In the most recent installment of the McGuireWoods Fiduciary Advisory Services annual multipart series on recent fiduciary cases, developments in the law concerning various topics are examined through the following:
In re Jill Petrie St. Clair Trust Reformation, 311 Kan. 541, 464 P.3d 326, 2020 Kan. LEXIS 41, 2020 WL 3023373. The Supreme Court of Kansas reformed the terms of an irrevocable trust to conform to the settlor’s intent when intent proved by clear and convincing evidence.
De Prins v. Michaeles, 154 N.E.3d 921, 486 Mass. 41, 2020 Mass. LEXIS 650, 2020 WL 6141080. The Massachusetts Supreme Judicial Court held that the assets of a self-settled spendthrift trust that allows distributions to the settlor during his lifetime, can be reached by the settlor’s creditors after the settlor’s death.
Wilburn v. Mangano, 851 S. E.2d 474 (Va. 2020). The Virginia Supreme Court found that the term “fair market value” on a specific date in a codicil, without more, failed to provide sufficient certainty as to the purchase price to warrant specific performance of an option contract for sale.
Neal v. Neal, 2020 Tex. App. LEXIS 4514, 2020 WL 3263433. A Texas appeals court upheld a final judgment construing a trust when the trust was later challenged.
Ron v. Ron, 2020 WL 6494223 (5th Cir. 2020). The 5th U.S. Circuit Court of Appeals affirmed the U.S. District Court, Southern District of Texas, decision that a trust protector has no fiduciary duty to the settlor.
Platt v. Griffith, 853 S.E.2d 63 (Va. 2021). The Virginia Supreme Court held that the personal representative of an estate is the only party entitled to bring suit on behalf of the estate for personal claims that would belong to the decedent during the decedent’s lifetime.
In re Matter of the Ruff Management Trust, 2020 WL 7065829 (Tex. Ct. App. Dec. 3, 2020). A Texas Court of Appeals held that a trial court’s order modifying the trustee removal provisions of a trust agreement was not subject to review on appeal because the modification was consistent with the material purposes of the trust and caused no harm to the interested parties.
Hodges v. Johnson, 2020 WL 5648573 (May 13, 2020). The Supreme Court of New Hampshire held that trustees were not entitled to reimbursement or indemnification for fees incurred in defending improper decantings where the trustees were found to have been in serious breach of fiduciary duties.
Turk v. Morris, Manning & Martin, LLP, Case 1:20-mi-99999-UNA (N.D. Ga. 2020). Class action plaintiffs alleged that law firm and other defendants promoted and advised on prepackaged conservation easements that did not qualify for the charitable deduction from federal income tax.
Burgess v. Johnson, 835 Fed. Appx. 330, 2020 WL 6479178 (Nov. 4, 2020). The 10th U.S. Circuit Court of Appeals held that a trustee’s power under the trust agreement to submit a claim against the trust or the trustee to arbitration did not allow the trustee to compel arbitration of a beneficiary’s claim for breach of trust.
Bergal v. Bergal, 153 N.E.3d 243 (Ind. Ct. App. Sept. 17 2020). The dead man’s statute may apply to prevent a party whose interest is adverse to the estate from testifying about matters against the estate in certain trust cases where the trust at issue is so central to the overall estate plan that it is akin to the estate itself.
In Re Passarelli Family Trust, J-46-2020 (Supreme Court of Pennsylvania December 22, 2020); see also In Re Passarelli Family Trust, 231 A.3d 969 (Superior Court of Pennsylvania April 16, 2020). A settlor alleging fraudulent inducement in the creation of an irrevocable trust must prove the elements of common law fraud by clear and convincing evidence.
Ramirez v. Rodriguez, 2020 WL 806653 (Tex. Feb. 19, 2020). Trustees established a prima facie case for the removal of a co-trustee by providing clear and specific evidence of the co-trustee’s hostile and unauthorized actions that impeded the proper performance of the trust.
Ferguson v. Ferguson, 473 P.3d 363 (Idaho Sept. 24, 2020). As a matter of first impression, the Idaho Supreme Court held that no-contest provisions in trust agreements are generally enforceable in Idaho, but such enforceability is subject to various common law limitations. Additionally, a broad grant of discretion under the terms of a trust agreement will not excuse trustees from applicable fiduciary duties, including the duty to administer the trust in good faith and the duty to keep beneficiaries reasonably informed with relevant information.
Trowbridge v. Estate of Trowbridge, 150 N.E.3d 220 (Indiana June 11, 2020). Under Indiana law, when offering a copy of a missing will for probate, the proponent’s failure to produce the decedent’s original will is not determinative of the proponent’s ability to rebut the presumption that the decedent destroyed the original will with the intent to revoke it.
Parris v. Ballantine, Supreme Court of Alabama, September 25, 2020 (not yet released for publication). The Alabama Supreme Court held that a beneficiary’s adopted son, who was adopted as an adult, was not a “lineal descendant” of the child of the trustors entitled to take under the terms of trust, and therefore was not a beneficiary of the trust. The court concluded that, in 1971, Alabama law did not authorize the adoption of adults, and therefore, the trustors neither intended to include adopted children, nor did they have constructive knowledge of an adopted adult being included in the plain meaning of the phrase “lineal descendants” as used in their trust agreement.
Pena v. Dey, 39 Cal. App. 5th 546, 548, 252 Cal. Rptr. 3d 265, 266 (2d. Dist 2019). The California Third District Court of Appeal held that the settlor’s handwritten interlineations did not satisfy trust’s amendment provisions, which required amendments to be signed by the settlor, and therefore the interlineations did not effectively amend the trust.
Cundall v. Mitchell-Clyde, 51 Cal. App. 5th 571, 265 Cal. Rptr. 3d 254 (2020). California Appellate Court held that, to eliminate the availability of the statutory method of trust revocation provided in section 15401 of the California probate code, a trust agreement must provide an alternative method of revocation and provide an express statement that such alternative method of revocation is the exclusive method available.
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