In re Trust of Cook

I
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
07/14/2020 08:07 AM CDT




                                                       - 624 -
                             Nebraska Court of Appeals Advance Sheets
                                  28 Nebraska Appellate Reports
                                            IN RE TRUST OF COOK
                                             Cite as 

28 Neb. Ct. App. 624



                          In re Trust of Margie E. Cook, deceased.
                      Lloyd Russo and Betty Russo, husband and wife,
                         appellants, v. Union Bank and Trust Co.,
                               Trustee of the Margie E. Cook
                                 Revocable Trust, appellee.
                                                  ___ N.W.2d ___

                                        Filed July 14, 2020.     No. A-19-755.

                 1. Trusts: Equity: Appeal and Error. Absent an equity question, an
                    appellate court reviews trust administration matters for error appear-
                    ing on the record; but where an equity question is presented, appellate
                    review of that issue is de novo on the record.
                 2. Judgments: Appeal and Error. When reviewing a judgment for errors
                    appearing on the record, the inquiry is whether the decision conforms
                    to the law, is supported by competent evidence, and is neither arbitrary,
                    capricious, nor unreasonable.
                 3. ____: ____. An appellate court, in reviewing a judgment for errors
                    appearing on the record, will not substitute its factual findings for
                    those of the trial court where competent evidence supports those
                    findings.
                 4. Decedents’ Estates: Appeal and Error. An appeal from the county
                    court’s allowance or disallowance of a claim in probate will be heard as
                    an appeal from an action at law. In reviewing a judgment of the probate
                    court in a law action, an appellate court does not reweigh evidence,
                    but considers the evidence in the light most favorable to the successful
                    party and resolves evidentiary conflicts in favor of the successful party,
                    who is entitled to every reasonable inference deducible from the evi-
                    dence. The probate court’s factual findings have the effect of a verdict
                    and will not be set aside unless clearly erroneous.
                 5. Decedents’ Estates: Wills: Trusts: Judgments: Appeal and Error.
                    The interpretation of the words in a will or a trust presents a question of
                    law. When reviewing questions of law in a probate matter, an appellate
                                      - 625 -
            Nebraska Court of Appeals Advance Sheets
                 28 Nebraska Appellate Reports
                             IN RE TRUST OF COOK
                              Cite as 

28 Neb. Ct. App. 624

       court reaches a conclusion independent of the determination reached by
       the court below.
 6.    Actions: Parties. The purpose of Neb. Rev. Stat. § 25-301 (Reissue
       2016) is to prevent the prosecution of actions by persons who have no
       right, title, or interest in the cause.
 7.    Trusts. Where a trust is revocable, the settlor is in control of the trust.
 8.    Trusts: Parties. The plain language of Neb. Rev. Stat. § 30-3855(b)
       (Supp. 2019) suggests that the only real party in interest in a case
       involving a revocable trust would be the settlor of that trust, or perhaps
       one that represents the settlor’s interests.
 9.    Decedents’ Estates. A mere expectancy interest is insufficient to entitle
       a prospective heir to bring an action to recover property.
10.    Trusts. Incapacity does not terminate a settlor’s power to revoke a
       trust, though it might well affect the ability of the settlor to exercise
       that power.
11.    ____. Because incapacity does not affect the power to revoke a trust, a
       trust remains revocable until revoked, either by the settlor or by another
       acting in the settlor’s stead.

  Appeal from the County Court for Douglas County: Thomas
K. Harmon, Judge. Affirmed.
  Tiernan T. Siems, of Erickson & Sederstrom, P.C., for
appellants.
  Darren R. Carlson and Terry A. White, of Carlson & Burnett,
L.L.P., for appellee.
      Pirtle, Bishop, and Arterburn, Judges.
      Pirtle, Judge.
                       INTRODUCTION
   Lloyd Russo and Betty Russo appeal from an order of the
county court for Douglas County, finding that they lacked
standing to assert a claim for the distribution of trust proceeds
from the Margie E. Cook Revocable Trust. Based on this
conclusion, the county court additionally denied the Russos’
motion to disallow attorney fees. The county court also found
that the issue of Margie E. Cook’s capacity was not relevant to
the issue of standing.
                              - 626 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                     IN RE TRUST OF COOK
                      Cite as 

28 Neb. Ct. App. 624

                        BACKGROUND
   Union Bank and Trust Company (Union Bank), acting as
trustee of the Margie E. Cook Revocable Trust, filed its peti-
tion for instruction in trust administration on September 6,
2018, requesting direction from the county court on how to
distribute the proceeds from the sale of an Arizona condo-
minium (condo) previously owned by Cook. On October 12,
the Russos filed a motion to intervene and requested an order
requiring Union Bank to distribute the trust proceeds from
the Arizona condo to them, pursuant to a beneficiary deed
executed in their favor by Cook in 2015. The Russos appar-
ently also filed a separate civil complaint against Union Bank
that same day, but that pleading is not contained in the record
before us.
   On October 25, 2018, Union Bank filed an objection to the
Russos’ motion to intervene, alleging that the Russos’ civil
complaint failed to state a claim and that the Russos neverthe-
less lacked standing to assert such claims. Alternatively, Union
Bank sought to consolidate the Russos’ civil complaint with the
pending probate matter. The two matters were consolidated for
a bench trial.
   On March 8, 2019, the Russos filed a motion to disallow
attorney fees, requesting the county court to order the law firm
of Carlson & Burnett to disgorge fees previously paid to it. The
Russos argued that one of the firm’s attorneys, Adam Wintz,
served as Cook’s personal attorney and drafted certain docu-
ments at issue in the case and that therefore, Carlson & Burnett
had an ethical conflict representing Union Bank and should not
receive attorney fees in the matter.
   On March 15, 2019, Union Bank filed a motion to dismiss
the Russos’ civil complaint against Union Bank, alleging that
the Russos lacked standing as contingent beneficiaries of a
revocable trust and that the probate court had exclusive juris-
diction over the matter. The civil court granted Union Bank’s
motion to dismiss, finding that it did not have subject matter
jurisdiction over the Russos’ claim.
                               - 627 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                      IN RE TRUST OF COOK
                       Cite as 

28 Neb. Ct. App. 624

   A bench trial was held on June 25 and 26, 2019, regarding
Union Bank’s petition for instruction in trust administration
and the Russos’ motion to intervene.
   John Atkins, vice president and senior trust officer of Union
Bank, was called to testify on Union Bank’s behalf. Atkins
testified that he is responsible for administering fiduciary docu-
ments such as financial powers of attorney, conservatorships,
revocable and irrevocable trusts, and “virtually any type of
fiduciary capacity.”
   Atkins testified that Union Bank first became involved in
Cook’s affairs when he was contacted by Wintz, an attorney
then with Elder Law of Omaha, who asked Atkins whether
Union Bank would be willing to serve under a financial power
of attorney for Cook. Atkins testified that he became aware
Lloyd was serving as Cook’s attorney in fact and that Atkins
first met him in late June or early July 2017. Lloyd was
coincidentally referred to Atkins and Union Bank as a pos-
sible replacement attorney in fact by an attorney in Bellevue,
Nebraska.
   A meeting was arranged between representatives of Union
Bank and Cook at her assisted living residence at Brighton
Gardens (Brighton) in Omaha, Nebraska, on July 7, 2017.
Along with Atkins and his assistant, Wintz and Denise Craft
were also present at the meeting. Atkins testified that Craft is a
“transition specialist” for elder care whom he has worked with
on a number of occasions since they met in the early 2000’s.
Atkins testified that Lloyd was present at the Brighton facility
on that date, but he did not participate in the meeting.
   Atkins testified that Cook was “very clear . . . that she was
very upset with the Russos. She did not want them involved
as beneficiaries of her estate, and she did not want them to
receive the Scottsdale villa.” He indicated that Cook appeared
comfortable with him and that she was clear about her wishes
regarding the condo and did not appear to be confused at
the time.
   A new financial power of attorney for Cook, naming Union
Bank as Cook’s agent, was signed at the July meeting. Atkins
                               - 628 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                      IN RE TRUST OF COOK
                       Cite as 

28 Neb. Ct. App. 624

indicated that Union Bank does not serve as agent under
health care powers of attorney, but Cook asked Craft whether
she would serve in that role, which Craft accepted. After the
documents had been signed, Cook was taken back to her room
and Lloyd entered the meeting to sign his resignation of all
fiduciary positions he held for Cook.
   At a later date, Atkins spoke to Lloyd regarding whether
Cook had an estate plan in place. Lloyd indicated that Cook
had worked with an Omaha attorney, Niel Nielsen, on an estate
plan. Nielsen provided Atkins with Cook’s last will and testa-
ment, her revocable trust, and a competency checklist he had
completed with Cook.
   Exhibit 8, the trust agreement for the Margie E. Cook
Revocable Trust, dated March 9, 2017, was introduced. Article
IX of the trust agreement provided that any interest in Cook’s
Arizona condo that she retained at her death was to go to
the Russos.
   Exhibit 9, an “execution checklist” signed by Cook and
Nielsen on March 9, 2017, was the only information Atkins
received related to Cook’s competency at the time. Atkins
testified that Cook appeared to him to be “cognitive in every
respect” when she signed the power of attorney documents
on July 7.
   Exhibit 5, a beneficiary deed dated March 30, 2015, names
the Russos as beneficiaries of Cook’s Arizona condo. Atkins
testified that exhibit 5 appeared to supersede a prior beneficiary
deed dated May 18, 2012, naming “Jack E. Stewart” as bene­
ficiary of the same Arizona condo. Exhibit 7, a last will and
testament for Cook dated November 17, 2010, named “Lynn K.
Scott M.D.” as the beneficiary of the Arizona condo.
   Atkins testified that exhibit 10 was a handwritten amend-
ment to Cook’s trust, which in essence states that Cook did
not want the Russos to receive the Arizona condo at her death.
That amendment is dated July 20, 2017, and was signed by
Cook. Atkins testified that he received the handwritten amend-
ment from Craft and was satisfied that it met the require-
ments for amending Cook’s trust. Exhibit 11 reflected another
                               - 629 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                      IN RE TRUST OF COOK
                       Cite as 

28 Neb. Ct. App. 624

amendment to Cook’s trust, under which Union Bank was to
assume the position of trustee. Exhibit 12 is a revocation of the
May 2012 beneficiary deed.
   Atkins testified that Union Bank, as trustee, moved Cook’s
assets that otherwise would have been subject to probate
into the trust. Prior to Union Bank’s assuming the role of
trustee, Cook told Atkins that she did not think she would
ever return to Arizona. Atkins contacted a real estate agent
to list the Arizona condo for sale because Union Bank “felt it
was in [Cook’s] best interest not to keep a piece of real estate
that would be unoccupied.” Atkins testified that the condo
had costs associated with insurance, real estate taxes, home-
owner association dues, and maintenance and upkeep if Cook
retained the condo. Exhibit 13 is the settlement statement that
was prepared once the Arizona condo was sold, and it reflects
the $136,164.84 in net proceeds Union Bank received as
trustee from the sale.
   On cross-examination, Atkins testified that he did not
become aware of any dementia or other memory problems
with Cook until after July 7, 2017, when Union Bank took over
under the financial power of attorney. Atkins conceded that he
did not look further into competency issues after Union Bank
became Cook’s financial attorney in fact.
   Atkins testified that he was not present when Craft drafted
the handwritten trust amendment. He agreed that it was not
Craft’s role to be preparing documents that attempted to amend
the trust. At no point during the July 2017 meeting did Cook
mention that she had previously signed similar estate plan doc-
uments with Nielsen in March 2017. Atkins never conducted
any sort of competency evaluation with Cook and was unable
to say whether Wintz or Craft did so.
   On redirect examination, Atkins testified that Union Bank
did not have any concerns regarding Cook’s competency after
she had appointed Union Bank under the financial power
of attorney because “if [Cook] became incapacitated at that
time was not relevant to what [Union Bank’s] role was as
                              - 630 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                     IN RE TRUST OF COOK
                      Cite as 

28 Neb. Ct. App. 624

attorney-in-fact and eventual trustee of her trust.” At that
point, Union Bank was already acting as attorney in fact under
what it believed to be a valid document. Atkins perceived Cook
to be competent during both the July 7 and July 20 meetings in
2017. He also did not believe that Lloyd raised any concerns
about Cook’s competency when they met in July 2017.
   Craft, owner of Craft Lifestyle Management (CLM), testified
that CLM works to transition special needs adults and senior
citizens into accommodating living arrangements, whether by
modifying their home or assisting with placement in other
communities. Cook was referred to CLM in March 2017. Lloyd
previously contacted CLM in December 2016, inquiring about
the cost of assisted living for Cook. Craft was called upon to
visit Cook at her Bloomfield apartment, an independent living
apartment in Omaha. There, Craft found that Cook’s medica-
tions were scattered throughout the apartment, there was noth-
ing in the refrigerator, and there were moldy dishes in the
sink and that in the living room, “there [was] nowhere to get
through.” Cook informed Craft that Lloyd was serving as her
attorney in fact.
   Craft testified that Lloyd made arrangements to move Cook
to Brighton. Craft met with Lloyd at Brighton to have him
sign paperwork allowing CLM to assist in the move. Lloyd
brought Cook to Brighton the next day, but after moving some
of Cook’s belongings into her room, Craft discovered Cook
sitting alone in the lobby, with a swollen hand. Craft contacted
Brighton’s director of nursing, and Cook was examined by
Brighton’s medical staff and taken to the hospital. The Russos
were not contacted.
   Craft testified that Cook requested a meeting in July 2017
regarding her powers of attorney. On July 7, Craft met with
Cook, Wintz, Atkins, and Atkins’ assistant to discuss Cook’s
health care power of attorney. Craft served as Cook’s health
care attorney in fact going forward. Craft testified that Cook
was “very well-prepared” and “alert” throughout the meeting.
According to Craft, Cook appeared to know where she was
                               - 631 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                      IN RE TRUST OF COOK
                       Cite as 

28 Neb. Ct. App. 624

and specifically asked that Craft serve as her health care agent.
Craft testified that Lloyd was not present during the meeting
when Cook’s powers of attorney were discussed, but he came
later after Cook left.
   Craft testified that a note, introduced as exhibit 10, was
handwritten by her except for Cook’s signature. Cook asked
Craft to write for her, but dictated the contents of the note,
in which Cook indicated that she did not want the Russos to
receive the Arizona condo, nor any of her other assets. Craft
testified that Cook first began to express concerns about the
Russos prior to the incident where she was left alone in the
Brighton lobby. Cook asked Craft to take the note to Union
Bank, which Craft did.
   On cross-examination, Craft testified that she first became
aware of Cook’s dementia in September or October 2017,
despite CLM’s accompanying Cook to medical appointments
since May. She testified that she “[w]ould have had no reason
to” suspect Cook had a diagnosis of dementia any time prior to
the July 2017 meeting. Craft acknowledged that she had access
to Cook’s medical information prior to July 2017, but did not
avail herself of it.
   Craft acknowledged that she had access to attorneys like
Wintz and Atkins, but nevertheless assisted Cook in modify-
ing her estate plan with the July 2017 handwritten note. Craft
testified that she did not volunteer to fill Lloyd’s role as medi-
cal power of attorney, despite knowing he was looking for a
replacement, because it is not CLM’s common practice to take
on that role.
   Union Bank next called Lloyd to testify. Lloyd testified that
he and his wife, Betty, rented a condo in Arizona from mid-
January to mid-March each year. The Russos first met Cook in
Arizona approximately 17 years before her death. The Russos
frequently attended concerts, parades, music festivals, and
other activities with Cook.
   Lloyd testified that he handwrote exhibit 5, a transfer-
on-death deed dated March 30, 2015, purporting to transfer
                              - 632 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                     IN RE TRUST OF COOK
                      Cite as 

28 Neb. Ct. App. 624

Cook’s Arizona condo to the Russos upon her death. He testi-
fied that Cook was visiting the Russos when she said, “‘You
know, all these years, I come here and do things with you
guys. You guys come to Arizona. . . . I don’t know why I
don’t give you my condo.’” Lloyd was aware of the existing
transfer-on-death deed that would have given Cook’s condo to
another individual.
   In November 2016, Cook asked the Russos whether they
would be willing to serve as her attorney in fact. Lloyd testi-
fied that he believed Cook became incapacitated around June
2017 and that her doctor wanted her to enter assisted living,
but he was hesitant to force her into a living arrangement she
did not want.
   Lloyd testified that he decided to resign as medical attorney
in fact after Cook moved to Brighton because of the number
of decisions he was responsible for regarding Cook. Lloyd
contacted Atkins at Union Bank to see if he and Union Bank
would be able to take on the role as financial attorney in fact.
Lloyd believed the July 7, 2017, meeting was to have Atkins
and Cook meet before Union Bank assumed its role, but he
said he was “blindsided” by the actual events that occurred.
Lloyd believed that Union Bank would take over the financial
power of attorney role and that Atkins had someone arranged
to fulfill the medical duties. He testified that he did not know
Craft was taking over under the health care power of attorney
until the meeting was over. Lloyd did not believe Craft should
serve as Cook’s health care attorney in fact.
   After Lloyd’s testimony, Union Bank rested its case in chief.
   Dr. Terry Davis was called to testify on behalf of the
Russos. Davis testified that he is a forensic psychiatrist and
also has a law degree. Davis described the practice of forensic
psychiatry as “any place where the legal system and the mental
health system overlap,” including questions of competency in
legal matters.
   Davis testified that he was provided with Cook’s medi-
cal records, which he reviewed to formulate a diagnosis for
                              - 633 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                     IN RE TRUST OF COOK
                      Cite as 

28 Neb. Ct. App. 624

Cook in the time leading up to her death. Davis reviewed the
medical records dated October 17, 2016, which indicated Cook
was suffering from “‘delusions . . . delirium’” and was sent
to “‘Angel’s Home Health to evaluate and treat as indicated
for increased delirium,’” “‘confusion,’” and “‘agitation and
aggression.’” Davis was unable to determine from the medi-
cal records whether Cook was experiencing episodic or more
continuous periods of delirium, but “she was clearly suffering
from some significant mental impairment and cognitive impair-
ment as far back as October of 2016.” Davis testified that the
records revealed additional evidence that Cook was experienc-
ing a chronic and deteriorating form of dementia.
   Davis noted Cook underwent a CT scan on October 8, 2017,
which revealed “moderate atrophy” and “deterioration of her
brain.” Davis testified that agitation and aggression are com-
mon symptoms associated with Alzheimer’s disease. A record
from October 24, 2016, revealed that Cook “‘continues to talk
to her husband, who passed.’” Cook’s husband had not been
alive for nearly 20 years at that point.
   Davis noted that as of March 7, 2017, Cook’s memory was
worsening, as evidenced by her prescription for “Namenda,”
a medication designed to assist with memory loss. Based on
his review of Cook’s medical records, Davis offered his pro-
fessional opinion that Cook suffered from “dementia of the
Alzheimer’s type and that she was on a progressive downhill
course” as of March 7. He stated that “it would be highly ques-
tionable whether or not she was competent to execute legal
documents on that date or thereafter.”
   Davis further testified that someone suffering from Cook’s
condition “might have some brief periods where she would be
more lucid than not in some areas, but that isn’t necessarily
going to make her competent to do things like execute a will,
execute a trust, [or] consent to medical care.” On April 18,
2017, Cook’s records revealed she scored 13 out of 30 points
on the “SLUMS test,” one of several screening tests used to
detect cognitive impairment. Davis testified that a score of
                               - 634 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                      IN RE TRUST OF COOK
                       Cite as 

28 Neb. Ct. App. 624

“anything below 14 [was] indicative of dementia.” He testified
that as more evidence supported a diagnosis of dementia and
Alzheimer’s disease for Cook over time, it became “less likely
that there would be lucid intervals.”
   Davis testified that when conducting a competency evalua­
tion for the execution of a will or trust, he will ask more
detailed questions than those shown in the “execution check-
list” performed by Cook’s then-attorney, Nielsen. He testified
that the contents of the checklist did not change his opinions as
to Cook’s diagnosis and competency at the time it was admin-
istered. A May 10, 2017, nursing note from Brighton indicated
that Cook “‘does not have the cognitive capability to make
decisions per M.D.’” That same month, there was evidence of
depression and suicidal thoughts by Cook, which Davis indi-
cated “shows some serious mental disturbance.”
   Davis opined that a June 7, 2017, note from Cook’s primary
physician, Dr. Lynn Scott, “cemented” Cook’s incapacity. Scott
wrote that Cook “‘doesn’t have a good grasp on anything,’”
and she further referenced Cook’s need for a power of attorney
and “‘placement in a nursing home for skilled care, medica-
tion dispensing.’” Davis further opined that Cook would not
have been competent to execute any financial documents after
that date.
   On cross-examination, Davis agreed that the presence of
moderate atrophy on a CT scan does not necessarily mean an
individual has dementia. He acknowledged that on March 28,
2017, Scott reported the findings of another physician who
concluded Cook was competent to take care of her affairs. He
also acknowledged that April 2017 medical entries reflected
that Cook was “alert and oriented to self, but not to date.” He
noted that Scott wrote, on June 7, that Cook “appeared to have
some lucid intervals” but also “cannot recall any facts.” Davis
agreed that there were findings by various medical profession-
als that Cook was alert and oriented, as well as findings to
the contrary.
                               - 635 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                      IN RE TRUST OF COOK
                       Cite as 

28 Neb. Ct. App. 624

   Nielsen testified that his law practice regularly involves
working with wills, trusts, powers of attorney, and other areas
of estate planning. Nielsen testified that he met Cook when
she stopped by his office in October 2016. After their initial
meeting, Nielsen took Cook on as a client and drafted her
health care and financial powers of attorney in November
2016.
   Nielsen testified that Lloyd was named the primary agent
under both documents and that Betty was named the alternate
agent. Coincidentally, the Russos were also clients of Nielsen’s
at the time. Nielsen testified that a health care power of attor-
ney usually becomes effective upon a determination by a doc-
tor that the individual has become incapacitated. He indicated
that while Cook was his client, no doctor had determined that
she was incapacitated.
   Nielsen also drafted a revocable trust and “pour-over will”
for Cook. Cook was designated the primary trustee under the
trust, and in the event Cook could no longer serve in that role,
Lloyd was named first successor trustee and Betty was second
successor trustee. The trust designated specific gifts to certain
individuals, with the residual assets to go to the University of
Nebraska Foundation. The trust indicated that Cook’s Arizona
condo should be left to the Russos. At the time, a “transfer-on-
death,” or “beneficiary,” deed leaving the condo to the Russos
was in place.
   Nielsen went through an “execution checklist” with Cook in
order to verify she had the necessary capacity to execute the
documents. Nielsen testified that he was satisfied that Cook
was competent at the time and understood the documents she
was signing. He testified that if he had further concerns regard-
ing Cook’s competency, he would have asked her to see a doc-
tor and have an evaluation done.
   Exhibit 31, a summary of Cook’s medical records between
October 17, 2016, and October 9, 2017, was introduced. Nielsen
testified that if he had reviewed Cook’s medical records on
March 9, 2017, when she signed the documents, he likely
                               - 636 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                      IN RE TRUST OF COOK
                       Cite as 

28 Neb. Ct. App. 624

would have suggested that Cook seek a full evaluation by a
physician. Nielsen testified that had a medical professional
opined that Cook was not legally competent at the time, he
would have relied on those opinions and would not have over-
seen the execution of the documents. Nielsen testified that,
nevertheless, the documents he drafted for Cook did little to
change the disposition of her property under previously drafted
wills and beneficiary deeds. The purpose was to avoid any of
Cook’s assets being subject to probate. Nielsen testified that he
did not have any contact with Cook after March 9.
   Exhibit 8, the revocable trust agreement drafted by Nielsen
and executed by Cook on March 9, 2017, was introduced into
evidence. Exhibit 28, the last will of Cook drafted by Nielsen
on that same date, was also introduced into evidence. Article
IX of the revocable trust provides, as relevant here:
         Upon the death of the Settlor, the Trustee shall distrib-
      ute the following bequests, which shall be net gifts after
      payment of all taxes, debts and expenses of the Settlor’s
      estate:
         ....
         2. Any interest the Settlor may own in [the Arizona
      condo], along with any contents thereof not otherwise
      disposed of by other provisions of this Trust, to [Lloyd]
      and [Betty], or the survivor of them, if living.
   In reviewing Cook’s prior estate plan, Nielsen was aware
that the Arizona condo had previously been designated to
another individual through a transfer-on-death deed. Nielsen
was not concerned that the beneficiary designation for the
condo had changed three times within a 5-year period. Nielsen
previously had conversations with Lloyd about designating
a corporate trustee, like Union Bank, but Lloyd did not ask
Nielsen to make any changes to Cook’s estate plan.
   Edna James testified that she assisted elderly and disabled
individuals by purchasing their groceries, preparing meals,
and performing other tasks as needed. James testified that she
became acquainted with Cook over a period of 5 years when
                              - 637 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                     IN RE TRUST OF COOK
                      Cite as 

28 Neb. Ct. App. 624

James was caring for an individual who lived across the hall
from Cook. James was hired by the Russos to help care for
Cook in June 2017.
   James testified that she became familiar with the Russos
after seeing them at Cook’s apartment. She testified that Cook
“always talked about them, how nice they were to her, and that
they looked out for her in Arizona. And she just — she thought
the world of them.” She testified that Cook would frequently
discuss leaving the Russos her condo. James testified that Cook
was “always happy” when she was with the Russos.
   The Russos’ daughter testified that she first met Cook dur-
ing the summer of 2003. She testified that in the spring of
2016, she helped Lloyd “find an airline ticket” for him to
fly to Texas to meet Cook, because Cook had gotten “con-
fused and lost coming back from Arizona.” She testified that
Cook “took the wrong exit” while driving back to Nebraska
from Arizona and stopped at a hotel in Texas where she con-
tacted the Russos. The Russos’ daughter testified that her
parents and Cook maintained a good relationship from the
time she first met Cook in 2003 until the last time she spoke
with Cook.
   Lloyd was called again to testify as part of the Russos’ case
in chief. The Russos saw Cook two to three times per week
while in Arizona and occasionally while in Nebraska. Lloyd
believed that Cook decided to gift the Russos her condo as a
“token of her appreciation” for being her friends and spending
time with her. He testified that Cook seemed happy to be gift-
ing the Russos the condo.
   Lloyd testified that he initially did not believe acting as
Cook’s attorney in fact would be very difficult. He testified
that he was not aware of the extent of Cook’s medical issues
when he agreed to act as her medical attorney in fact. In com-
paring Cook’s condition from 2015 to 2016, Lloyd testified
that among other things, Cook began losing things, became for-
getful, would get lost, and could not remember the location of
places she had been to many times. Lloyd further testified that
                              - 638 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                     IN RE TRUST OF COOK
                      Cite as 

28 Neb. Ct. App. 624

these issues with Cook were not present on March 30, 2015,
when the beneficiary deed granting the Russos the Arizona
condo was signed.
   Lloyd testified that every year Cook would drive from
Nebraska to Arizona and back and that she had never gotten
lost until July 2016, when she missed a turn and ended up in
Amarillo, Texas. At the time, Cook had lost her wallet, had
no money, and did not know where she was. A receptionist at
the hotel where Cook stopped contacted Lloyd, who booked
a flight to pick up Cook and drive her home. However, Cook
called Lloyd the night before his flight and told Lloyd, “‘I’m
fine. I’m just going to drive home.’” The next morning,
the hotel receptionist called Lloyd and said that Cook could
not drive because she could not read the map the reception-
ist showed Cook. Lloyd testified that Cook had her driver’s
license revoked in late 2016 because she repeatedly got lost in
Omaha and called the 911 emergency dispatch service to come
get her. Lloyd testified that he was unaware of the extent of
Cook’s issues as they were occurring and that he had attributed
them to her age.
   Lloyd testified that he hired Craft to help assist with mov-
ing Cook to Brighton. Lloyd testified that he drove Cook to
Brighton one morning, ate lunch with her, and waited for Craft
to have Cook’s room ready for her. Lloyd noticed Cook’s hand
was bruised, but Cook was unable to say what happened. A
nurse offered to bring Cook some ice, but Cook refused. Lloyd
denied leaving Cook at Brighton with a broken wrist, testifying
that he offered to help but that Cook refused.
   Lloyd admitted he browsed assisted living locations “to find
the best one around,” but he denied that it had anything to do
with him attempting to protect his interest in Cook’s condo.
He testified that he hired Craft to clean out Cook’s Bloomfield
apartment but that after a week or so with little progress, he
called “1-800-GotJunk” to clear the apartment so it could be
put up for sale.
                              - 639 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                     IN RE TRUST OF COOK
                      Cite as 

28 Neb. Ct. App. 624

   Lloyd indicated that he and Betty maintained contact with
Cook even after Lloyd was replaced as attorney in fact. Lloyd
testified that he and Betty would attempt to call Cook after she
moved to Brighton but that they later found out Cook’s tele-
phone cord had been removed. The Russos continued to visit
Cook after Craft became Cook’s health care attorney in fact,
but stopped trying to call.
   On cross-examination, Lloyd acknowledged that he was
aware there was a beneficiary for the Bloomfield unit, but nev-
ertheless thought it was appropriate to sell it, acting as power
of attorney, to save Cook the associated costs. Lloyd conceded
that the situation was similar in “principle” to the sale of
the Arizona condo, but distinguished the Bloomfield sale as
costing Cook more per month to maintain. When asked if he
thought there was anything wrong with selling the Arizona
condo, Lloyd responded, “I don’t know. I guess not.”
   Betty testified that she asked Lloyd to resign as Cook’s
attorney in fact because it became “very difficult” for them.
She testified that on one occasion, Cook fell and the Russos
took her to the hospital. Betty told Lloyd to drive home while
she stayed with Cook at the hospital. When they were pre-
paring to leave the hospital, Cook told Betty, “‘I’m walking
home,’” despite the fact it was around 2 a.m. and her condo
was eight blocks from the hospital.
   On September 22, 2017, Betty called Brighton and was
told that Cook was in her room and that Betty could visit.
When Betty arrived to Cook’s room at Brighton, the door
was locked and the Brighton staff told Betty she had to con-
tact Cook’s new attorney in fact to find out where she was.
Betty determined that Cook was at a hospital and found Cook
there with two black eyes, a broken nose, a broken ankle,
and her arm “taped up.” Betty denied that Cook ever became
agitated seeing the Russos and that Cook was always glad to
see them.
   After the conclusion of Betty’s testimony, the Russos rested.
The Russos then moved for summary dismissal on the ground
                               - 640 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                      IN RE TRUST OF COOK
                       Cite as 

28 Neb. Ct. App. 624

that no reasonable fact finder could find otherwise than Cook
lacked testamentary capacity on July 7, 2017, and that there-
fore, any documents executed on or after that date were invalid.
Both parties delivered closing arguments, and the pending mat-
ters were taken under advisement.
   On July 17, 2019, the county court issued an order direct-
ing Union Bank to distribute the funds held from the sale of
the Arizona condo to the University of Nebraska Foundation.
The court found that the Russos were not “real parties in
interest” and lacked standing to pursue their claim for trust
proceeds from the sale of the condo, and it denied the Russos’
motion to disallow attorney fees. The court also made the find-
ing that Cook’s capacity was not relevant to its rulings. This
appeal followed.

                  ASSIGNMENTS OF ERROR
   The Russos assign, restated, that the county court erred by
(1) viewing the Russos’ claim as a challenge to a valid trust
rather than one involving a valid beneficiary deed and an
improper use of a power of attorney, (2) finding that Cook
was mentally competent at times relevant to this case, (3)
finding that the Russos lacked standing to assert their claims,
(4) failing to find that Union Bank lacked the authority and a
legitimate basis to sell Cook’s Arizona condo, and (5) failing to
consider the issue of undue influence.

                   STANDARD OF REVIEW
   [1] Absent an equity question, an appellate court reviews
trust administration matters for error appearing on the record;
but where an equity question is presented, appellate review of
that issue is de novo on the record. In re Robert L. McDowell
Revocable Trust, 

296 Neb. 565

, 

894 N.W.2d 810

(2017).
   [2,3] When reviewing a judgment for errors appearing on
the record, the inquiry is whether the decision conforms to the
law, is supported by competent evidence, and is neither arbi-
trary, capricious, nor unreasonable. In re Trust of Rosenberg,
                               - 641 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                      IN RE TRUST OF COOK
                       Cite as 

28 Neb. Ct. App. 624


273 Neb. 59

, 

727 N.W.2d 430

(2007). An appellate court, in
reviewing a judgment for errors appearing on the record, will
not substitute its factual findings for those of the trial court
where competent evidence supports those findings. In re Estate
of Forgey, 

298 Neb. 865

, 

906 N.W.2d 618

(2018).
   [4] An appeal from the county court’s allowance or disal-
lowance of a claim in probate will be heard as an appeal from
an action at law. In re Estate of Karmazin, 

299 Neb. 315

, 

908 N.W.2d 381

(2018). In reviewing a judgment of the probate
court in a law action, an appellate court does not reweigh evi-
dence, but considers the evidence in the light most favorable to
the successful party and resolves evidentiary conflicts in favor
of the successful party, who is entitled to every reasonable
inference deducible from the evidence.

Id. The probate

court’s
factual findings have the effect of a verdict and will not be set
aside unless clearly erroneous.

Id. [5] The

interpretation of the words in a will or a trust pre­
sents a question of law. When reviewing questions of law in a
probate matter, an appellate court reaches a conclusion inde-
pendent of the determination reached by the court below. In re
Estate of Barger, 

303 Neb. 817

, 

931 N.W.2d 660

(2019).

                            ANALYSIS
   The Russos’ first two assignments of error relate directly to
the issue of Cook’s testamentary capacity at various dates rele-
vant to this case. First, the Russos claim the county court erred
in viewing their claim as a challenge to a valid trust instead
of a case involving a beneficiary deed and an improper use of
a power of attorney. In doing so, they claim that Cook lacked
the capacity to execute her revocable trust on March 9, 2017,
and that the March 30, 2015, beneficiary deed should control
the disposition of Cook’s Arizona condo. The Russos’ second
assignment of error argues that the county court misinterpreted
Nielsen’s testimony in finding that Cook was competent at
times relevant to this case.
                                - 642 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                       IN RE TRUST OF COOK
                        Cite as 

28 Neb. Ct. App. 624

   As is further discussed below, we agree with the county
court that the issue of capacity is not relevant to the dispo-
sition of the Russos’ claims because they lack standing to
assert them.

                             Standing
   At the heart of the Russos’ appeal is the county court’s
determination that they were not real parties in interest and,
therefore, lacked standing to assert their claims. Because we
agree with the county court that the Russos lacked standing to
pursue their claims, this issue is determinative of the appeal
and we, therefore, affirm the county court’s decision.
   [6] Although the Russos maintain that the 2015 beneficiary
deed controls this case, they nevertheless contend that they
also have standing under the revocable trust. Neb. Rev. Stat.
§ 25-301 (Reissue 2016) provides that “[e]very action shall be
prosecuted in the name of the real party in interest . . . .” The
purpose of the real party in interest statute is to prevent the
prosecution of actions by persons who have no right, title, or
interest in the cause. Cattle Nat. Bank & Trust Co. v. Watson,

293 Neb. 943

, 

880 N.W.2d 906

(2016).
   [7-9] The county court relied on the Nebraska Supreme
Court’s decision in Manon v. Orr, 

289 Neb. 484

, 

856 N.W.2d 106

(2014), in concluding that the Russos lacked standing
under Cook’s revocable trust. In Manon, the Supreme Court
looked to a previous version of Neb. Rev. Stat. § 30-3855
(Supp. 2019), with identical statutory language, to find the
appellants lacked standing to challenge the sale of certain
trust property based on the settlor’s alleged incapacity. That
language, found today at § 30-3855(b), provides: “While a
trust is revocable, rights of the beneficiaries are subject to the
control of, and the duties of the trustee are owed exclusively
to, the settlor.” In interpreting what today is § 30-3855(b), the
Supreme Court held:
      [The statute] clearly provides that where the trust is revo-
      cable, as is the trust in this case, the settlor is in control
                                - 643 -
         Nebraska Court of Appeals Advance Sheets
              28 Nebraska Appellate Reports
                       IN RE TRUST OF COOK
                        Cite as 

28 Neb. Ct. App. 624

      of the trust. The plain language of this statute suggests
      that the only real party in interest in a case involving
      a revocable trust would be the settlor of that trust, or
      perhaps one that represents the settlor’s interests, for
      example, a court, a guardian or conservator, or a next
      friend. But plaintiffs here are contingent beneficiaries of
      the trust and have no real interest in the cause of action
      or a legal or equitable right, title, or interest in the subject
      matter of the controversy. This result is supported by our
      case law, which provides that a mere expectancy is insuf-
      ficient to entitle a prospective heir to bring an action to
      recover property.
Manon v. 

Orr, 289 Neb. at 487-88

, 856 N.W.2d at 109.
   [10,11] The Supreme Court then went on to discuss the
legislative history of § 30-3855(b) and the Uniform Trust
Code, which previously included language that “‘negate[d]
the settlor’s control if the settlor is incapacitated.’” Manon
v. 

Orr, 289 Neb. at 489

, 856 N.W.2d at 110 (quoting Unif.
Trust Code § 603, comment, 7C U.L.A. 554 (2006)). In 2005,
the Nebraska Legislature removed this conditional language.
Based on that history, the court in Manon held:
      This history shows that incapacity does not terminate a
      settlor’s power to revoke a trust, though it might well
      affect the ability of the settlor to exercise that power. And
      because it does not affect the power to revoke a trust, that
      trust remains revocable until revoked, either by the set-
      tlor, or by another acting in the settlor’s 

stead. 289 Neb. at 490

, 856 N.W.2d at 110-11.
   Under the express terms of article IX of Cook’s revocable
trust, the Russos’ interest in the Arizona condo would not vest
until Cook’s death, and the trust remained revocable until that
time. Based on the Supreme Court’s holding in Manon v. 

Orr, supra

, we agree with the county court that the Russos were
merely contingent beneficiaries under the trust and had nothing
more than an expectancy interest in the Arizona condo. The
Russos, therefore, lacked standing to challenge the sale of the
                              - 644 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                     IN RE TRUST OF COOK
                      Cite as 

28 Neb. Ct. App. 624

Arizona condo under § 30-3855(b) of the Nebraska Uniform
Trust Code. This result does not change regardless of whether
Cook had the requisite capacity to execute the trust on March
9, 2017, because the Russos do not have standing to challenge
the validity of the trust, nor the disposition of its assets.
   The Russos also cite to Neb. Rev. Stat. § 30-4016 (Reissue
2016) in arguing that the county court improperly dismissed
them for lack of standing. Section 30-4016 provides:
         (1) The following persons may petition a court to con-
      strue a power of attorney or review the agent’s conduct
      and grant appropriate relief:
         ....
         (e) An individual who would qualify as a presump-
      tive heir of the principal or would otherwise qualify as a
      devisee under a will that remains unrevoked;
         (f) A person named as a beneficiary to receive any
      property, benefit, or contractual right on the principal’s
      death or as a beneficiary of a trust created by or for
      the principal that has a financial interest in the princi-
      pal’s estate;
         ....
         (h) The principal’s caregiver or another person that
      demonstrates sufficient interest in the principal’s wel-
      fare; and
         (i) A person asking to accept the power of attorney.
   After reviewing the provisions of § 30-4016, we find
that none of them confer standing upon the Russos. Section
30-4016(1)(e) pertains to a “presumptive heir,” which neces-
sarily relates to a decedent’s blood relatives. The Russos are
not relatives of Cook. They also were not devisees under a
will that remained unrevoked upon Cook’s death. Section
30-4016(1)(f) relates to individuals who possess some right
“on the principal’s death.” As has been discussed, the Russos
were not beneficiaries of Cook’s revocable trust, nor the then-
revoked beneficiary deed, upon her death and cannot invoke
§ 30-4016(1)(f) to confer standing. While Lloyd at one point
                              - 645 -
        Nebraska Court of Appeals Advance Sheets
             28 Nebraska Appellate Reports
                     IN RE TRUST OF COOK
                      Cite as 

28 Neb. Ct. App. 624

served as attorney in fact under health care and financial pow-
ers of attorney for Cook, he voluntarily resigned from these
positions in July 2017, before Cook’s death, and cannot be
said to have been her “caregiver” or to have a “sufficient
interest in the principal’s welfare” to invoke standing under
§ 30-4016(1)(h). Finally, Lloyd and Betty at no point were
asking to accept Cook’s power of attorney. In fact, both sought
to remove themselves voluntarily from those roles. For these
reasons, the Russos’ reliance on § 30-4016 to challenge the
authority of Union Bank under the July 2017 financial power
of attorney, which Lloyd intentionally sought out to replace
him, is misplaced.
   Based on the foregoing analysis, we agree with the county
court that the Russos lacked standing to assert their claims.
               Russos’ Remaining Arguments
   The Russos also raise several issues unrelated to the ques-
tion of standing. The Russos claim that the county court erred
by (1) finding that Cook was mentally competent at times rel-
evant to this case, (2) failing to find that Union Bank lacked
the authority and a legitimate basis to sell Cook’s Arizona
condo, and (3) failing to consider the issue of undue influence.
However, none of these arguments change the underlying fact
that the Russos lack standing in this trust administration pro-
ceeding. Without standing to raise their claims, we need not
consider the merits of these arguments.
                        CONCLUSION
   Based on the foregoing reasons, we agree with the county
court that the Russos lacked standing to assert their claims in
this matter. Therefore, we affirm the county court’s dismissal
of the Russos’ claims for lack of standing and its denial of the
Russos’ motion to disallow attorney fees.
                                                   Affirmed.

Add comment

By Ronald

Recent Posts

Recent Comments