979 P.2d 338 (Utah 1999)
In November 1987, Alva A. Young, Sr. created the Alva A. Young Trust for the benefit of his wife Emily P. Young, his five children Alva Jr., Sid, Joe, Hal, and Sis, and his grandchildren.1 The trust assets included real property, water and irrigation stock, items of farm machinery, and several bank accounts, with Alva Sr., Emily, and Alva Jr. named as trustees.2
In 1987, some of the trust property was leased to Sid and his wife Cecilia to conduct farming operations, under which Sid and Cecilia were obligated to pay fifty percent of the profits from the leased property to the trust.3 Alva Sr. died on July 30, 1989, at which time the corpus of the trust was valued at $728,505.4 Following Alva Sr.'s death, Emily executed a warranty deed on June 2, 1990, and a grant deed on June 28, 1990, purporting to convey the trust property in equal amounts to two trusts she identified as the Alva A. Young Family Trust and the Emily P. Young Trust.5 Emily also conveyed her own water shares to a trust identified as the Emily P. Young Family Trust.6 Emily died on August 18, 1993.7
After Emily's death, Alva Jr. found a yellow envelope among her possessions labeled "Cash Loans" containing checks and an itemization showing $100,000 delivered to Sid from two bank loans secured by trust assets.8 In 1994, Alva Jr., as personal representative for the estates of Alva Sr. and Emily and as successor trustee for the 1987 trust, brought suit against the defendants to resolve disputes over trust interpretation, asset allocation, deed validity, advancements, loans, and farm lease obligations.9 A bench trial was held in January of 1996.10
Defendants appealed the judgment entered in favor of plaintiff to the Supreme Court of Utah.11
Whether the 1987 trust was ambiguous regarding allocation of assets between the marital and residuary trusts?12
A trust is unambiguous when its language, read as a whole, permits only one reasonable interpretation of asset allocation; courts then apply that language without resort to parol evidence.13
No. The 1987 trust language in article IV, paragraph 4.2 and article IV(b), paragraph 3.2, when read together, requires allocation to the marital trust of only Emily's qualifying community or separate property and the fractional share of Alva Sr.'s property that minimizes estate taxes.14 The established facts show Alva Sr. created the trust naming specific trustees and assets.15 Emily released her interests upon signing.16 No evidence exists that any of her separate property entered the trust corpus valued at $728,505.17
Accordingly, the trial court allocated $600,000 to the residuary trust and the remaining $128,505 to the marital trust.18
The 1987 trust was unambiguous, and the tax-minimizing allocation was correct.19
Whether Emily's warranty deed and grant deed were valid?20
A deed is invalid when it attempts to convey trust assets in a manner that violates the trust's express terms and tax-minimization directive.21
No. The warranty deed of June 2, 1990, and grant deed of June 28, 1990, purported to divide the 1987 trust assets equally.22 The established facts establish that the trust required allocation to minimize federal estate taxes and prohibited Emily from invading residuary-trust principal.23 Equal division would increase taxes and circumvent the prohibition, rendering both deeds invalid.24
Emily's warranty deed and grant deed were invalid.25
Whether Emily's conveyances of her own water shares were valid?26
An attempted conveyance of property to a nonexistent entity is void from the outset.27
No. Emily conveyed her Deseret Irrigation and Abraham Irrigation water shares to the Emily P. Young Family Trust.28 The established facts and trial record contain no evidence that this trust was ever created.29 The attempted conveyances were therefore void.30 The shares remained part of Emily's estate at her death on August 18, 1993.31
Emily's conveyances of her own water shares were invalid.32
Whether the monies Emily distributed to Sid and Joe constituted advancements against their inheritances?33
Under Utah Code Ann. § 75-2-110 and § 75-2-612, lifetime transfers are treated as advancements or satisfactions only when declared in a writing by the decedent or acknowledged in writing by the recipient.34
No. The established facts show Emily distributed sums to her children.35 She labeled one envelope Cash Loans.36 The trial court's finding relied solely on intent to treat children equally without identifying any writing declaring the transfers advancements.37 Because the statutory writing requirement was not satisfied, the monies did not constitute advancements.38
The monies Emily distributed to Sid and Joe did not constitute advancements against their inheritances.39
Whether the $100,000 Sid received from Emily constituted a loan rather than a gift?40
A finding that funds were a loan is upheld when supported by evidence that the recipient admitted borrowing the money and intended to repay it.41
Yes. The established facts establish that Emily obtained two bank loans totaling $100,000 secured by trust assets and delivered the funds to Sid.42 Plaintiff introduced evidence at trial that Sid admitted borrowing the money and initially intended to repay it.43 That evidence adequately supported the trial court's finding that the $100,000 was a loan.44
The $100,000 Sid received from Emily constituted a loan that he was obligated to repay.45
Whether Sid and Cecilia owed $60,642 plus interest under the 1987 farm lease?46
Yes. The established facts show that Sid and Cecilia leased trust property in 1987 and were required to pay fifty percent of the profits from those operations.50 Using Sid's tax returns as the source, the trial court applied production percentages to isolate the revenue and expenses attributable to the leased land, excluded non-lease expenses such as gifts to Sid's children and unrelated mortgage payments, and calculated interest at ten percent under Utah Code Ann. § 15-1-1(2).51
This process yielded an award of $60,642 plus $23,175 in interest.52 The component involving tax and assessment payments was remanded for consistency with the advancements ruling on remand.53
Sid and Cecilia owed $60,642 plus interest under the 1987 farm lease.54
Whether all water rights listed in the 1987 farm lease were transferred to the 1987 trust?55
A finding concerning transfer of water rights is corrected when the written judgment expressly states that the settlor retained ownership of specific shares.56
No. The trial findings incorrectly stated that all water rights listed in the 1987 farm lease were conveyed to the trust.57 The established facts and the court's written judgment correctly reflect that Emily retained the 100 shares of Deseret Irrigation stock and the 140 shares of Abraham Irrigation stock.58 The corrected judgment governs.59
Not all water rights listed in the 1987 farm lease were transferred to the 1987 trust.60
Whether the sale of the farm to third parties included property and water shares owned by Hal and Alva Jr.?61
An appellate court does not reach an issue when the appellant fails to marshal supporting evidence and the appellee consents to modification of the finding.62
No. The court did not resolve the issue on the merits.63 Defendants failed to marshal evidence supporting the finding that the sale included Hal's and Alva Jr.'s parcels and water stock.64 Plaintiff has no objection to modifying the finding to state that the sale may include that property.65 The issue therefore remains open for any necessary clarification on remand.66
The court did not decide whether the sale included property owned by Hal and Alva Jr.67