Estate Litigation: Authority of a Personal Representative to Settle Claims
The Minnesota Probate Code imposes substantial duties and authority on the personal representative of an estate, among them the ability “satisfy and settle claims.” Occasionally, exercise of that authority leads to a court challenge questioning the validity and enforceability of a settlement. A case decided by the Minnesota Court of Appeals illustrates key principles relating to this type of probate and estate litigation.
Background of the Case
Like many court actions relating to estates, In re Estate of Kukowski, A18-0217, 2018 WL 4056590 (Minn. App. Aug. 27, 2018), involved a family-related dispute. Specifically, the case related to settlement of a claim between the estates of a mother and her son.
When Dolores Kukowski passed away, her Last Will and Testament left the estate to her three children in equal shares. One of the children, Steven, passed away a short time after his mother. Steven’s wife was named as the personal representative of his estate. A surviving adult daughter was appointed as the personal representative of the Dolores estate.
The personal representative of the Dolores estate filed a claim against Steven’s estate, asserting that Steven owed Dolores nearly $200,000 for property taken from her home without permission and real property that she sold to him, for which he did not pay. Eventually, the personal representatives for the two estates entered into a mediated settlement agreement, which was contained in a memorandum of understanding (MOU). The document included a number of terms for settling the claim, including return of the property and a provision acknowledging that the terms were binding, even though details would be finalized in a separate agreement. The parties never entered into another agreement.
Steven’s estate complied with some of the settlement terms, but did not complete all of them. Six months after the mediation, Steven’s estate sued the Dolores estate to enforce the release and dismissal provisions in the agreement. The Dolores estate opposed the request on the basis that the personal representative of the Dolores estate exceeded her authority by entering into the MOU.
The district court found that the memorandum constituted a valid and enforceable settlement agreement. It ordered Steven’s estate to comply with the uncompleted provisions and the Dolores estate to comply with the release and dismissal provisions. The Dolores estate appealed.
Court of Appeals Decision Regarding Settlement Authority of the Personal Representative
The Minnesota Court of Appeals reviewed the district court’s decision under the applicable standard of determining whether the district court abused its discretion by holding the memorandum of understanding to be valid and enforceable. Ultimately, the Court of Appeals affirmed the district court’s decision in all regards.
First, the Court of Appeals reviewed the statutory criteria for validity of a mediated settlement agreement, contained in Minn. Stat. § 572.35. The Court agreed with the district court that the MOU met all requirements and therefore was valid under that statutory provision.
Then, the Court reviewed the claim that the personal representative of the Dolores estate exceeded her authority in settling the claim, because the agreement attempted to adjust the distributions from the Dolores estate. In making this objection, the appellant relied on a provision in Minn. Stat. § 524.3-912, relating to agreements among beneficiaries to alter interests under a will. Reliance on this provision was based on the fact that one of the beneficiaries under the Dolores will did not attend the mediation or sign the MOU.
The Court of Appeals noted that the memorandum of understanding was an agreement between the two estates, not among the beneficiaries and that the MOU was not conditioned on any agreement among the beneficiaries. For these reasons, § 524.3-912 did not apply. The Court concluded that since both personal representatives had statutory authority to enter into the settlement under Minn. Stat. § 524.3-715(27), the memorandum was valid and enforceable.
The Court observed that the issue of whether the memorandum affected the distribution of the Dolores estate was not before the court, and that any objections in that regard would have to be asserted against the estate in a separate action. In addition, the opinion stated that the Dolores estate could clarify provisions of the memorandum by pursuing enforcement of the agreement in the district court (which the estate had not done).
Challenging Settlement of a Claim By the Personal Representative of an Estate
While the Kukowski decision is unpublished and therefore not precedential, it sheds light on important concepts relating to the statutory provisions that are relevant when the personal representative of an estate exercises the statutory authority to settle a claim. The most important principle is that validity and enforceability of a settlement agreement is determined based on the statutory authority of the personal representative, as well as the nature and contents of the agreement itself, including applicable statutory requirements, such as those for mediated settlements.
In the appeal, the Dolores estate raised objections that did not directly address the central issue of whether the personal representative had authority to settle the claim. Instead, those claims related to interpretation or enforcement of the agreement. The Court of Appeals declined to address those questions, explaining that if the estate wanted to pursue those objections, separate lawsuits would be necessary.
The case illustrates why the personal representative of an estate who is faced with settling a possibly problematic claim — such as one involving complex family circumstances — should talk with an experienced probate and estate litigation attorney, to ensure that a potentially controversial settlement comports with all statutory and legal requirements. In addition, if beneficiaries or heirs have concerns about settlement of a claim by a personal representative, a knowledgeable estate and probate litigation attorney is in the best position to advise on the appropriate course for addressing the specific concerns of heirs or beneficiaries.
Talk With an Experienced Minnesota Probate and Estate Litigation Lawyer
My practice at the Dave Burns Law Office includes all types of probate and estate litigation, including issues relating to conduct and decisions of a personal representative such as settlement of a claim of the estate. I represent beneficiaries or heirs of an estate, as well as personal representatives, in all matters involving potential court actions relating to estate or probate issues.
If you would like to discuss a situation involving a personal representative’s settlement of a claim or another issue relating to probate or administration of an estate, I invite you to contact me at (612) 677-8351 or by emailing firstname.lastname@example.org. I welcome inquiries from clients and referring attorneys throughout the State of Minnesota and am available to meet with clients in both Minneapolis and St. Paul.
The Dave Burns Law Office hopes you find this article helpful. But please do not rely on it as legal advice. The law changes regularly and the outcome of any legal matter depends on its unique circumstances. View full disclaimer