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In re Estate of Nichols

Court of Appeals of Tennessee, Knoxville

March 22, 2018

In re ESTATE OF JAMES HOOD NICHOLS

          Session: September 13, 2017

          Appeal from the Probate Court for Jefferson County No. 2013-12-310 Dennis Roach, II, Judge

         This case involves an order by the trial court directing the personal representative of the Estate of James Hood Nichols (the Estate) to sell a portion of the real property of the Estate. James Hood Nichols (the deceased) died testate. He bequeathed annuities to his daughters, Connie Jane Nichols Cinder and Nan Nichols Jones (the beneficiaries). In the will, the deceased gave a $75, 000 annuity to Connie Jane Nichols Cinder and a $50, 000 annuity to Nan Nichols Jones. According to the final settlement filed by Richard N. Swanson and Earl Wayne Campbell (the co-executors), the net distributable probate estate is $8, 712.01. The co-executors proposed to distribute that amount to the beneficiaries in proportion to the amount left to each beneficiary. The beneficiaries filed an objection to the proposed final settlement, asking the court to order the sale of a portion of the deceased's real property in order to fund the annuities. Finding that the bequests to the beneficiaries are higher priority than other bequests and devises in the will, the trial court ordered the personal representative to sell a portion of the deceased's real property sufficient to fund the annuities. The trial court also awarded the beneficiaries their attorney's fees. The co-executors appeal. We affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Probate Court

          Mark A. Cowan, Morristown, Tennessee, for the appellants, Richard N. Swanson and Earl Wayne Campbell.

          Eddy R. Smith, Knoxville, Tennessee, for the appellees, Connie Jane Nichols Cinder and Nan Nichols Jones.

          Charles D. Susano, Jr., J., delivered the opinion of the court, in which D. Michael Swiney, C.J., and John W. McClarty, J., joined.

          OPINION

          CHARLES D. SUSANO, JR., MJUDGE

         I.

         The trial court admitted the deceased's will to probate and appointed the co-executors nominated in his will. In addition to being named co-executors, Richard N. Swanson and Earl Wayne Campbell also served as co-trustees under the will. Article THIRD of the will provides the following:

I give to my daughter Nan Jones a paid up annuity which is to be purchased by my estate. The purchase price for such annuity is to be in the amount of fifty thousand dollars ($50, 000). Said annuity is to be payable to my daughter for her life time [sic] and shall be payable to her in equal monthly installments. This annuity shall be purchased from an insurance company as a non-assignable annuity contract without refund provisions, and the delivery of such contract to the annuitant shall release my Executor from any further liability to the annuitant.
I give to my daughter Connie Nichols a paid up annuity which is to be purchased by my estate. The purchase price for such annuity is to be in the amount of seventy-five thousand dollars ($75, 000). Said annuity is to be payable to my daughter for her life time [sic] and shall be payable to her in equal monthly installments. This annuity shall be purchased from an insurance company as a non-assignable annuity contract without refund provisions, and the delivery of such contract to the annuitant shall release my Executor from any further liability to the annuitant.

         The will also contains a residuary clause. Article FIFTH of the will provides, in pertinent part, the following:

If my wife . . . survives me, I give all the rest, residue and remainder of my property and estate, both real and personal, of whatever kind and wherever located, that I own or to which I shall be in any manner entitled at the time of my death (collectively referred to as my "residuary estate"), to my Trustees, IN TRUST, to hold the same in a separate trust (referred to as the "Marital Deduction Trust"), to manage, invest and reinvest the same, and to dispose of the net income therefrom and principle thereof, as follows:
(a) My Trustees shall pay the entire net income therefrom to my wife . . . for so long as she lives, in quarter-annual or more frequent intervals as determined by my Trustees in their absolute discretion.

(Capitalization and bold font in original.)

         The co-executors filed a final settlement and petition to close the estate providing that the net distributable probate estate was $8, 712.01. Because that amount is insufficient to fund the annuities, the co-executors proposed distributing the net estate to the beneficiaries in proportion to the amounts stated in the will: $5, 227.21 (60%) to Connie Jane Nichols Cinder and $3, 484.80 (40%) to Nan Nichols Jones.

         The beneficiaries filed an objection to the proposed final settlement. They claim that the bequests of the annuities are of a higher priority than the other bequests or devises in the deceased's will. The beneficiaries assert that, based upon the deceased's inheritance tax return, the Estate contains assets valued in excess of $3, 000, 000, including real property valued at $3, 196, 000. The beneficiaries asked the trial court to order the sale of a portion of the deceased's real property sufficient to fund their annuities.

         Article ELEVENTH of the will gives the co-executors/co-trustees all powers provided in Tenn. Code Ann. § 35-50-110. The will specifically gives the co-executors/co-trustees the power to "purchase, dispose ...


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