Ecton v. Ecton

Ecton v. Ecton, 2013 MT 114 (April 30, 2013) (5-0) (Cotter, J.)

Issue: (1) Whether the district court erred in interpreting Zales Ecton, Jr.’s will requiring IRC § 2032A property to be distributed as part of the residuary estate as requiring a specific devise rather than a devise to the residuary beneficiaries; and (2) whether the district court erred in allowing Zales III to object to the PR’s decision to award the income from the IRC § 2032A property to residuary beneficiaries more than 30 days after the proposed distribution was submitted for approval.

Short Answer: (1) No, and (2) no.


Facts: This case involves a dispute between siblings over who was entitled to receive farm and ranch land owned by their parents. The Home Ranch consists of more than 1900 acres near Amsterdam, Montana. Zales, Jr. (Dad) and his wife, Patricia (Mom), had three children: Zales III, of Amsterdam, Doug, of Spokane, WA, and Elaine, of Spokane. Zales III has operated the farm and ranch business on the Home Ranch for nearly 40 years.

Mom died in 1998. She owned an undivided one-half interest in the Home Ranch as a tenant in common with Dad. Her will created a trust and transferred her interest to the trust upon her death. Dad was the sole beneficiary. Mom’s trust was to terminate upon Dad’s death. A reciprocal provision of Mom’s will provided that upon Dad’s death, any portion of the Home Ranch that was an asset of the trust estate was to be distributed to Zales III.

Dad died in 2006. Doug was PR of Dad’s estate, and successor trustee to Mom’s trust. Doug partitioned the Home Ranch so that half of the real estate could be separately deed to Zales III, the trust beneficiary.  The remaining acreage was subject to probate. Because the valuation of all of Dad’s assets exceeded the $2 million exemption from federal estate tax, Doug used a special valuation statute for farm property, IRC § 2032A, to reduce the estate’s value by classifying 528 acres of the Home Ranch as farm property.

Doug filed a final accounting in 2009. Relying on the provision that the PR was to distribute IRC § 2032A property as part of the residuary estate, the final accounting proposed distributing the 528 acres equally between Doug and Elaine. Zales III objected.

Procedural Posture & Holding: The district court determined that Dad clearly intended to devise the entire Home Ranch to Zales III, and not distribute part of it to Doug and Elaine. Subsequently, Doug submitted an amended final accounting, which distributed the 2009, 2010, and 2011 income from the 2032A property to Doug and Elaine. Zales objected, and the district court agreed that distributing “all property known as the Home Ranch” would necessarily include any associated income and proceeds from the property, and granted Zales III’s objection. Doug appeals, and the Supreme Court affirms.