Editor's Note: Would you want your final wishes to be overruled and your heirs to be stripped of what should rightfully be theirs? This type of "estate looting" is occurring across the country. The US~Observer sincerely hopes Judge Burt Carnes takes it to heart that his ruling in this case just might have impact beyond his "little" corner of Texas.
By Edward SnookInvestigative Reporter
GEORGETOWN, Texas – Upon his death Vernon Kunshick intended that his daughters acquire his assets, so he placed them into a living trust for that purpose. Now, his wishes are being challenged by his second wife Teddie Jo Kunshick and the attorney who Vernon Kunshick used to prepare that same trust.
Teddie Jo Kunshick, is apparently seeking court approval to retain the trust assets of her late husband under the guise of alleged estate administration purposes. She is also trying to disqualify Kunshick’s daughters, his primary heirs, as trust beneficiaries. If successful this will essentially place another dagger into the wishes of Vernon Kunshick. A hearing in this matter is scheduled for March 16, 2009 in a Williamson County, Texas District Court and is to be heard by Judge Burt Carnes.
Should clearly stated final wishes of an individual be respected? Should courts and/or legal manipulations and procedures reconfigure a decedent’s property distribution intentions at the behest of estate administrators? This case listed as “Teddie Jo Kunshick, as Trustee of the Vernon Kunshick Living Trust, v. Patricia Gayle Gregory and Lou Ann Anderson”, just might answer these questions. Ultimately, Judge Carnes’ ruling could affect all Texans’ individual rights to determine their final distribution of assets, as well as affecting all beneficiaries’ rights of inheritance. As the nation’s second most popular retirement locale, this case could set standards for those who live and die in Texas, particularly in Williamson County – home to Sun City Texas and the state’s largest concentration of senior citizens.
Property being passed down through generations of family was once a time-honored American tradition, but today, legal system abuses and selective treatment of probate documents threaten intended property transfers. Legal commentator Horace Cooper refers to this rise in estate litigation as a new inheritance tax designed to divert assets from intended beneficiaries. Cooper cites Marshall v. Marshall (Anna Nicole Smith’s action against her deceased husband’s family) as an example of such activities, but warns that estates of far less value are becoming similarly vulnerable.
Prior to his 1998 marriage to Teddie Jo Line, Vernon Kunshick created a trust to ensure assets accumulated during 46 years of marriage to his first wife were maintained as separate property. Vernon Kunshick was his trust’s trustee until a 2001 health downturn mandated other involvement. Vernon’s daughter, Lou Ann Anderson, became trustee and served in that capacity (or as co-trustee with Kunshick) until 2004 when she resigned due to “escalating hostility” on the part of Teddie Jo Kunshick. With limited options, Vernon Kunshick made Teddie Jo Kunshick his co-trustee.
Major Conflict of Interest
Vernon Kunshick died in May 2006. In November 2007, Teddie Jo Kunshick filed a lawsuit against Anderson and Patricia Gayle Gregory, Kunshick’s other daughter. She was represented by Ron Greening, the attorney Vernon Kunshick used for his estate plan preparation. I don’t know about Texas, however in Oregon and many other places one would call it a “major conflict of interest” for Greening to create a trust for a person and then attempt to exclude that trusts intended beneficiaries after the person is deceased.
In her lawsuit, Teddie Jo sought court approval to withhold trust funds for a spend-down plan intended to “ensure that adequate funds are available to administer the Trust” over the course of her life. The beneficiaries viewed this action as contrary to their father’s intentions. Vernon Kunshick had earmarked $40,000 for the trustee’s use in paying taxes, insurance and for other maintenance items associated with a life interest allowing her continued use of his residence. Beneficiaries maintain Kunshick’s intentions are clearly shown through a hand-written distribution model in which he detailed a nominal withholding for trust administration and the bulk of assets being distributed to his daughters and only grandchild upon fulfillment of specific bequests to Trustee Kunshick in her beneficiary capacity.
Trustee Teddie Jo Kunshick received her specified bequests upon Kunshick’s death. The grandchild’s distribution was delayed when her mother, Lou Ann Anderson, declined signing a release that violated trust terms and Kunshick’s intentions by attempting to remove the child as a successor beneficiary upon receipt of the bequest. The delay continued additional months as Ron Greening, despite numerous requests, would not provide more than a partial copy of the trust’s most recent (fourth) amendment. Kunshick’s daughters only received a distribution offer with the lawsuit filing.
Court documents indicate months of hearings including a mediation session deemed “premature” due to the plaintiff’s failure to receive discovery requests. At that time, Ron Greening did not accept mail at his court filing address. In March 2008, Judge Burt Carnes dismissed the case. Despite an open court admission that the pleadings did not constitute a “justiciable controversy” and sought only an “advisory opinion,” Ron Greening re-filed the next day asking for a rehearing and motion for new trial.
The defendants scheduled a Motion for Sanctions to be heard at a May 2008 hearing along with Greening’s new trial motion. This motion contended the plaintiff’s initial pleading was filed in bad faith and for the purpose of harassment. It stated the lawsuit sought to intimidate defendants into relinquishing their rights, to indemnify Trustee Kunshick and Greening from any and all claims of any character in the administration of the Trust and to needlessly increase the cost of litigation.
In an accompanying affidavit, Defendant Lou Ann Anderson stated her father’s intention was for the trust “to minimize legal involvement and legal expense,” that Trustee Kunshick stopped communication with beneficiaries and instead delegated all contact to be through Ron Greening, that “although all distributions to the Trustee were made shortly after our father’s death, the distribution to us has been stonewalled,” and that upon filing the suit, Greening’s letter demanding a full release in exchange for $51,000 to each daughter was “in contrast to our father’s specific instructions.” The affidavit continued that “Mr. Greening’s law firm has already billed in excess of $35,000.00 as of March 2007 and we are no closer to getting a resolution of our rights under the Trust than when our father died.” The document concluded with “My sister and I are not attempting to contest the Will or Trust in any way, but are merely trying to secure the rights that belong to us under the Trust documents prepared by Mr. Greening.” While Judge Carnes ultimately granted the plaintiffs’ rehearing/new trial motion, the defendants’ sanctions motion was never heard.
Defendants Gregory and Anderson filed a counterclaim in August 2008 stating “After Vernon Kunshick’s death, Teddie Jo Kunshick and Ron Greening have conspired to prevent the Defendants/Third-Party Plaintiffs from receiving their benefits under the trust and filed this suit to get this Court’s approval of that conspiracy.” The “conspiracy” was described as an attempt to set aside funds “to finance trust administration over the expected life of the trust, primarily to benefit the Trustee and Mr. Greening.”
Mike Cosby of Pakis, Giotes, Page & Burleson deposed Teddie Jo Kunshick and Ron Greening in November 2008. Characterizing herself as a “full-time trustee,” Trustee Kunshick expressed uncertainty on the overall trust value. She acknowledged the amount sought to be withheld has ranged from $194,000 to $216,000, but offered no explanation for the amounts’ basis. Transcripts indicate similar responses from Ron Greening. Both also argued they had not filed a lawsuit against beneficiaries. Defense-filed documents described the plaintiffs’ deposition testimony as “Thus, Mrs. Kunshick filed a lawsuit, purportedly to ask the Court to bless the amount she wants to withhold from dissemination, expressly acknowledging under oath that she knew the ‘girls’ (Defendants) would not accept that projection, disclaiming that she knows the source of the projection that she claims should be accepted , deferring to her attorney who likewise denies knowing the source of the projection, and they have refused to identify any witnesses who might know the source of the projection; all the while acknowledging that the projection for which they seek a blessing is completely at odds with the handwritten projection prepared by the Settlor of the Trust (Vernon Kunshick) in his own handwriting.”
After depositions, the defendants amended earlier filings, added an application for trustee removal and scheduled a February hearing. Trustee Kunshick and Ron Greening responded by changing their lawsuit to a non-suit, an attempt to negate their 15-month legal action against the beneficiaries.
In a bait and switch tactic, Greening also asked Judge Carnes to realign the case making trust beneficiaries the plaintiffs and Trustee Kunshick the defendant to support the trustee’s declaration that Gregory and Anderson are no longer beneficiaries. By proclaiming the defendant’s countersuit to the trustee-initiated litigation a trust contest and an effort by beneficiaries to enlarge their interest, Trustee Kunshick now claims they “forfeit any amount to which they may have been entitled under the Trust, and their interest passes as if they predeceased Mr. Kunshick.”
Additional plaintiff motions seek to bring Kunshick’s sole grandchild, daughter of Lou Ann Anderson, into the case as an indispensable party. Anderson refused to sign a 2006 Trustee Kunshick/Ron Greening-generated release that sought to violate the trust and terminate her daughter’s successor beneficiary status. The trustee and Greening now want to also diminish the parental rights of Anderson and her husband, the child’s father, by precluding them from serving as their daughter’s guardian in future actions.
Another Greening filing supports the trustee’s desire to withhold and potentially deplete the trust by quoting the trust’s Fourth Amendment: “the Trustee may make disbursements to herself for purposes of health, education as well as maintenance and support in the Trustee’s accustomed standard of living.” Interestingly, this clause is on the document pages withheld from beneficiaries by Greening for six months. If considered valid, the clause brings into question the necessity and motivation of any trustee-initiated legal action.
Despite being filed outside legal timeframes, Greening asked Judge Carnes to hear his pleadings ahead of the trustee removal motion. The judge opened the February 19 hearing saying he had not read all the motions. After opening statements, Judge Carnes ruled he would hear no motions until a time at which he could hear them all. As Trustee Kunshick has attended none of the hearings related to her litigation, the defense subpoenaed her for court appearance, but learned that Judge Carnes only requires assurance of “availability.” A similar position was articulated when the defense asked the court to grant a motion freezing trust assets. Judge Carnes instead was satisfied with Ron Greening’s word that no funds would be spent before the March 16 hearing.
To date, the US~Observer’s investigation finds legal maneuvering occurring at great expense to Vernon Kunshick’s trust and his beneficiaries yet facts of the case are still to be addressed. Upon that happening, trust assets may be depleted. If Ron Greening’s invocation of the HEMS clause (health, education, maintenance and support) is legitimate, he demonstrates the uncalled for and inappropriate nature of the trustee’s litigation. How can a trustee be considered as acting in good faith or as a proper fiduciary after unnecessarily creating a conflict leading to 15 months of litigation and causing major expense to both the trust and the trust beneficiaries? It therefore is not surprising that Trustee Kunshick and Ron Greening are working to pre-empt the beneficiaries’ trustee removal motion by disentitling Kunshick’s daughters from any intended inheritance.
These proceedings illustrate how the execution of an estate plan can become a legal entanglement, beneficial to few and why these “case trends” pose a dangerous threat to many. The bottom line is, a person’s last wishes should be just as secure today as they were in past decades, but unfortunately they aren’t.
The US~Observer will continue reporting to America on this case, watching closely what Judge Burt Carnes allows to happen with Vernon Kunshick’s estate assets. Anyone with information on this case, including the players involved is urged to contact Edward Snook at 541-474-7885.
Starting Saturday,March 7th 2009 from 1-4 p.m. Pacific Time or 4-7 p.m. E.T .
