Colver Estate Jurisdiction Rule: Probate Courts Cannot Determine Third-Party Equitable Ownership of Estate Property

1. Introduction

In In the Matter of the Estate of Rosemary E. Colver, 2025 MT 146, the Supreme Court of Montana grapples with whether a probate court may decide a land trust’s claim that it—rather than the decedent’s estate—equitablely owns real property. The dispute pits the Colver Land Trust and two of its co-trustees (Bruce Larsen and Karin Lance) against Gretchen Larsen, another child of the decedent and a life-estate claimant. The central issues are:

Jurisdiction: Does a probate court have subject-matter jurisdiction to adjudicate a constructive-trust/equitable-ownership claim asserted by a third party (here, the Land Trust) against the estate?
Testamentary Interpretation: Did Rosemary Colver’s will create a life estate in favour of Gretchen Larsen over the Sanders County Property?

The Court reverses the probate court on jurisdiction, holding that such equitable claims belong in a civil action of general jurisdiction, and affirms the probate court’s ruling that the will grants Gretchen a life estate.

2. Summary of the Judgment

Issue 1 (Jurisdiction): The Supreme Court holds that a district court sitting in probate lacks subject-matter jurisdiction to decide a third-party equitable ownership (constructive trust) claim to estate property. The Land Trust’s petition must therefore be dismissed without prejudice to refiling in a court of general jurisdiction.
Issue 2 (Life Estate): Interpreting Section Fifth of the will, the Court affirms that Rosemary devised the Sanders County Property “in trust” for Richard (husband) and Gretchen (daughter), conferring upon Gretchen a valid life estate after Richard’s death.
Disposition: Reversed in part (Land Trust claim), affirmed in part (life estate), and remanded with instructions to dismiss the Land Trust petition.

3. Analysis

3.1 Precedents Cited

The Court relies heavily on three Montana decisions, synthesizing them into a clearer jurisdictional doctrine:

In re Estate of Cooney, 2019 MT 293 – Held that probate courts lack jurisdiction to enforce equitable claims for specific performance of succession contracts. Introduced the distinction between creditor claims (inside probate) and equitable ownership claims (outside).
In re Estate of Scott, 2023 MT 97 – Reaffirmed Cooney; children’s demand for farm equity under a divorce settlement agreement was an equitable claim beyond probate jurisdiction.
In re Day’s Estate, 119 Mont. 547 (1947) – Early case recognizing that title disputes between an estate and third parties belong outside probate.

By analogising the Land Trust’s petition to the equitable claims in Cooney and Scott, the Court extends the rule to constructive-trust theories and to situations where the claimant is a separate trust whose beneficiaries overlap with the heirs.

3.2 Legal Reasoning

Characterisation of the Claim – Although framed partly as a “debtor/creditor” relationship, the Court looks at substance over form. Because the Land Trust sought title to the Sanders County Property—asserting the estate holds it in constructive trust—the claim is equitable ownership, not a creditor demand.
Statutory Limits on Probate Jurisdiction – § 72-1-202(1)(a), MCA restricts probate to matters “related to estates of decedents,” e.g., determination of heirs, will construction, payment of claims. Equitable ownership claims require broader powers unavailable to a probate court.
No Waiver Possible – Subject-matter jurisdiction cannot be conferred by consent or waiver; the Court invokes its independent duty to police jurisdiction.
Application of Cooney/Scott – The Land Trust’s petition mirrors the equitable claims rejected in those cases. Hence the probate court must dismiss for lack of jurisdiction, allowing the Land Trust to reassert its constructive-trust theory in a separate civil action.
Interpretation of Section Fifth (Life Estate) – The Court uses standard canons of testamentary construction: read text as a whole and honour testator intent. The words “she may reside … as long as she wishes” unequivocally confer a life estate, terminable at Gretchen’s death or earlier departure.

3.3 Impact of the Decision

Clarifies Procedural Path: Parties asserting an equitable or constructive-trust claim against an estate must file a separate civil (general jurisdiction) action, even if they are also personal representatives or beneficiaries.
Drafting & Litigation Strategy: Estate planners and litigators must anticipate jurisdictional barriers; trusts or family agreements that might clash with testamentary dispositions should incorporate explicit enforcement mechanisms outside probate.
Judicial Economy vs. Jurisdiction: Although forcing separate actions could appear inefficient, the Court prioritises jurisdictional fidelity over consolidation.
Life Estate Precedent: The ruling reaffirms that clear language (“reside as long as she wishes”) suffices to create a life estate, guiding Montana drafters on how to structure residence-rights provisions.

4. Complex Concepts Simplified

Subject-Matter Jurisdiction: The legal authority of a court to hear a particular type of dispute. If absent, any ruling is void.
Probate Court vs. District Court (General Jurisdiction): In Montana, a district court “sitting in probate” exercises a special, narrow authority limited by statute. The same district court, in its regular capacity, can hear broader civil claims.
Constructive Trust: An equitable remedy where a court declares that someone holding legal title is a mere “trustee” for another, usually to prevent unjust enrichment.
Creditor Claim: A demand for payment of a debt owed by the decedent, payable from estate assets before distribution.
Equitable Ownership Claim: A claim that the claimant actually owns the property (even if title is in the decedent’s name), typically pursued through constructive trust or specific performance.
Life Estate: A form of ownership granting possession and use of property for the duration of a person’s life; upon death (or earlier surrender) the property passes to the remainder beneficiaries.

5. Conclusion

Colver cements a bright-line rule in Montana probate practice: probate courts cannot adjudicate third-party equitable ownership or constructive-trust claims; those disputes belong in a separate civil action of general jurisdiction. By simultaneously upholding Gretchen’s life estate, the Court demonstrates that will construction remains squarely inside probate competence, whereas ownership contests grounded in alleged pre-death promises do not. Practitioners must now bifurcate such litigation accordingly, and drafters should take heed of the precise language needed to grant life estates or avoid unintended jurisdictional detours.