In re Estate of Skinner

804 S.E.2d 449

In the MATTER OF the Estate of Cathleen Bass SKINNER

No. 277A16

Supreme Court of North Carolina.

Filed September 29, 2017

Ward and Smith, P.A., Wilmington, by Jenna Fruechtenicht Butler and Alexander C. Dale, for petitioner-appellants Nancy Bass-Clark and Douglas Ray Bass.

Braswell Law, PLLC, by Ira Braswell IV, for respondent-appellee Mark Skinner.

ERVIN, Justice.

The resolution of this case hinges upon the identification and proper application of the appropriate standard of review for use in reviewing an order removing a guardian of the estate and trustee under a special needs trust for breach of fiduciary duty. After careful consideration of the record evidence in light of the relevant legal principles, we conclude that the Court of Appeals erred by reversing the removal order.

On 20 January 2010, a representative from the Adult Protective Services Division of the Wake County Human Services Department filed a petition seeking to have Cathleen Bass Skinner, who was, at that time, known as Cathy Bass, adjudicated as an incompetent and to have a guardian appointed for Ms. Skinner. In support of these requests, Adult Protective Services alleged that Ms. Skinner "is a disabled adult who has short term memory loss," "carries a diagnoses [sic] of seizure disorder and early stages of dementia," "[l]acks sufficient understanding and the capacity to make or communicate responsible decisions concerning her person," and "requires 24 hour supervision, something her siblings and extended family can not [sic] commit to her." On 13 April 2010, Assistant Clerk of Superior Court Bill Burlington found Ms. Skinner incompetent and appointed Wake County Human Services to serve as Ms. Skinner's guardian.

In July 2010, Ms. Skinner's long-time friend, Mark L. Skinner, Jr., retained Gilbert W. File, III, of the Brownlee Law Firm, for the purpose of determining whether he and Ms. Skinner could legally marry and whether he could legally serve as Ms. Skinner's guardian. On 3 August 2010, Mr. and Ms. Skinner married. On the following day, Mr. Skinner filed a motion seeking to have himself appointed as Ms. Skinner's guardian. On 10 October 2010, Mr. Skinner retained Christine S. Eatmon to assist him in litigating his motion to modify the existing guardianship arrangement. On 20 January 2011, following an evidentiary hearing held on 13 January 2011 and with the consent of Mr. Skinner, Ms. Eatmon, the attorneys for Wake County Human Services, Ms. Skinner's former guardian of the person, and Ms. Skinner's guardian ad litem, the Assistant Clerk entered an order concluding that Mr. Skinner should, on a trial basis, be appointed as the guardian of Ms. Skinner's person. On 2 August 2011, the Assistant Clerk made Mr. Skinner's appointment as the guardian of Ms. Skinner's person permanent.

Ms. Skinner's mother, Kathleen Holton Bass, died on 27 August 2012. Along with a number of her siblings and a niece and nephew, Ms. Skinner was named as a beneficiary in Ms. Bass's will. On 23 August 2013, one of Ms. Skinner's brothers, Douglass Bass, and one of Ms. Skinner's sisters, Nancy Bass Clark, filed a motion seeking to have Ms. Clark appointed as the guardian of Ms. Skinner's estate on the grounds that, since Ms. Skinner had been declared incompetent, any distributions payable to Ms. Skinner from Ms. Bass's estate "will need to be distributed to an authorized recipient in order to comply with Estate requirements/laws." On 29 August 2013, Mr. Skinner requested that he be appointed to serve as guardian of Ms. Skinner's estate instead of Ms. Clark. As Kimberly Richards, who had been appointed to serve as Ms. Skinner's guardian ad litem, noted in her report, Ms. Skinner's family questioned the appropriateness of appointing Mr. Skinner as the guardian of Ms. Skinner's estate given that he had "sold [Ms. Skinner's] car during the pendency of the original incompetency hearing and reportedly used the funds for his own personal gain," took Ms. Skinner "to the bank so that she could withdraw fund[s] to give to him for his use," unsuccessfully sued Ms. Skinner's nephew "for reimbursement of [Mr. Skinner's] travel expenses to visit [Ms. Skinner] after she was placed in a facility by ... Wake County Human Services," "does not appreciate the full nature of [Ms. Skinner's] mental incapacity," and "removed [Ms. Skinner] from the adult day care center that she formerly attended, perhaps to redirect her social security funds."

On 9 October 2013, after an evidentiary hearing, the Assistant Clerk entered an order appointing Mr. Skinner as the guardian of Ms. Skinner's estate. The Assistant Clerk found, in pertinent part, that:

1. That [Ms. Skinner] resides with [Mr.] Skinner, in an apartment located ... in Wake Forest, North Carolina. Mr. Skinner married [Ms. Skinner] after this court declared her incompetent. To date, no legal action has been filed to challenge the validity of this marriage.

2. That [Ms. Skinner] receives SSI [Supplemental Security Income] benefits of approximately $700.00 per month and is a Medicaid recipient.

....

7. [Ms. Skinner's] mother, [Ms. Bass], died on August 27, 2012. [Ms. Skinner] will inherit from her mother. [Ms. Skinner's] inheritance is expected to be between $200,000.00 and $250,000.00.

....

11. [Ms. Skinner] would be at risk of losing her SSI benefits and Medicaid assistance if her inheritance is not placed in a Special Needs Trust. [Ms. Skinner] was born October 20, 1951 and at the time of the hearing was 62 years old. [Ms. Skinner] will have medical needs for the remainder of her life.

12. [Mr. and Ms.] Skinner appear to love each other. The Guardian ad Litem.... represented to the Court that [Ms. Skinner] had expressed a desire that [Mr.] Skinner be the Guardian of her Estate.

13. [Ms.] Richards is of the opinion that [Ms.] Clark should be the guardian of [Ms. Skinner] estate. She expressed concern with regard to [Mr.] Skinner's use of a document he believes is a valid Power of Attorney. Ms. Richards does not believe the Power of Attorney is valid. She further indicated that [Mr.] Skinner does not appreciate the seriousness of Cathy's mental illness, might be resistant to placing the inheritance in a Special Needs Trust, and was further concerned by testimony of [Mr.] Skinner that he had experienced significant losses in an IRA account during the recession.

Based upon these and other findings of fact, the Assistant Clerk concluded as a matter of law, in pertinent part:

2. That an inheritance by [Ms. Skinner] of the size testified to in this case would best be managed by a Special Needs Trust. If [Ms. Skinner] were to directly receive the inheritance, it would compromise her ability to receive essential government benefits.

....

4. That it is in the best interest of [Ms.] Skinner, that [Mr.] Skinner, be appointed Guardian of the Estate if he can satisfy the following conditions:

a. That he can secure a bond in the amount of $250,000.00.

b. That he set up a Special Needs Trust for [Ms.] Skinner and that no inheritance received by [Ms.] Skinner be spent except pursuant to the provisions of the Special Needs Trust....

c. That the Special Needs Trust shall contain an accounting provision whereby [Mr.] Skinner shall annually report all receipts and expenditures in the Special Needs Trust to [Ms.] Clark.

5. That [Ms.] Clark is capable of, and shall serve as Guardian of the Estate of [Ms.] Skinner should [Mr.] Skinner not be able to meet the above conditions ... set out herein. The same conditions set out herein shall apply if [Ms.] Clark serves as Guardian of the Estate.

Based upon these findings and conclusions, the Assistant Clerk ordered that Mr. Skinner be appointed as guardian of Ms. Skinner's estate subject to the posting of a $250,000.00 bond and the establishment of a Special Needs Trust for the use and benefit of Ms. Skinner, with the Special Needs Trust to contain a provision "requiring an annual accounting to [Ms.] Clark of any and all receipts and expenditures from the Special Needs Trust," and that, in the event that Mr. Skinner failed to comply with these conditions, Ms. Clark be appointed to serve as the guardian of Ms. Skinner's estate.

On 5 December 2013, Mr. Skinner posted the required $250,000.00 bond. On 18 March 2014, Mr. Skinner executed the Cathleen Bass Skinner Special Needs Trust, which was approved by the Assistant Clerk by means of an order entered on 25 March 2014, in which Mr. Skinner's appointment as guardian of Ms. Skinner's estate was reaffirmed. On 30 April 2014, letters appointing Mr. Skinner as the guardian of Ms. Skinner's estate were issued. On 21 May 2014, the Assistant Clerk entered an order directing Ms. Bass's estate to distribute Ms. Skinner's share to the Special Needs Trust.

On 28 July 2014, Mr. Bass and Ms. Clark filed a petition seeking to have Mr. Skinner removed as trustee for the Special Needs Trust "due to his non-compliance with Trust Provision Section 5.04 Duty to Report and Account" and to have Ms. Clark appointed as successor trustee of the Special Needs Trust.¹ On 27 August 2014, following another evidentiary hearing, the Assistant Clerk entered an order removing Mr. Skinner as trustee under the Special Needs Trust and as guardian of Ms. Skinner's estate and appointing Ms. Clark as successor trustee and guardian of Ms. Skinner's estate in lieu of Mr. Skinner.² As a basis for these determinations, the Assistant Clerk found as fact, in pertinent part, that:

2. In July 2010, [Mr.] Skinner engaged the Brownlee Law Firm and attorney Gil File to provide legal advice with respect to Mr. Skinner's desire to marry and become Guardian of the Person for [Ms.] Bass. The Brownlee Law Firm charged [Mr.] Skinner the sum of $1,000.00 for these legal services by invoice dated July 16, 2010.

....

4. In October 2010, [Mr.] Skinner engaged the Eatmon Law Firm, P.C. and attorney Christine Eatmon to represent him in connection with pending guardianship of the person and incompetency proceedings. The Eatmon Law Firm

...