In re Family Trust Created Under Akerlund Trust

I n re FamIly TrusT C reaTed under The
andrez P. akerlund TrusT oF January 6, 1974.
u.s. Bank , n.a., TrusTee , aPPellee ,
v. F rITz akerlund, aPPellanT, and
ellen akerlund G onella , aPPellee .
784 N.W.2d 110
Filed June 25, 2010. 	No. S-09-671.
1. Trusts: Equity: Appeal and Error. Appeals involving the administration of
a trust are equity matters and are reviewable in an appellate court de novo on
the record.
2. Appeal and Error. In a review de novo on the record, an appellate court reap-
praises the evidence as presented by the record and reaches its own independent
conclusions concerning the matters at issue.
3. Trusts: Intent. The primary rule of construction for trusts is that a court must, if
possible, ascertain the intention of the testator or creator.
4. Trusts. The interpretation of the words of a trust is a question of law.
5. Trusts: Intent. In interpreting a trust, the entire instrument, all its parts, and its
general purpose and scope are to be considered; no parts are to be disregarded
as meaningless if any meaning can be given them consistent with the rest of
the instrument.
Appeal from the County Court for Douglas County: C raIG
Q. mCdermoTT, Judge. Affirmed.
Thomas B. Thomsen, of Sidner, Svoboda, Schilke, Thomsen,
Holtorf, Boggy, Nick & Placek, for appellant.
Donald R. Witt, Christina L. Ball, and Julie M. Karavas,
of Baylor, Evnen, Curtiss, Grimit & Witt, L.L.P., for appellee
Ellen Akerlund Gonella.
heavICan, 	C.J., 	WrIGhT, 	C onnolly, 	G errard, 	sTePhan,
mCC ormaCk , and mIller-lerman, JJ.
WrIGhT, J.
NATURE OF CASE
U.S. Bank, N.A., the trustee of the family trust created
under the Andrez P. Akerlund Trust of January 6, 1974, sought
instruction from the Douglas County Court to determine how
the assets of the family trust should be distributed. The court
ordered the assets of the family trust divided and distributed
IN RE FAMILy TRUST CREATED UNDER AKERLUND TRUST 	89
Cite as 280 Neb. 89
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:47 AM CST

equally between Fritz Akerlund and Ellen Akerlund Gonella
(Ellen). Fritz appeals, and we affirm.
SCOPE OF REVIEW
[1,2] Appeals involving the administration of a trust are
equity matters and are reviewable in an appellate court de novo
on the record. In re Estate of Hedke, 278 Neb. 727, 775 N.W.2d
13 (2009). In a review de novo on the record, an appellate
court reappraises the evidence as presented by the record and
reaches its own independent conclusions concerning the mat-
ters at issue. Id.
FACTS
On January 6, 1974, Andrez P. Akerlund signed a trust
agreement consisting of two parts: a marital trust and a family
trust. Upon Andrez’ death, the trustee was directed to place half
of Andrez’ gross estate, as established by the Internal Revenue
Service, in the marital trust for the benefit of his wife, Frances
J. Akerlund. The remainder of the assets of Andrez’ estate was
to be placed in the family trust. The income from both trusts
was to be paid to Frances during her lifetime, subject to the
provision that in the event she remarried, the income from the
family trust would then be divided equally between Andrez’
children, Fritz and Ellen.
Frances had full power to distribute the assets in the marital
trust either by power of appointment or by will. Upon Frances’
death, the assets of the family trust and any assets remaining
in the marital trust that had not previously been distributed by
Frances were to be distributed pursuant to paragraph II(4)(a)
and (b) of the trust agreement:
a. One-half of this trust shall, if possible, be held in
trust for . . . Fritz . . . in a separate trust. In establishing
the trust I request that the following real estate be placed
in [Fritz’] trust: The East Half of the Southeast Quarter
of Section 10; the Northwest Quarter[ ]of Section 11 . . .
except 2.3 acres deeded to the State; the South Half of
Section 11, all in Township 16, Range 9, Douglas County,
Nebraska. In connection with this direction as to the
real estate, any supporting personal property including
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insurance pertaining to this real estate shall be allot[t]ed
to [Fritz’] trust.
b. The remaining assets shall be allocated to [Ellen’s]
trust.
Paragraph II(9) directed the trustee to hold, manage, admin-
ister, and control the assets of the trusts in accordance with the
following terms and provisions:
a. A substantial portion of my assets are involved in
farm properties which are being operated by Willard
Wedberg. I direct that insofar as may be possible, the
trustees shall continue the arrangement with Willard in
connection with the operation of these properties. In the
event of Willard’s death or disability, I direct that insofar
as is possible, the Trustees continue to operate these farm
units so as to retain them in the family. Upon termination
of the trust, I request that the beneficiaries insofar as pos-
sible continue to operate these as a unit. In that connec-
tion, I have directed that certain farms be placed in the
trust for eventual distribution to [Fritz] and I wish that
[Fritz] and his children continue to operate and conduct
the farming operations as long as is feasible, since these
farms have been in the family for many years and I hope
that they can so remain.
Andrez died on May 6, 1978. At that time, the federal estate
tax return filed in his estate showed a total gross estate of
$1,527,937.55, and an adjusted gross estate of $1,430,208.32.
The Douglas County farm referenced in paragraph II(4)(a) of
the family trust consisted of 557.7 acres and was appraised at
$840,780. The trustee distributed all of the nonfarm property
and an undivided 26.43-percent interest in the farm to the
marital trust.
Frances died on April 2, 2008. Prior to her death, she distrib-
uted the remaining assets of the marital trust equally between
Fritz and Ellen, including the 26.43-percent interest in the
farm. Therefore, Fritz and Ellen each have approximately a 13-
percent interest in the farm.
The assets held in the family trust upon Frances’ death con-
sisted of an undivided 73.57-percent interest in the farm and
IN RE FAMILy TRUST CREATED UNDER AKERLUND TRUST 	91
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securities and other liquid investments with an approximate
market value of $117,981. The parties estimated that the farm
had a value of approximately $5,000 per acre. Currently, Fritz
and Ellen reside in California, and neither has participated in
the management or operation of the farm.
On August 7, 2008, the trustee of the family trust filed
a “Petition for Instruction and Declaration of Rights Under
Nebraska Uniform Trust Code Section 30-3812.” The trustee
stated it did not know how to distribute the assets in the fam-
ily trust between Fritz and Ellen because certain provisions
of the trust agreement stated that half of the trust “‘shall’” be
allocated to Fritz and other provisions of the trust agreement
“‘request’” and “‘direct’” that the farm be placed in trust for
Fritz. The trustee noted that it was impossible to comply with
all of the provisions, because the Farm constituted more than
half the value of the assets in the family trust.
Ellen argued that the farm and the remaining assets should
be divided equally between her and Fritz. Fritz argued that
he should receive the entire farm and that Ellen should
receive the remaining assets, which amounted to approxi-
mately $117,000.
At trial, the affidavit of the vice president and trust offi-
cer for the trustee was offered and received into evidence as
were a copy of the trust agreement and form 706, the “United
States Estate Tax Return.” The oral stipulation of the par-
ties was placed on the record, and the court took the matter
under advisement.
The court issued its order on June 10, 2009, finding that
the assets of the Family Trust created under the Andrez P.
Akerlund Trust of January 6, 1974, should be divided and
distributed as follows:
1. An undivided one-half interest in the farm property
to Fritz . . . and an undivided one-half interest in the farm
property to Ellen . . . and;
2. An undivided one-half interest in all other remaining
assets of the Family Trust to Fritz . . . and an undivided
one-half interest in all other remaining assets of the
Family Trust to Ellen . . . .
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ASSIGNMENT OF ERROR
Fritz claims, summarized and restated, that the court erred
in distributing half the family trust to Fritz and the other half
to Ellen instead of distributing the entire farm to Fritz and the
remaining assets to Ellen.
ANALySIS
Fritz claims that it was Andrez’ intention to give him the
entire farm even if the value of the farm exceeded half the
value of the family trust. Ellen claims that Andrez intended to
treat both children equally and that he expressed a preference
to fund Fritz’ half with the farm, if possible.
[3-5] The primary rule of construction for trusts is that a
court must, if possible, ascertain the intention of the testator
or creator. In re Wendland-Reiner Trust, 267 Neb. 696, 677
N.W.2d 117 (2004). The interpretation of the words of a trust
is a question of law. In re Estate of West, 252 Neb. 166, 560
N.W.2d 810 (1997). Appeals involving the administration of
a trust are equity matters and are reviewable in an appellate
court de novo on the record. In re Estate of Hedke, 278 Neb.
727, 775 N.W.2d 13 (2009). In a review de novo on the record,
an appellate court reappraises the evidence as presented by the
record and reaches its own independent conclusions concern-
ing the matters at issue. Id. In interpreting a trust, the entire
instrument, all its parts, and its general purpose and scope are
to be considered; no parts are to be disregarded as meaning-
less if any meaning can be given them consistent with the rest
of the instrument. Smith v. Smith, 246 Neb. 193, 517 N.W.2d
394 (1994).
Andrez’ trust agreement provides for two separate trusts.
Paragraph I(1) states:
Upon the death of [Andrez] there shall be placed in
the marital trust . . . property which has a value equal
to 1⁄2 of [Andrez’] gross estate . . . less the value of
any other property which . . . Frances . . . might have
received because of his death, which has been included in
[Andrez’] gross estate.
Paragraph II(1) provides: “Upon the death of [Andrez] there
will be placed in the family trust the remainder of the assets
IN RE FAMILy TRUST CREATED UNDER AKERLUND TRUST 	93
Cite as 280 Neb. 89

of [Andrez’] estate less that placed in the marital trust and that
used for taxes, claims, and expenses.”
Paragraph II(4) of the trust agreement provides that upon the
death of Frances,
the trustees shall hold the assets of this family trust
and any unappointed assets received from the marital
trust . . . :
a. One-half of this trust shall, if possible, be held in
trust for . . . Fritz . . . in a separate trust. . . .
b. The remaining assets shall be allocated to [Ellen’s]
trust.
. . . .
d. The principal and any undistributed income shall be
distributed to each individual beneficiary as follows:
(1) As each child reaches the age of 35 . . . one-third of
the trust to him or her.
(2) When said child shall attain the age of 40 . . . one-
half of the then remainder of that child’s trust to him
or her.
(3) When said child shall attain the age of 45, that
child’s trust shall terminate and the remainder of his or
her share thereof shall be transferred to him or her.
e. If . . . the Trustee . . . shall determine that such child
is in need of funds . . . the Trustee may pay to such child
. . . portions of the principal . . . as the Trustee . . . shall
deem necessary or advisable.
Fritz argues that regardless of the value of the farm, he
should receive the entire farm because it is simply not pos-
sible for him to receive the entire farm and to receive only half
of the family trust. He claims this is the only interpretation
that would give meaning to the words “if possible” because it
would always be possible for him to receive half of the trust.
He argues that interpreting the language of the trust to mean
that he receives only half of the trust renders the words “if
possible” superfluous and meaningless, in violation of the rules
of construction for trusts. He claims his position is further sup-
ported by paragraph II(4)(b), which instructs that Ellen is to
receive the remaining assets of the trust rather than specifying
that she is to receive the other half of the trust assets.
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Ellen argues that other provisions of the trust indicate
Andrez’ intent. She notes that in the event Frances remar-
ried, the income from the marital trust was to be divided
equally between Fritz and Ellen. Ellen argues that Andrez
did not intend for Fritz to receive the entire farm in the event
that it made up more than half of the value of the family
trust, and she interprets the words “if possible” to mean that
Fritz’ share of the trust was to be funded with the farm to the
extent possible.
Our examination of the trust instrument and the federal
estate tax return leads us to conclude that Andrez intended
to divide his estate into two separate trusts. The first was the
marital trust, in which he placed half of his gross estate as
established by the Internal Revenue Service less any value of
other property that Frances might have received because of his
death that was included in his gross estate. The division was
to be made giving full consideration to changes in the value of
these assets such as would permit the division to conform to all
requirements of the Internal Revenue Code.
The second trust—the family trust—was to consist of the
remainder of the assets of Andrez’ estate less those placed
in the marital trust and used for taxes, claims, and expenses.
Half of the family trust was to be held in trust for Fritz, and
the remainder was to be allocated to Ellen. This is the same
language by which Andrez placed half of his gross estate in
the marital trust and the remainder of the assets in the family
trust. Furthermore, if Fritz was to receive the entire farm, there
would be no remaining assets to be allocated to Ellen as part
of the family trust. Such an interpretation would render many
of the provisions of paragraph II(4)(b) through (4)(e) meaning-
less because there would be no assets in the family trust except
the farm.
The federal estate tax return filed after Andrez’ death lists
the value of the farm at $840,780, which is greater than half
the total gross estate of $1,527,937. The gross estate reduced
by the funeral expenses and expenses incurred in adminis-
tering the property and Andrez’ debts left an adjusted gross
estate of $1,430,208. The tax return shows that the marital
deduction was $715,104. Because the value of the farm was
IN RE FAMILy TRUST CREATED UNDER AKERLUND TRUST 	95
Cite as 280 Neb. 89

$840,780—more than half of the gross estate—26.43 percent
of the farm was conveyed to the marital trust. Thus, it was not
possible to allocate half the assets of the gross estate to the
marital trust without including part of the farm. Ultimately,
26.43 percent of the farm was reconveyed by Frances to Fritz
and Ellen in equal shares. It was not possible to convey the
farm to Fritz as half of the family trust.
Upon Frances’ death, the assets of the family trust con-
sisted of 73.57 percent of the farm and $117,981 in securities
and other liquid assets. The court ordered that an undivided
half interest in the farm property be allocated to Fritz and
that a half interest in the farm property be allocated to Ellen.
It further ordered that an undivided half interest in all the
remaining assets of the family trust be allocated to Fritz and
Ellen in equal shares. We find no error in this distribution of
the property.
CONCLUSION
Andrez’ intention was to create two trusts upon his death:
the marital trust and the family trust. He also intended to divide
the family trust equally between his and Frances’ two children,
Fritz and Ellen. If possible, Fritz was to receive the farm as
his half interest in the family trust. Because the farm exceeded
half the value of the gross estate, it was not possible for Fritz
to receive the entire farm. The county court did not err in its
division of the trust property. The judgment of the county court
is affirmed.
aFFIrmed.
sTaTe oF neBraska , aPPellee , v.
ryan T. P resCoTT, aPPellanT.
784 N.W.2d 873
Filed June 25, 2010. 	No. S-09-721.
1. Courts: Appeal and Error. Both the district court and the Nebraska Supreme
Court generally review appeals from the county court for error appearing on
the record.
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