



                    But  Donna,  Colver,  Ingaldson,  and  Danny  all  testified  that  Kathryn  

                                                                                                               



understood the effect of the trust at the time it was executed and intended to transfer all  

                                                                                                                



of her property to the trust, and the superior court found their testimony more credible  



than  Kathryn's.    Because  we   give  deference  to  the  superior  court's  credibility  

                                                  



          8         AS 13.36.350(a).  



          9         DeNuptiis v. Unocal Corp. , 63 P.3d 272, 275 n.3 (Alaska 2003) (internal  



quotation marks omitted).  



          10        Kathryn appears to attach some weight to the fact that the superior court   



adopted its factual findings more or less verbatim from the Trust's proposed findings.   

However, that fact has no bearing on our review of the superior court's findings. See  

Strack v. Miller, 645 P.2d 184, 186 n.1 (Alaska 1982) ("The 'clearly erroneous' standard  

                                               

is still to be applied when, as here, the trial court's findings of fact are adopted from  

                                                                                                         

those submitted by the prevailing party.").  



                                                               -9-                                                         6894
  


----------------------- Page 10-----------------------

determinations,11 the fact that Kathryn's testimony contradicted the testimony of these  



other witnesses is not a sufficient basis for finding clear error.  



                                                                        

                    In the alternative, Kathryn argues that, although one of the trust's primary  



                                                                                                                   

purposes was to protect Kathryn's assets from Medicare or Medicaid, it does not actually  



fulfill that purpose.  She maintains that the "trust should be revokable or reformed" to  



meet her medical care planning goals.  But because Kathryn raised this argument for the  

                                                                                                                          

first time in her reply brief, it is waived.12  



                    Because Kathryn has not established that the superior court's finding that  



                                

the  trust  as  written  conforms  to  her  original  intent  was  clearly  erroneous,  we  are  



compelled to conclude that reformation under AS 13.36.350 is not warranted.  



                                                       

                    2.        Unanticipated circumstances  



                    Alaska Statute 13.36.345(a) provides that  



                                                                                              

                    [o]n petition by a trustee, settlor, or beneficiary, a court may  

                                                                                         

                    modify        the   administrative   or   dispositive   terms                    of    an  

                                                   

                    irrevocable trust or terminate an irrevocable trust if, because  

                    of circumstances not anticipated by the settlor, modification  

                    or   termination   would   substantially   further   the   settlor's  

                                                                 [13] 

                    purposes in creating the trust.  



          11        Fyffe  v.  Wright ,  93  P.3d  444,  450-51  (Alaska  2004)  ("[I]f  most  of  the  



evidence is oral testimony, or the superior court's factual determinations depend largely  

                                                                                                              

on  conflicting  testimony,  then  the  superior  court's  greater  ability  to  assess  witness  

                        

credibility requires deferential review by this court.").  



          12  

                                       

                    See Alaska R. App. P. 212(c)(3);  Willoya v. State, Dep't of Corr., 53 P.3d  

1115, 1126 (Alaska 2002).  



          13  

                                                                                                                  

                    In its Findings of Fact and Conclusions of Law, the superior court wrote  

                                                                              

that unanticipated circumstances must be proven by clear and convincing evidence.  This  

appears to be an error.  Although AS 13.36.350 explicitly provides that the settlor's  

intent must be proven by "clear and convincing evidence," AS 13.36.345 contains no  

                   

analogous provision. However, because we conclude that the facts Kathryn alleges, even  

                                                                                       

                                                                                                               (continued...)  



                                                              -10-                                                         6894
  


----------------------- Page 11-----------------------

                    In  her  petition,  Kathryn  argued  that  she  did  not  "anticipate[]  that  the  



                                

 circumstance would arise where she would have no control as to when or if her bills  



 would be paid, or when or how her money was to be spent."  



                    But a misunderstanding about the effect of a legal instrument is not an  



 unanticipated circumstance.  Something "anticipated" is "foresee[n]," "give[n] advance  

                      

 thought," or "expect[ed]."14  

                                           That is, unanticipated circumstances are facts about the  



future  that were not known to the settlor at the time the trust was executed and, if they had  

                                                                                                                

 been known, would have caused the settlor to draft the trust provisions differently.15  That  



 a settlor was mistaken about the legal effect of a trust is not an unforeseen fact about the  

                                                                                                                 



 future but a mistake "in expression in the trust" that might warrant reformation under  

                                                                                                    



 AS 13.36.350(a).  



                    Therefore, as the superior court concluded, termination under AS 13.36.345  

                                     



 is not warranted.  



          13        (...continued)  



 if true, are not "unanticipated circumstances" within the meaning of AS 13.36.345, the  

                                                                                                    

 superior court's application of a higher burden of proof was harmless.  



          14        MERRIAM -WEBSTER 'S COLLEGIATE DICTIONARY 50 (10th ed. 1999).  



          15  

                                                  

                    See, e.g., In re Trust D Created Under Last Will & Testament of Darby, 234  

 P.3d  793,  800  (Kan.  2010)  ("Courts  have  generally  been  more  willing  to  allow  

 modification for unanticipated circumstances where there are truly unforeseen events  

 resulting  in  economic  hardship,  the  incapacity  of  a  beneficiary,  the  impossibility  or  

 imprudence of a trust provision, or the diminution in value of a trust asset." (emphasis  

                          

 added)); Niemann v. Vaughn Cmty. Church , 113 P.3d 463, 471 (Wash. 2005)  

 (" '[C]ircumstances not anticipated by the settlor' . . . include significant congregational  

                                                         

 growth, limitations with the building and property, stricter development and building  

                                                               

 codes, . . . and finally changes in the attitudes, expectations, and needs of parishioners  

 compared with the 1950s." (citation omitted)).  



                                                            -11-                                                      6894
  


----------------------- Page 12-----------------------

                         

                    3.        Modification or termination by consent  



                    AS 13.36.360 provides that  



                                                          

                    on petition by a trustee  settlor or beneficiary, a court may  

                    modify   or   terminate   an   irrevocable   trust   if   all   of   the  

                    beneficiaries consent and if continuation of the trust on the  

                    existing terms of the trust is not necessary to further a material  

                                                                    

                    purpose of the trust. However, the court, in its discretion, may  

                                           

                    determine that the reason for modifying or terminating the  

                                     

                    trust  under  the   circumstances  outweighs  the  interest  in  

                                              

                    accomplishing the material purposes of the trust.  



                    On appeal, Kathryn argues that termination is permissible under  



AS 13.36.360 because she petitioned the court to terminate the trust as "both . . . the  



settlor and sole life beneficiary of the trust."  



                    But  Kathryn  never  argued  before  the  superior  court  that  AS  13.36.360  

                                                               



applies to this case.  Therefore, her argument that the trust may be terminated by consent  

                                                                           

is waived.16  



                    Even if this argument were not waived, because Kathryn is not the sole  



                                                                                                     

beneficiary of the trust,  AS 13.36.360 does not provide a basis for termination. Kathryn  



                                                                                                                           

is correct that she is the "primary lifetime [b]eneficiary" of the trust, but several of her  



                                                                                                

children are also future beneficiaries. Therefore, Kathryn cannot terminate the trust under  



AS 13.36.360(a) without obtaining the consent of the other beneficiaries, and the record  



gives no indication that they have consented to termination.  



          16        Maines v. Kenworth Alaska, Inc. , 155 P.3d 318, 329 (Alaska 2007) ("It is  

                                     

well-established that matters that were not made issues in the trial court . . . or that were  

                                                   

not tried before the court will not be considered on appeal." (internal quotation marks  

                                                     

and alterations omitted)).  



                                                              -12-                                                             6894  


----------------------- Page 13-----------------------

         B.        Undue Influence  



                   Kathryn's brief also suggests that the trust is invalid because it was the  



product  of  Donna's  undue  influence.    The  superior  court    concluded  that  "Kathryn  



presented no evidence to support a claim of undue influence."  



                                                                              

                   "A transfer in trust or declaration of trust can be set aside, or the terms of  



                                                                                                        

a  trust  can  be  reformed,  upon  the  same  grounds  as  those  upon  which  a  transfer  of  

                                                                        17   For example, a trust may be set  

property not in trust can be set aside or reformed."                        

aside if "its creation was induced by fraud, duress, or undue influence."18  



                   Undue influence is the exercise of such control over a person that the person  



is unable to exercise "free and deliberate judgment" or is coerced "into doing something  

                                                                             

that would not have been done absent the influence."19  

                                                                             In order to prove that a trust was  



the product of undue influence, a party must demonstrate that  



                   (1)      the  target  of  the  alleged  undue  influence  was  susceptible to  

                                                                                                                       

                            influence;  



                   (2)      another person had the opportunity to exert influence;  



                   (3)      improper influence was, in fact, exerted; and  

                   (4)      the trust shows signs of the improper influence.20  



                   Whether the influence exerted on the settlor was undue is determined using  



a subjective standard, that is, "considering [the settlor's] physical and mental condition,  

                                                                                            



the  person  by  whom  [the  influence]  was  exerted,  the  time  and  place  and  all  the  

                                        



         17        RESTATEMENT (THIRD) OF TRUSTS  12 (2003).  



         18        Id.   12 cmt. b.  



         19        In re Adoption of S.K.L.H. , 204 P.3d 320, 328 n.41 (Alaska 2009) (quoting   



25 A 

       M .   JUR .   2D  Duress and Undue Influence   36 (2004)) (internal quotation marks   

omitted).  



         20        Id.  



                                                          -13-                                                    6894
  


----------------------- Page 14-----------------------

surrounding circumstances."21  Undue influence must be proven by clear and convincing  

                                                                                 

evidence.22  



                    Kathryn suggests that Donna's improper influence on Kathryn is evidenced  

                                                                                 



by the fact that, contrary to the superior court's finding, Donna, not Ingaldson, was the  



primary proponent of the trust.  



                    But the superior court's finding that Ingaldson "encouraged  Kathryn to  

                                                                                                                  



consult with attorney John Colver about establishing a trust" was not clearly erroneous.  



Ingaldson  testified  that  he  spoke  with  Kathryn  about  estate  planning  "many  times,"  

                                                                                                            



"literally when we first met on up," and that they discussed "some general issues dealing  



with setting up a trust and . . . putting assets into a trust and the pros and cons about doing  

                                                                                  



that."    And  although  Donna's  testimony  suggests  she  was  concerned  about  estate  



planning and may have encouraged Kathryn to put her property in a trust, that evidence  

                                                                                   



is not inconsistent with a finding that Ingaldson also recommended Kathryn execute a  



trust.  



                    Moreover, even if the superior court did clearly err in finding that Ingaldson  

                                                                                                



proposed creating the trust, that error would not require reversal.  That the trust was  

                             



Donna's idea does not by itself constitute clear and convincing evidence that Donna  

                                                                                                                  



exerted improper influence on Kathryn. There are many benign explanations for Donna's  

                                                                                              



decision to propose and advocate for the trust.  



                    Kathryn also suggests that Donna had ample opportunity to exert improper  

                                                                              



influence on Kathryn because Kathryn placed significant trust in her. It is true that, at the  

                                                                                                          



          21        Crittell v. Bingo, 36 P.3d 634, 639 (Alaska 2001) (quoting 1  WILLIAM J.  



B 

                                                    

   OWE  &  DOUGLAS  H.  PARKER , PAGE  ON  THE  LAW  OF  WILLS    15.2,  at  715  (rev.  

ed.1960)) (internal quotation marks and alteration omitted) .  



          22        Laliberte v. Mead , 628 A.2d 1050, 1052 (Me. 1993); Wright v. Roberts, 797  



So. 2d 992, 998 (Miss. 2001); Peterson v. Peterson , 432 N.W.2d 231, 236 (Neb. 1988).  

                                                                                                          



                                                              -14-                                                         6894
  


----------------------- Page 15-----------------------

time  the  trust  was  executed,  Kathryn  relied  on  Donna  to  manage  her  finances.  



Eventually, Kathryn created a joint bank account with Donna so that Donna could pay  



                                            

Kathryn's bills directly.  Kathryn also depended on Donna and Danny for transportation  



to and from her meetings with Ingaldson and Colver because she has an eye condition that  



prevents her from driving.  



                                                                                            

                       But Kathryn's relationship with Donna was not a confidential relationship  



                                                                                                 23  

such as would trigger a presumption of undue influence.                                                     

                                                                                                       A confidential relationship  



                                                                                             24  

                                                            

does not necessarily arise from a family relationship.                                            Nor does the fact that Donna  



                                                                                                                                                   25  

                                            

helped Kathryn manage her affairs convert their relationship into a confidential one. 



                                                                                            

                       At trial, Kathryn's attorney implied that undue influence is evident from the  



fact that the trust instrument only provides for distribution to three of her sons - Danny,  



             

Steve, and Mark - and excludes Rick and Gorden.  Kathryn's testimony suggested that  



            23         See Paskvan v. Mesich, 455 P.2d 229, 233 (Alaska 1969) ("[W]hen the                                     



principal or sole beneficiary under a will, who had a confidential relationship with the   

testator, participated in the drafting of the will, then a presumption of undue influence  

arises.").  



            24          Ware  v.  Ware,  161  P.3d  1188,  1194-95  (Alaska  2007)  (confidential  



relationship cannot be proven by "[t]he mere fact of a parent-child relationship").  



            25         Compare Ware, 161 P.3d at 1195 ("While the record shows evidence of  



Brandie helping Margaret by  checking her oil, cutting wood, and purchasing a new  

                                                      

washing machine for her, these activities . . . do not change the relationship from parent- 

                                                                                  

child to that of a fiduciary."), with Paskvan, 455 P.2d at 232 (concluding that a finding  

                                                                              

that a confidential relationship existed was not erroneous where "Mesich's actions in  

                                  

making Paskvan the managing partner in the Arctic Hotel enterprise, in giving Paskvan  

his power of attorney so that Paskvan could act and speak for Mesich, in executing his  

                                                                              

will in favor of Paskvan so that there would be a basis for their partnership venture, and  

                                                       

in conveying to Paskvan a one-half interest in the Elbow Room property shows quite  

clearly that Mesich trusted Paskvan and reposed confidence in him - that he relied upon  

                     

Paskvan to act in Mesich's best interests in handling his affairs.").  



                                                                       -15-                                                                  6894
  


----------------------- Page 16-----------------------

this was contrary to her intent.              However, it was undisputed that a will Kathryn executed       



in  2002  provided  for  a  similar   distribution  of  property.    Ingaldson  explained  this  



arrangement at trial:  "Rick and Gord[e]n had received their inheritance in the form of the  



[Anchorage Roofing] business . . . from  Day One, that was what they were to get."  

                                                               



Therefore, as the superior court concluded, the "character and provisions of the trust were  

                                               



not such that it would have been unnatural for a person in Kathryn's position to create it."  

                                                



                    Although it is true that Kathryn was in her early 80s when the trust was  



drafted, there is ample evidence in the record that she participated actively in the trust  

                                                                                                                    



drafting process and was fully capable of protecting her interests.  And, as the superior  



court  found,  "[t]he  strongest  evidence  against  undue  influence  is  that  Kathryn  had  



independent legal advice from two experienced, highly respected lawyers (Ingaldson and  

                                             



Colver), both of whom recommended Kathryn establish the Trust."  



                    Given the superior court's findings - none of which is clearly erroneous  



- we are compelled to agree that Kathryn has not established by clear and convincing  

                                                                                                          



evidence that the trust was the product of undue influence.  



V.        CONCLUSION  



                    The judgment of the superior court is AFFIRMED.  



                                                             -16-                                                       6894
  

Case Law
Statutes, Regs & Rules
Constitutions
Miscellaneous


IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights
Soteria-alaska
Choices
AWAIC