[Cite as Steingass v. Steingass,
2012-Ohio-1647.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 97515
DONNA L. STEINGASS, SUCCESSOR TRUSTEE
PLAINTIFF-APPELLEE
vs.
DONNA L. STEINGASS, INDIVIDUALLY, ET AL.
DEFENDANTS-APPELLEES
[APPEAL BY CASH MISCHKA, ET AL.
DEFENDANTS-APPELLANTS]
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Probate Division
Case No. 11 ADV 0166881
BEFORE: Cooney, P.J., Keough, J., and E. Gallagher, J.
RELEASED AND JOURNALIZED: April 12, 2012
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ATTORNEYS FOR APPELLANTS
Frances Floriano Goins
Isaac J. Eddington
James A. Goldsmith
Patrick J. Tulley
Ulmer & Berne LLP
Skylight Office Tower
1660 West 2nd St., Suite 1100
Cleveland, OH 44113-1448
GUARDIAN AD LITEM
John P. Koscianski
West Moreland Building
5700 Pearl Road
Suite 302
Parma, OH 44129
ATTORNEYS FOR APPELLEES
For Donna L. Steingass, Successor Trustee
Douglas B. Schnee
Jeffrey P. Consolo
Erin K. Walsh
McDonald, Hopkins, Burke & Haber
2100 Bank One Center
600 Superior Ave., East
Cleveland, OH 44114
For Donna L. Steingass, Individually
Leon A. Weiss
Franklin C. Malemud
Reminger Co., LPA
1400 Midland Building
101 Prospect Avenue, West
3
Cleveland, OH 44115-1093
Marcia J. Wexberg
Calfee, Halter & Griswold
1400 Keybank Center
800 Superior Avenue
Cleveland, OH 44114
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COLLEEN CONWAY COONEY, P.J.:
{¶1} Defendants-appellants, Cash Mischka, Valerie Mischka, Spencer Mischka,
and Clay Mischka, appeal the trial court’s grant of summary judgment declaring that
Donna L. Steingass, as Trustee of the Frank L. Steingass Revocable Living Trust, has
authority to direct all of the assets of the late Frank L. Steingass into a marital trust. We
find no merit to the appeal and affirm.
{¶2} The late Frank L. Steingass (“Frank” or the “Settlor”) created the Frank L.
Steingass Revocable Living Trust (the “Trust”) for the benefit of his wife Donna L.
Steingass (“Donna”) and his stepson Cash Mischka and Cash’s children, Valerie,
Spencer, and Clay Mischka (the “Mischkas”). The Trust Agreement (the “Agreement”)
provided that upon Frank’s death, the Trust’s assets would be split between a “Marital
Trust” for Donna’s benefit, and a “Family Trust” that would benefit the Mischkas. Upon
Donna’s death, the remaining Marital Trust assets would (for the most part) be used for
the Mischkas’ benefit as well.
{¶3} It is undisputed that when Frank created the Trust Agreement, he was
contemplating the unsettled state of federal estate tax law in 2006, when the Agreement
was executed. The Economic Growth and Tax Relief Reconciliation Act of 2001 (“the
2001 Act”), which was in effect in 2006, gradually reduced the maximum federal estate
tax rate from 50 percent in 2002 to a rate of 45 percent in 2009. It also gradually
increased the applicable exclusion amount from $1 million in 2002 to $3.5 million in
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2009. The 2001 Act completely repealed the federal estate tax in 2010 and reinstated the
tax rates and exemptions for 2011 that existed prior to the 2001 Act.
{¶4} When Frank executed his Trust in 2006, he contemplated a changed federal
estate tax scheme depending on the year of his death. The Agreement provided that, if
upon the Settlor’s death, the federal estate tax was “repealed and not in effect,” all Trust
assets would go to the Marital Trust. Under these circumstances, no assets would flow
into the Family Trust.
{¶5} The 2010 Act, which was enacted in December 2010, retroactively
reinstated the federal estate tax for 2010 with a 35 percent rate and a $5 million
applicable exclusion amount. The 2010 Act also contained a provision that allowed the
estate of a person who died during the 2010 calendar year to choose to remain under the
complete repeal and not be subject to federal estate tax, or to be subject to an alternative
tax relief scheme under which the estate assets would be “stepped up” to their date of
death value, if the estate chose to be subject to the federal estate tax.
{¶6} Donna filed a complaint for declaratory judgment seeking to invoke the “no
federal estate tax” clause in the Agreement because the 2010 Act allowed the estate to
completely “opt out ” of the federal estate tax. Both parties filed motions for summary
judgment. Donna argued that on Frank’s date of death, December 11, 2010, there was no
federal estate tax and, therefore, the plain language of the Trust required that all estate
assets be placed in the Marital Trust. She also argued that although the 2010 Act was
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made retroactive and applicable to the actual date of death, the opt-out provision in the
2010 Act allowed for a situation where no federal tax was in effect on the date of death.
{¶7} The Mischkas argued that because the 2010 legislation applied
retroactively, there was a federal estate tax on the actual date of death and, therefore,
estate assets were to be distributed to both the Marital Trust and the Family Trust. The
Mischkas also argued that because the 2001 Act was “repealed,” the provision for placing
all of the assets into the Marital Trust is inapplicable.
{¶8} In granting summary judgment in favor of Donna, the probate court found
that on the actual date of Frank’s death, there was no effective federal estate tax. The
court acknowledged that the 2010 Act applied retroactively to impose a federal estate tax
on the date of death, but found that the opt-out provision effectively allowed the 2001 Act
to apply and the estate tax to remain repealed at the time of Frank’s death. The Mischkas
now appeal, raising one assignment of error.
{¶9} In their sole assignment of error, the Mischkas argue the trial court erred in
holding that the federal estate tax was not in effect at the time of Frank’s death for
purposes of the Trust Agreement.
{¶10} An appellate court reviews a trial court’s decision on a motion for summary
judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105,
671 N.E.2d 241
(1996). Summary judgment is appropriate when, construing the evidence most strongly in
favor of the nonmoving party, (1) there is no genuine issue of material fact; (2) the
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moving party is entitled to judgment as a matter of law; and (3) reasonable minds can
come to but one conclusion, that conclusion being adverse to the nonmoving party.
Zivich v. Mentor Soccer Club, Inc., 82 Ohio St.3d 367, 369-370,
696 N.E.2d 201 (1998),
citing Horton v. Harwick Chem. Corp.,
73 Ohio St.3d 679,
653 N.E.2d 1196 (1995),
paragraph three of the syllabus.
{¶11} It is undisputed that there is no genuine issue as to any material fact. The
sole issue before this court is the construction of the Trust as it relates to the federal estate
tax legislation in effect on the date of the Settlor’s death.
{¶12} In construing the language of a revocable inter vivos trust, courts apply the
same rules of construction as those used for interpreting wills. Ohio Citizens Bank v.
Mills, 45 Ohio St.3d 153,
543 N.E.2d 1206 (1989), superseded by statute on other
grounds. Our fundamental goal is “to ascertain and carry out, within the bounds of the
law, the intent of the testator.” Prentiss v. Goff,
192 Ohio App.3d 475,
2011-Ohio-734,
949 N.E.2d 560 (8th Dist.), citing Domo v. McCarthy,
66 Ohio St.3d 312, 314,
612
N.E.2d 706 (1993). Therefore, when the language of the trust is clear and unambiguous,
the settlor’s intent must be ascertained from the express terms of the trust itself.
Id.
Only when the express language of the instrument creates doubt as to its meaning may the
court consider extrinsic evidence to determine the testator’s intent. Oliver v. Bank One,
Dayton, N.A.,
60 Ohio St.3d 32,
573 N.E.2d 55 (1991), paragraph one of the syllabus.
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{¶13} In addition, when determining the testator’s intent, we consider not just the
contested language but rather the “whole [trust] … read in light of the applicable law,
and circumstances surrounding the [trust’s] execution.” Cent. Trust Co. of N. Ohio, N.A.
v. Smith, 50 Ohio St.3d 133, 136,
553 N.E.2d 265 (1990).
{¶14} Article IX of the Agreement, which governs the applicability of federal
estate tax on the Trust, provides, in pertinent part:
Congress enacted the Economic Growth and Tax Relief Reconciliation Act
(the Act), which has created some uncertainty as to the application and the
extent of the application of the federal estate tax … on an individual’s
estate. It is also possible that Congress will make further changes in the
application of these taxes. The preceding Article reflects the Settlor’s plan
for division into shares/trusts for the Settlor’s beneficiaries based on the
Settlor’s death occurring at the time this Trust is executed. This Article is
intended to control the actual division in shares/trusts depending on the
circumstances at the Settlor’s actual date of death. It is, therefore, the
Settlor’s intention that this Article at the Settlor’s death will control whether
the disposition of the Trust Estate is as provided in the preceding Article or
as specifically modified or provided in this Article. …
…
If the federal estate tax has been repealed and is not in effect upon the
Settlor’s death, and the Settlor’s wife shall survive the Settlor, then the
entire trust estate shall be allocated to THE DONNA L. STEINGASS
MARITAL TRUST to be held, administered and distributed as provided
herein.
{¶15} Acknowledging that the federal estate tax laws were in a state of flux,
Settlor anticipated the possibility that he could pass away in 2010, when there would be
no estate tax. Mindful of these circumstances, the Settlor stated: “This Article is
intended to control the actual division in shares/trusts depending on the circumstances at
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the Settlor’s actual date of death.” (Emphasis added.) On the actual date of his death,
the 2001 Act had repealed the estate tax, and the 2010 Act had not yet been enacted.
Thus, there was no federal estate tax in effect on the Settlor’s estate on his actual date of
death.
{¶16} The Mischkas argue a federal estate tax was in effect at the time of the
Settlor’s death because the 2010 Act, which was enacted five days after Frank’s death,
applied retroactively to the entire 2010 year. In support of their argument, the Mischkas
cite several federal cases for the proposition that “[c]ongress almost without except has
given general revenue statutes effective dates prior to the dates of actual enactment.”
United States v. Carlton, 512 U.S. 26,
114 S.Ct. 2018,
129 L.Ed.2d 22 (1994). (Rejecting
constitutional challenge to retroactive limitation of estate tax deduction.)
{¶17} The Mischkas also refer to Nationsbank of Texas, N.A. v. United States, 269
F.3d 1332 (2001), cert. denied,
537 U.S. 813, in which the executor of a woman’s estate
claimed that the 50, rather than 55 percent tax rate, was applicable because the woman
had died in March 1993. The court rejected the executor’s argument and held that the
recently enacted tax laws “made the fifty-five percent rate retroactive to January 1993,
which had the same effect as if President Bush had signed the bill presented to him in
1992.” Id. at 1335.
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{¶18} Based on these cases, the Mischkas assert that case law reinforces the notion
that the “ retroactive” language in the 2010 Act rendered the federal estate tax very
much “in effect” when the Settlor died. We disagree.
{¶19} Although Congress has applied tax laws retroactively in the past, the 2010
Act is different from all previously enacted retroactive tax laws because it offers the
taxpayer (estate) the right to opt out of the new tax. Specifically, the 2010 Act gave the
estate the option to remain in federal estate tax repeal, as it would have been had the 2010
Act never been enacted. Thus, at the moment of death, the federal estate tax was
repealed and not in effect.
{¶20} Moreover, other provisions in the Trust illustrate the Settlor’s intent to pay
as little federal estate tax as possible, while primarily benefitting his surviving spouse
during her lifetime. The Marital Trust gives Donna powers of appointment and
discretion to determine how much Trust property will pass to her son, Cash Mischka, and
her son’s descendants upon her death. The Settlor’s inclusion of the power of
appointment expresses an intent to benefit his wife with as much trust property as
possible, including subsequent control of how those assets ultimately pass upon her death.
{¶21} Similarly, in the event that assets were to flow into the Family Trust, the
Family Trust would be funded only in the amount of the estate tax exemption and any and
all excess assets were allocated to the Marital Trust. These limitations for potential
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funding of the Family Trust indicate that the Settlor intended to primarily benefit Donna,
and that funding of the Family Trust was limited to instances where federal estate tax is
imposed. The terms and structure of the Trust demonstrate the Settlor’s intent to first
direct allocation of property in a manner that minimizes federal estate tax and maximizes
the amount going to Donna, his wife of 27 years.
{¶22} Although the 2010 Act applies retroactively to estates of people who died
during the year 2010, the 2010 Act allowed Frank’s estate to avoid any federal estate tax.
These circumstances, coupled with the Settlor’s clear intention to avoid federal estate tax
if possible in order to benefit Donna, require that we find the federal estate tax was
repealed on the actual date of the Settlor’s death. We concur with the probate court that
the subsequent retroactive application of the 2010 tax is inconsequential because it
allowed the estate tax to remain in repeal.
{¶23} Accordingly, the sole assignment of error is overruled.
{¶24} Judgment affirmed.
It is ordered that appellees recover of appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court, probate division, to carry this judgment into execution.
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A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
____________________________________________________
COLLEEN CONWAY COONEY, PRESIDING JUDGE
KATHLEEN ANN KEOUGH, J., and
EILEEN A. GALLAGHER, J., CONCUR
