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No. 94,5691 IN THE COURT OF APPEALS OF THE STATE OF KANSAS COMMERCE BANK, N.A., Appellee, v. CRYSTAL L. BOLANDER, EXECUTOR OF THE ESTATE OF WANDA J. BENNETT-RODGERS, Deceased, DOUGLAS R. COOK, and SANDRA R. COOK, Appellees, and HAROLD JAMES WHITTET, TRUSTEE OF THE WANDA J. BENNETT-RODGERS TRUST, dated February 19, 1998, Appellant.

SYLLABUS BY THE COURT

1. K.S.A. 58a-107 sets forth the standards under the Kansas Uniform Trust Code by which the meaning and effect of the terms of a trust are determined (1) The law of the jurisdiction designated in the terms of the trust unless the designation of that jurisdiction's law is contrary to the law of the jurisdiction having the most significant relationship to the matter at issue; or (2) in the absence of a controlling designation in the terms of the trust, the law of the jurisdiction having the most significant relationship to the matter at issue.

2. K.S.A. 58a-108 provides the following guidelines regarding the administration of a trust under the Kansas Uniform Trust Code: (a) Without precluding other means for 1

establishing a sufficient connection with the designated jurisdiction, terms of a trust designating the principal place of administration are valid and controlling if: (1) A trustee's principal place of business is located in or a trustee is a resident of the designated jurisdiction; or (2) all or part of the administration occurs in the designated jurisdiction.

3. If the language of a written instrument is clear and can be carried out as written, there is no room for rules of construction. Where contract terms are plain and unambiguous, the intention of the parties and the meaning of the contract are determined from the contract itself.

4. K.S.A. 58a-107 is analyzed and applied.

5. The resolution of the question of the state with the most significant relationship to the trust under K.S.A. 58a-107 is both a question of fact and law. This issue is very fact specific since each determination under K.S.A. 58a-107 presents a unique set of facts. The function of an appellate court is to determine whether the trial court's findings of fact are supported by substantial competent evidence and whether the findings are sufficient to support the trial court's conclusions of law. Substantial evidence is such legal and relevant evidence as a reasonable person might accept as sufficient to support a conclusion.

6. A party is not permitted to invoke the jurisdiction and power of a court for the purpose of securing important rights from an adversary through its judgment and then,

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after obtaining the benefits sought, to repudiate or question the validity of that adjudication on the ground the court was without jurisdiction.

7. When there is no dispute by any of the parties that a trust is clearly a revocable trust, K.S.A. 58a-505(a)(1) provides that during the lifetime of a settlor, the property of a revocable trust is subject to the claims of the settlor's creditors.

8. K.S.A. 58a-505(a)(3) controls the limitations on assets held in trust: After the death of a settlor, and subject to the settlor's right to direct the source from which liabilities will be paid, the property of a trust that was revocable at the settlor's death is subject to claims of the settlor's creditors, costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal of remains, the homestead, the homestead allowance, the elective share rights of the surviving spouse pursuant to K.S.A. 59-6a209, and amendments thereto, and the statutory allowances to a surviving spouse and children to the extent the settlor's probate estate is inadequate to satisfy those claims, costs, expenses, and allowances.

9. A revocable living trust is a trust established during the settlor's lifetime in which the settlor reserves the right to alter, amend, or revoke the trust and may retain the right during his or her lifetime to direct the disposition of principal and income. At the death of the settlor, the trust assets are disposed of in accordance with the terms of the trust document. When a trust is created for the settlor's own benefit, the settlor's creditors can reach any trust assets and, for purpose of the present case, those nonexempt assets available to the settlor. This rule promotes a valid public policy that a person ought not to be able to shelter his or her assets from creditors in a discretionary trust of which he or

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she is the beneficiary and thus be able to enjoy all the benefits of ownership of the property without any of the burdens.

10. Pursuant to K.S.A. 58a-505(a)(3), when the settlor of a revocable living trust dies, the property in the revocable trust is subject to the claims of the settlor's creditors

11. The exemptions that surround an individual retirement account (IRA) or its benefits to the settlor are personal to the settlor.

12. The assets in a revocable trust are subject to the claims of the settlor's creditors pursuant to K.S.A. 58a-505. Although IRA benefits are not available to a settlor's creditors during his or her lifetime, they are available to the settlor's creditors upon his or her death because the settlor placed them in an inter vivos revocable trust.

Appeal from Montgomery District Court; ROGER L. GOSSARD, judge. Opinion filed April 6, 2007. Affirmed.

Robert E. Keeshan, of Scott, Quinlan, Willard, Barnes & Keeshan, of Topeka, for appellant Harold James Whittet.

William J. Kelly, of Independence, for appellee Commerce Bank, N.A.

Before MCANANY, P.J., PIERRON, J., and BUKATY, S.J.

PIERRON, J.: Harold James Whittet, trustee of the Wanda J. Bennett-Rodgers Trust (Trust), appeals the summary judgment decision of the district court that Commerce

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Bank, N.A. (Commerce), could attach assets in the Trust to satisfy its judgment entered for a promissory note Wanda executed before her death. We affirm.

On February 19, 1998, Wanda resided in Independence, Kansas, and executed the Trust. She was the beneficiary of the Trust during her lifetime and reserved the right to amend or revoke the Trust at any time. The purpose of the Trust was to provide for the educational expenses of her lineal descendants. Wanda's son, Whittet, was named as first successor trustee. The initial Trust documents indicated that the Trust property consisted of a Merrill Lynch individual retirement account (IRA) and also real estate in Montgomery County. However, the Trust was not funded with these assets upon its execution. At the time of Wanda's death, no property was owned by the Trust.

On June 22, 2000, Wanda executed her last will and testament. The will provided for specific bequests of $2,000 to $8,000 to certain grandchildren and individuals, $10,000 to each of her three children, and assigned the residue to the Trust for educational purposes.

On May 25, 2002, Wanda executed a promissory note, payable to the order of Commerce in the principal amount of $93,314.48. The promissory note was secured by a security interest in real property and personal property. The promissory note indicated that Commerce had a right of setoff but "this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law."

Wanda remained in Kansas until December 2002, when she moved to Friendswood, Texas, and took all her personal belongings and effects. She contracted to sell her house in Independence. On December 6, 2002, Wanda voluntarily moved into the Park Place Retirement Home in Friendswood. She received Medicaid from the State of Texas.

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Wanda died in Houston, Texas, on January 17, 2003. Upon her death, a Texas death certificate was issued. Pursuant to Wanda's will, Crystal Bolander was named as the executor of Wanda's estate (Estate), and the will was admitted for probate in April 2003. The inventory and valuation filed in the estate case listed real estate valued at $246,000, personal property valued at $10,000, and stock valued at $40,113.83, for a total valuation of $296,113.85. The valuation also listed jointly owned property in the amount of $39,986.16, and for the Trust in question it listed $7,320.11 in a Merill Lynch IRA and $205,225.69 in a Solomon Smith Barney IRA for a total value of $212,545.80 in the Trust. The petition listed Whittet as residing at 3185 N. 24th, Independence, Kansas.

On June 2, 2003, Commerce filed a chapter 60 petition seeking a money judgment against the Estate for the unpaid balance of the promissory note, plus costs and fees, and for foreclosure of its security interests and mortgage. Commerce later amended its petition to add Whittet, as trustee, as an additional defendant, claiming that since the Trust was revocable at the time of Wanda's death, the Trust property was subject to Commerce's claim as well.

Whittet was personally served at 3185 N. 24th St., Independence, Kansas, with a summons and a copy of the petition on November 24, 2003. Whittet, as trustee, filed an answer and "counter petition" (counterclaim) in the chapter 60 action. He raised affirmative defenses, inter alia, that Commerce could not attach the Trust assets and that the Kansas court lacked personal jurisdiction over the Trust or any Trust property because the situs of the Trust and all property was in Oklahoma. In the counterclaim, Whittet challenged the validity of Commerce's real estate collateral claim and the legality of the promissory note.

On July 30, 2004, the Estate advised the district court that Wanda had not filed income tax returns or paid taxes for the years 2000-2003 and combined with the other liabilities the Estate was insolvent, with $94,054.42 in assets and $206,928.33 in 6

liabilities. Commerce filed for summary judgment against the Trust in August 2004. Commerce claimed the Estate was insolvent and that under the Kansas Uniform Trust Code, K.S.A. 58a-101 et seq., it was entitled to judgment against the Estate and the Trust, jointly and severally, for the full amount of the indebtedness regardless of any spendthrift clause.

The Trust filed a response to the summary judgment motion and a motion to dismiss. The Trust claimed Commerce's claim against the Trust was uncertain and the district court lacked jurisdiction. The Trust requested a dismissal claiming the Trust was not a Kansas Trust, and the Kansas Uniform Trust Code did not grant a creditor of a deceased settlor a means to collect from a revocable trust in a foreclosure action.

On January 24, 2005, the district court granted summary judgment in favor of Commerce. The court found that under the terms of the Trust instrument and the laws of Kansas, the Trust was governed by the laws of Kansas, including the Kansas Uniform Trust Code. The court held that pursuant to K.S.A. 58a-505, the assets of the Trust were available to satisfy Commerce's judgment claim. The court entered judgment against the Trust, reduced by the amount of proceeds from the sale of Commerce's secured collateral. The court also froze the assets of the Trust with a value not less than the unpaid balance of the judgment entered in favor of Commerce.

On February 3, 2005, the Trust filed a motion for reconsideration, arguing the district court improperly froze the assets of the Trust and that almost all of the assets of the Trust were funds in IRAs and the IRA funds were exempt from any judgment of a creditor of the Trust. The district court denied the Trust's motion for reconsideration. The court also found the Trust assets exceeded $200,000 and Commerce's claim as of that day was $76,199.82. The court held there were substantial assets in the Trust over and above the value of Commerce's claim, which were unaffected by the freeze order. The court

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held the Trust had failed to offer any evidence to show that the Trust, trustee, or the beneficiaries of the Trust were in any way harmed by the freeze order.

On April 7, 2005, Commerce filed a request for garnishment for $83,956.88 from the Trust assets, specifically from Smith Barney Citigroup. In response, on April 27, 2005, the Trust filed a motion to determine Trust property subject to Commerce's judgment. The Trust claimed there was no property in the Trust at the time of Wanda's death but that after her death two of her IRA accounts became Trust assets, Smith Barney on May 31, 2003, and Merrill Lynch on September 27, 2003. The Trust claimed the relevant portions of the Kansas Uniform Trust Code only applied to Trust property in a trust at the time of the settlor's death, and in this case, the Trust received the property after Wanda's death. The district court rejected the Trust's claims by ruling:

"5. K.S.A. 58a-505(a)(3), as interpreted by the court, does not shelter from the plaintiff's judgment the funds received by the Trust as beneficiary of the settlor's IRAs. The phrase "at the settlor's death," refers to whether or not a trust is revocable at the time of the settlor's death. The said phrase does not limit those assets of a trust which are subject to creditor's claims. "6. The funds received by the Trust, as beneficiary of the settlor's IRA, are not exempt assets for the following reasons: A. The exemption which applied to the IRAs during the settlor's lifetime did not survive her death. B. The Trust is not owner of an IRA but rather is the recipient of funds as the beneficiary of the settlor's IRA. C. The Trust is not a natural person and the statutory exemptions which apply to natural persons do not apply to the Trust."

The Trust appeals.

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The Trust first argues the district court did not have jurisdiction over the Trust when Wanda died testate in Texas and the trust assets consisted entirely of IRA amounts transferred after Wanda's death to an Oklahoma trustee.

The question of jurisdiction is subject to review at any time in the proceedings. Whether jurisdiction exists is a question of law over which the court's scope of review is unlimited. Foster v. Kansas Dept. of Revenue, 281 Kan. 368, 369, 130 P.3d 560 (2006).

K.S.A. 58a-107 sets forth the standards under the Kansas Uniform Trust Code by which we measure this case:
"The meaning and effect of the terms of trust are determined by: (1) The law of the jurisdiction designated in the terms unless the designation of that jurisdiction's law is contrary to the law of the jurisdiction having the most significant relationship to the matter at issue; or (2) in the absence of a controlling designation in the terms of the trust, the law of the jurisdiction having the most significant relationship to the matter at issue."

Regarding administration of a trust under the Kansas Uniform Trust Code, K.S.A. 58a-108 provides the following guidelines:

"(a) Without precluding other means for establishing a sufficient connection with the designated jurisdiction, terms of a trust designating the principal place of administration are valid and controlling if: (1) A trustee's principal place of business is located in or a trustee is a resident of the designated jurisdiction; or (2) all or part of the administration occurs in the designated jurisdiction."

The Trust had a clear and unambiguous clause providing for the application of Kansas law. Article X(D) of the Trust provides: "The validity and construction of this agreement shall be determined and governed in all respects by the laws of the State of 9

Kansas. The Trust powers and provisions herein contained shall be administered, exercised, and carried into effect according to the laws of the such state."

"If the language of a written instrument is clear and can be carried out as written, there is no room for rules of construction. [Citation omitted.] Where contract terms are plain and unambiguous, the intention of the parties and the meaning of the contract are determined from the contract itself. [Citation omitted.]" Zukel v. Great West Managers, LLC, 31 Kan. App. 2d 1098, 1101, 78 P.3d 480 (2003), rev. denied 277 Kan. 928 (2003).

Consequently, the only jurisdictional question remaining in this case, pursuant to K.S.A. 58a-107, is whether the designation of Kansas law is contrary to the law of the jurisdiction having the most significant relationship to the matter at issue. The theme of the Trust's argument is that we live in a mobile society and that the beginning situs of a trust would normally be the domicile of the trust originator, but it is unreasonable to believe the situs of a trust involving personal property must remain the settlor's original domicile. See In re Saddy, 129 N.Y.S.2d 163 (1954) (in motion for change of successor trustee, New York court declined jurisdiction where settlor was from New York but all other facts pointed to Pennsylvania, including the trustees and the corpus of the trust).

The Trust claims that at the time of her death, Wanda was a resident of Texas and Harold was a resident of Oklahoma. The Trust also claims the language in Article X(D), referring to the "law of the such state," is ambiguous. The Trust cites several cases in support of its argument that courts have "gone outside" the trust designation of controlling law. See In re Estate of McMillian, 603 So. 2d 685 (Fla. Dist. App. 1992); Matter of Marcus, 191 Misc. 2d 497, 742 N.Y.S.2d 777 (2002). McMillian and Marcus are consistent with Kansas law in every respect. Under K.S.A. 58a-107, the court is free to go outside the choice of law designation in a trust in establishing the jurisdiction "having the most significant relationship to the matter at issue."

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We recognize the Trust's arguments that both Texas and Oklahoma, similar to Kansas, have statutory provisions to allow for change of the place of administration to their state. However, we must first determine which state has the most significant relationship to the matter at issue before we determine which law to apply. See K.S.A. 58a-107. The Trust claims that even if Texas was not the original state of administration, Texas law allows for change of the place of administration. See Uniform Trust Code

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