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In re Jorgenson Family Trust Dated March 12

Court of Appeals of Minnesota

June 24, 2013

In re: The Jorgenson Family Trust dated March 12, 2001

UNPUBLISHED OPINION

Chippewa County District Court File No. 12-CV-10-230

Keri A. Phillips, Gerald W. Von Korff, Rinke Noonan, St. Cloud, Minnesota (for appellant Michael Jorgenson)

Douglas G. Sauter, Tammy J. Schemmel, Barna, Guzy & Steffen, Ltd., Minneapolis, Minnesota (for respondents Sharlene Jorgenson, Angela Scott, Jeremy Jorgenson, Kristi Block, Val Rae Boe)

Considered and decided by Stoneburner, Presiding Judge; Rodenberg, Judge; and Klaphake, Judge. [*]

RODENBERG, Judge

In these trust proceedings, appellant challenges the district court's orders and judgment (1) denying appellant's request to terminate or reform the trust; (2) removing appellant as trustee; and (3) denying appellant's request for attorney fees. We affirm.

FACTS

Appellant Michael Jorgenson and respondent Sharlene Jorgenson dissolved their 38-year marriage in 2001. As part of their marital termination agreement, appellant and respondent transferred their marital assets into the Jorgenson Family Trust. They appointed themselves and their children as trustees of the trust. Appellant and respondent reserved the right to revoke the trust with "the written consent of both Settlors or, in the event one Settlor is incapacitated or deceased, the remaining Settlor and all of the then living children of the Settlors."

The trust instrument anticipated that appellant would continue to manage the trust's assets, which include a large amount of agricultural land that is rented out for farming purposes. At the time the trust was created, the Jorgenson family was not actively farming this land, but instead rented it out to others. In 2003, appellant began renting less than 100 acres of trust land to farm on a small scale.

Another trust asset is the home that previously belonged to appellant's mother, which had been purchased by contract for deed in 1977. This property was transferred to the trust at the time the trust was created, after which the trust made the payments on the contract for deed. In 2004, appellant's mother forgave the balance of the amount owed and executed a warranty deed transferring a life estate in the residence to appellant and the remainder interest to the trust. But until 2010, appellant continued to deposit into his personal checking account trust funds in amounts which had previously been paid on the contract for deed.

In 2005, appellant withdrew $81, 000 from the trust account for personal use, later returning that amount of money to the trust account with interest.

In 2006, the settlors and trustees signed a handwritten "purpose and mission statement" providing that "[t]he purpose of this trust is to embellish or enhance the lives of Mike and Sharlene Jorgenson, the founders." The statement related that "[t]he mission is to safeguard the financial well being of the trust, keeping in mind the opportunity for expansion."

In 2007, appellant began to farm on a large scale. In late 2008, approximately one-third of the trust's agricultural property was available for rent. Appellant expressed an interest in renting the property, and the other trustees delayed renting the property to other prospective renters to accommodate appellant's interest in renting the land. However, appellant delayed submitting a bid until January 2009, offering substantially less than the per-acre rent he had offered for other comparable land.

On December 28 and 29, 2009, appellant withdrew $9, 560.40 from the trust account and used it to pay his personal legal expenses. The relationship between appellant and respondents became more contentious over the years, with respondents no longer acquiescing to appellant's management decisions.

Appellant initiated the present action in 2010, seeking to have the trust terminated or to have the children removed as trustees and beneficiaries of the trust. Respondents then filed a petition seeking to have appellant removed as a trustee.

Respondents moved for partial summary judgment on appellant's petition to terminate the trust. The district court awarded partial summary judgment based on its determination that the purposes of the trust "have not been accomplished, are not impossible to accomplish and are not illegal." The district court determined that the purposes of the trust are to "generate income for the lifetime of the Settlors, to distribute the trust's assets to the Children after the deaths of the ...


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