## Facts

- A family trust owned farmland and granted certain beneficiaries, including brothers James and Kenneth Arnott, an option to purchase specified parcels.
- The option price was stated as “the appraised value of said property as affixed for federal and/or state estate tax purposes.”
- Kenneth and aligned beneficiaries asserted the clause set the price at the appraised fair market value used for estate-tax purposes.
- James, as successor trustee, and aligned beneficiaries argued the clause incorporated estate-tax reductions for farmland (e.g., special-use valuation), yielding a price below fair market value.
- Kenneth sought declaratory relief in probate court to resolve the pricing dispute before any option exercise and to guide trust administration.

## Issues

1. What appellate standard of review applies to a trial court’s determination that a declaratory-judgment action is appropriate (justiciable) versus the trial court’s resolution of legal issues within that action.
2. Whether the trust’s option-price phrase required payment of appraised fair market value or a tax-reduced valuation attributable to farmland-specific estate-tax provisions.

## Decision

- The Supreme Court of Ohio affirmed the judgment for Kenneth.
- It held appellate review is two-tiered in declaratory-judgment cases:
  - abuse of discretion for the trial court’s determination that declaratory relief is appropriate (including justiciability), and
  - de novo review for the trial court’s determinations of legal issues.
- Applying abuse-of-discretion review, the Court found the probate court acted within its discretion in entertaining the declaratory-judgment action because the parties had a real and ripe dispute affecting trust administration.
- Applying de novo review, the Court held the option-price language was unambiguous and referred to the appraised fair market value used for estate-tax purposes, not a value reduced by farmland-related estate-tax deductions or elections.

## Legal Principles

- In declaratory-judgment appeals, appellate courts apply abuse-of-discretion review to the trial court’s determination that declaratory relief is appropriate and de novo review to the underlying legal determinations.
- A justiciable controversy exists for declaratory relief when parties have an actual dispute with practical consequences and a declaration will settle legal relations and guide future conduct.
- Interpretation of trust language is a question of law reviewed de novo on appeal.
- When trust language is unambiguous, courts apply its plain meaning and do not incorporate valuation discounts or tax-reduction concepts absent express textual support.

## Conclusion

The Supreme Court of Ohio clarified that declaratory-judgment cases require deferential review of a trial court’s decision to entertain the action but independent review of the legal issues decided, and it enforced the trust’s option-price clause according to its plain terms as appraised fair market value rather than a tax-reduced farmland valuation.


Arnott v. Arnott, 132 Ohio St. 3d 401 (Ohio 2012)