- SunTrust Bank v. Farrar (Virginia) – The
Virginia Supreme Court reversed a surcharge award against SunTrust Bank for
$2.5 million for failure to sell a coal mine held in a trust on the grounds
that the beneficiaries failed to produce evidence of a willing buyer for the
- Keener v. Keener (Virginia) – In a case of first impression, the
Virginia Supreme Court upheld the validity of a no-contest clause in a
revocable trust, but construed the clause narrowly to reverse the trial
court's finding that the no-contest clause had been violated.
- Taylor v. Feinberg (Illinois) – The Illinois Supreme Court upheld
the validity of an exercise of a power of appointment to direct trust
distributions to grandchildren conditioned on marrying within the Jewish
- Merrill Lynch Trust Company v. Campbell (Delaware) – The Delaware
Chancery Court rejected surcharge claims against Merrill Lynch as trustee
arising out of the formation of an unusual charitable remainder unitrust and
subsequent severe investment losses despite improper actions by an
- Estate of Fridenberg (Pennsylvania) – The Pennsylvania Superior
Court reversed the Orphan's Court decision, on objections filed by the state
attorney general, denying Wachovia Bank principal commissions as trustee of
a charitable trust on the basis of multiple statutory changes to trust law
since the issuance of the decision relied upon by the attorney general.
- Cundall v. U.S. Bank (Ohio) – The Ohio Supreme Court dismissed
surcharge claims against U.S. Bank and other fiduciaries arising out of the
alleged discounted sale by a trustee of a closely held business interest on
the basis that the statute of limitations began running at the time of the
sale and not when the trustee died several years later.
- MacIntyre v. Wedell (Florida) – The Florida Court of Appeals
affirmed the dismissal of a suit brought after the death of the settlor,
challenging the withdrawal of assets from a revocable trust by the settlor
on grounds of undue influence.
SunTrust Bank v. Farrar, 277 Va. 546 (April 17, 2009)
Charles Wilson died in 1921, and was survived by his wife and two sons. Under
his will, he established a trust to hold a coal mine in Harlan County, Ky. He
named a corporate predecessor to SunTrust Bank as co-trustee. His wife served as
co-trustee until her death in 1976. The trust provided for distributions among
his wife and descendants, and upon termination (20 years after the death of his
wife and children), for outright distributions to his heirs at law. Under his
will, he directed that the trustees hold the coal mine "unless conditions
undergo a very radical change from what they are at present."
Upon the death of Mr. Wilson's last surviving child in 1984, SunTrust
petitioned the circuit court for authority to sell the coal mine, due to a rapid
decline in the income produced by the coal mine.
In 1987, the circuit court granted SunTrust the authority to sell the property.
In connection with the possible sale, SunTrust hired an appraiser who valued the
property at $1.1 million.
By the end of the 80s, the bottom fell out of the coal market. An offer was
made for the coal mine in 1992 for only $75,000. Later offers were made in the
amounts of $281,190 (1996), $25,000 (1996), and $100,000 (1997). SunTrust
eventually sold the coal mine in 1997 for $350,000.
The trust terminated in 2004, and the remainder beneficiaries of the trust
sued SunTrust alleging breach of fiduciary duty for failure to sell the coal
mine for the appraised value of $1.1 million, and seeking compensatory and
punitive damages. In support of their claim, the beneficiaries only offered the
testimony of an expert in economics who determined, based on a series of
assumptions, that if the property had been sold for $1.1 million on Sept. 1,
1987, and invested in a mix of 65% stocks and 35% bonds, the trust distributions
would have been $1,761,000 and the remaining trust assets would contain
$3,709,000 in assets. The expert acknowledged he could not testify that there
was a buyer on the date willing to pay $1.1 million for the coal mine. The
appraiser also testified that the property did not sell in 1987 because no one
was interested in it.
The circuit court found that SunTrust failed to properly market the property
and allowed the coal mine to become unproductive and a wasting asset. It awarded
the beneficiaries judgment in the amount of $2.4 million. In a separate action
on SunTrust's accountings, the circuit court also ordered SunTrust to reimburse
the beneficiaries for $89,000 paid out of the trust, plus interest, for costs of
maintaining the property.
On appeal, the Virginia Supreme Court reversed the trial court and dismissed
the beneficiaries' claims because: (1) they failed to meet their burden of
proving damages; (2) the beneficiaries had the burden of proving damages with
reasonable certainty; and (3) the circuit court could not rely on speculation
The court noted that the beneficiaries' claims were premised on the
assumption that the property could have been sold for $1.1 million in 1987, and
the beneficiaries presented no evidence of a willing buyer at any time
whatsoever, while SunTrust presented evidence that no one was interested in the
property at that time. The court noted that "a trustee who retains a trust asset
during a precipitous decline in the market, when there was no market for the
asset, cannot be held to account so long as the trustee acted as a reasonable
and prudent person would act in light of then existing conditions." The court
also noted problems with the appraised value of the coal mine.
The Virginia Supreme Court reversed the surcharge award and the award for
reimbursement of the property costs, and entered final judgment in favor of
Keener v. Keener, Record No. 082280 (Virginia Supreme Court, Sept. 18, 2009)
In 2003, Hollis Keener executed a pour-over will and a revocable trust
prepared by his estate planning attorney. His trust, which was intended to be
the primary vehicle for carrying out his estate plan, provided for the
distribution of his assets after his death in equal shares to his seven
children. At the same time, he executed four addenda to his trust addressing
trustee powers, the transfer of property to the trust, a gift of a car to one
child, and the retention of the shares for two of his children in lifetime
trusts. In 2005, he executed a fifth addendum providing that the shares for
certain of his children would be applied first to the repayment of certain
In March 2007, Mr. Keener's oldest son, Hollis, visited his father who was at
that time residing with his daughter Brenda and her husband. When Hollis
arrived, another of Mr. Keener's daughters, Debra, was examining Mr. Keener's
estate planning documents and arguing with Brenda. Debra took the papers from
the house, made copies, and then returned the papers. Thereafter, Debra was on
speaking terms with only one of her siblings. A few weeks after this incident,
Mr. Keener executed a final addendum to his trust adding a no-contest clause to
the trust. He did not add a no-contest clause to his will.
Mr. Keener died in August 2007. Hollis had possession of the original will,
but did not offer it for probate because he believed everything was handled
under the trust. Hollis told his siblings that "there really was no will" and
that the will "referred everything to the trust." Debra checked court records
for the probated will, and finding none, unsuccessfully attempted to probate a
copy of the will.
In October 2007, Debra applied for and was appointed administratrix of her
father's estate, and represented under oath that her father died intestate.
Shortly thereafter, Hollis, as successor trustee of his father's trust, made
partial distributions out of the trust to his siblings, but stopped payment on
the check to Debra on the grounds that Debra had violated the no-contest clause
in the trust by qualifying as administratrix.
Hollis, joined by two other siblings, petitioned the circuit court seeking
probate of the original will, removal of Debra as administratrix, and
appointment of Hollis as personal representative. In the petition, Hollis
alleged that Debra's actions amounted to a contest of the trust. Debra filed an
answer and a counterclaim alleging multiple counts of breach of fiduciary duty.
Debra amended her counterclaim seeking to remove the trustees or subject them to
the supervision of the Commissioner of Accounts. Hollis and the other
petitioners answered accusing Debra of fraud, perjury, unclean hands, and estoppel.
The circuit court admitted the will to probate and terminated Debra's
authority as administratrix, but denied Hollis's request for attorneys' fees.
The circuit court also ruled that Debra's action in qualifying as administratrix
was a contest of the trust because, had she been successful, she would have
distributed all of Mr. Keener's assets to his intestate heirs rather than to the
trust, and held that she forfeited her interest under the trust and had no
standing to bring claims against the trustees.
On appeal, the Virginia Supreme Court held, as a matter of first impression
in Virginia, that the court would give full effect to no-contest provisions in
trusts for the same reasons that support the enforcement of those provisions in
wills where, as here, the testator relied on the trust as part of the
testamentary estate plan (the will was a "pour-over" will) and the testator
relied on the trust for the disposition of his property. The court noted that
the compelling reasons for strictly enforcing no-contest clauses are the
protection of a testator's right to dispose of his property as he sees fit, and
the societal benefit of deterring the bitter family disputes frequently
engendered by will contests.
The court observed that no-contest clauses in Virginia are strictly construed
for two reasons: (1) the testator or a skilled draftsman at his direction has
the opportunity to select the language to best carry out a testator's intent;
and (2) forfeitures are not favored in the law and are only enforced on their
Applying these principles, the Virginia Supreme Court concluded that Debra's
actions failed to violate the no-contest clause in the trust because her action,
if successful, would have thwarted the pour-over provision in the will, and not
the trust, and the will did not contain a no-contest clause. Accordingly, the
court reversed the circuit court and remanded the case.
The Virginia Supreme Court observed twice in its opinion that Debra's demand
for removal of the trustees amounted to a contest, but that issue was not before
the court because it was not raised at trial or presented on appeal.
Taylor v. Feinberg, Docket No. 106982 (Illinois Supreme Court, Sept. 24,
Max Feinberg died in 1986, leaving a pour-over will and a revocable trust.
Under his trust, he established Trust A and Trust B for the lifetime benefit of
his wife, Erla Feinberg. He also granted his wife lifetime and testamentary
limited powers of appointment over the trust assets.
To the extent his wife did not exercise her powers of appointment, he
directed the distribution of the trust assets to his descendants, but subject to
what the court called a "beneficiary restriction clause." The beneficiary
restriction clause directed that 50% of the trust assets be held in separate
trusts for his grandchildren, but provided that any descendant who married
outside the Jewish faith or whose non-Jewish spouse did not convert to Judaism
within one year of marriage, would be deemed deceased and lose their share of
the trust, with any forfeited share paid to Mr. Feinberg's children.
Mrs. Feinberg exercised her lifetime power of appointment to direct the
distribution at her death of $250,000 outright and free of trust to each child
and grandchild who would not be deemed deceased under Mr. Feinberg's beneficiary
restriction clause. At the time of Mrs. Feinberg's death in 2003, all five
grandchildren had been married for more than one year, but only one met the
conditions of the beneficiary restriction clause and was entitled to receive
$250,000. One of the disinherited grandchildren sued Mr. Feinberg's children
(including her father) as co-executors challenging the validity of the
beneficiary restriction clause.
The trial court invalidated the beneficiary restriction clause on public
policy grounds for interfering with the right to marry a person of one's own
choosing, and the court of appeals affirmed relying on prior decisions of the
Illinois Supreme Court and the Restatement (Third) of Trusts. The Illinois
Supreme Court granted an appeal, and received amicus curiae briefs from Agudath
Israel of America, the National Council of Young Israel, and the Union of
Orthodox Jewish Congregations of America.
The Illinois Supreme Court refused to consider whether Mr. Feinberg's
original disposition under his will violated public policy and dismissed
arguments that related to the continuing trusts provided for under the will.
Because Mrs. Feinberg exercised her power of appointment to provide outright
distributions, the Illinois Supreme Court only considered whether her exercise
of the power of appointment violated public policy by disqualifying any
descendant who married outside the Jewish faith from receiving a $250,000
distribution. The court held that determinations of public policy are
conclusions of law, and reviewed the decisions of the trial court and the court
of appeals de novo.
The Illinois Supreme Court reviewed the state's public policy in support of
broad testamentary freedom, observing that state law only placed two limits on a
testator's freedom to leave property as he or she desired – the spouse's ability
to renounce and protections for pretermitted heirs. The court noted that there
is no forced heirship for descendants.
In support of this policy, the court noted the broad purposes for trusts
under state trust statutes, the repeal of the common law rule against
perpetuities and the Rule in Shelley's Case, and the focus in case law on
determining the intent of the testator. The factual record indicated Mr.
Feinberg's intent to benefit those of his descendants who furthered his
commitment to Judaism by marrying within the faith and his concern with the
dilution of the Jewish people by intermarriage. The court observed that Mr.
Feinberg would be free during his lifetime to attempt to influence his
grandchildren to marry within the faith, even by financial incentives.
The court acknowledged the long-standing rule that trust provisions that
encourage divorce violate public policy. However, the court distinguished its
prior decisions on the grounds that: (1) because of Mrs. Feinberg's power of
appointment, the grandchildren never received a vested interest in the trust
upon Mr. Feinberg's death; (2) because they had no vested interest that could be
divested by noncompliance with the condition precedent, the grandchildren were
not entitled to notice of the existence of the beneficiary restriction clause;
and (3) the grandchildren, since they were not heirs at law, had at most a mere
expectancy that failed to materialize.
The court refused to consider whether to adopt the rule of the Restatement
(Third) of Trusts on the basis that exercise of the power of appointment was not
in trust and was in the manner of a testamentary disposition. The court held
that Mrs. Feinberg's distribution scheme did not operate prospectively to
encourage the grandchildren to make choices about marriage, since the condition
precedent (marriage within the faith) was either met or not met at the moment of
Mrs. Feinberg's death, and observed the distinction between conditions precedent
(which might be effective even if a complete restraint on marriage) and
conditions subsequent (which may not). The court observed that because there
were no continuing trusts under Mrs. Feinberg's distribution scheme, there was
no "dead hand control" or attempt to control the future conduct of the
beneficiaries, and therefore no violation of public policy. Accordingly, the
court reversed the court of appeals and the trial court.
The Illinois Supreme Court rejected the grandchild's other arguments,
including her claim that the beneficiary restriction clause violated the
constitutional right to marry because of the absence of a governmental actor.
The court summarized its holding as follows: "Although those plans might be
offensive to individual family members or to outside observers, Max and Erla
were free to distribute their bounty as they saw fit, and to favor grandchildren
of whose life choices they approved over other grandchildren who made choices of
which they disapproved, so long as they did not convey a vested interest that
was subject to divestment by a condition subsequent that tended to unreasonably
restrict marriage or encourage divorce."
Merrill Lynch Trust Company v. Campbell, 2009 Del. Ch. LEXIS 160 (Sept. 2,
In 1996, Mary Campbell, age 74, met with a broker at Merrill Lynch, Pierce,
Fenner & Smith, Inc. (Pierce). She met with Pierce on instructions from her
husband, who was no longer able to manage the family's finances due to illness.
Mary and her husband's primary assets supporting their retirement were 10,000
shares of Exxon stock that he had acquired as an employee of the company.
Although the stock had greatly appreciated over the years, it paid only modest
The Pierce broker persuaded Mary to place the stock in a charitable remainder
unitrust with Merrill Lynch Trust Company as trustee (Pierce was an affiliate of
Merrill Lynch Trust Company). At the time of the trust's formation, the stock
had a market value of $840,000.
The trust provided for an annual payout to Mary of a 10% unitrust amount during
her lifetime, then to her husband during his lifetime, and then among Mary's
children during their lifetimes. At the death of the last surviving child, the
trust would terminate, and the remainder would be distributed in equal shares to
five charities. The expected duration of the trust was 48 to 50 years.
Shortly after forming the trust, Mary's financial needs increased due to her
husband's poor health, an ill sister, and a child in need of assistance. Mary
called the Pierce broker, who communicated to Merrill Lynch her need for more
income. Merrill Lynch changed the investment strategy for the trust to "growth"
from "growth and income," and increased the equities in the trust portfolio from
60% to as high as 99%, with a corresponding increase in the market risk.
Mary was unaware that her request for income would affect the investment
strategy and incur higher risk. Merrill Lynch sent Mary a letter to sign
approving the change, and on instructions from the Pierce broker, Mary signed
it. By the end of 2002, the value of the trust assets dropped from $840,000 to
The severe loss in value also reduced the unitrust payments to Mary, which
aggravated the strain on Mary from the death of her husband, the reduction in
her pension payments, and her cancer diagnosis. She called the Pierce broker
about her concerns, but did not receive a satisfactory answer. She then called a
friend's son who was also a Pierce broker, who opined that the trust was too
heavily invested in equities. With the help of her children, Mary commenced
arbitration proceedings against Pierce. Merrill Lynch, although not a party to
the arbitration, joined with its affiliate Pierce in seeking to enjoin the
arbitration. Merrill Lynch was dismissed from the arbitration and no injunction
When she did not prevail in the arbitration, Mary sought to replace Merrill
Lynch as trustee.
Merrill Lynch refused to resign and transfer the trust assets unless Mary
released both Merrill Lynch and its affiliates, including Pierce. Mary refused,
and Merrill Lynch sued Mary and the other beneficiaries of the trust to approve
its accountings and obtain a declaratory judgment approving its actions as
Mary counterclaimed seeking refund of all trustee, brokerage, investment, and
advisory fees, refund of legal fees taken by Merrill Lynch from the trust,
delivery of the trust assets to a successor trustee, and other damages and
In count I, Mary alleged she was induced to enter into the trust by
misleading representations by Pierce and Merrill Lynch. Because the alleged
misrepresentations occurred and her cause of action arose in 1996, the court
dismissed this count as barred by the applicable three-year statute of
limitations. In count II, she challenged the investment strategy for the trust.
In count III, she challenged Merrill Lynch's involvement in the arbitration and
the filing of the accounting action.
The Delaware Chancery Court observed that Pierce and Merrill Lynch failed to
adequately inform Mary about the trust and the investment risks, and expressed
doubt that a CRUT with a 10% payout was a good investment choice for Mary,
noting that the trust only provided Mary with a $6,237 charitable deduction. The
court observed that a trust with a 10% annual payout and a term of 50 years was
highly unusual, and that this was never conveyed to Mary. Pierce, in contrast,
counseled Mary that trusts with 10% payouts were common and acceptable, and
projected annual investment returns as high as 12%.
Although the court found the facts surrounding the formation of the trust
"distasteful," the court refused to charge Merrill Lynch with responsibility for
the actions concerning the trust formation because Pierce and Merrill Lynch are
separate legal entities, and there was no evidence that the relationship between
the two entities was improper or misrepresented. The court also found that
Mary's claims concerning the formation of the trust were time barred.
In considering Mary's claims concerning the investment losses, the court
observed (based on expert testimony at trial) that the unusual terms of the
trust (with a high unitrust payout and long duration) required an equity mix
above 50% in order to have any chance of lasting until its projected termination
date. The court rejected the suggestion that Merrill Lynch should have
recognized the impairment of the remainder interest form the outset, and focused
on Mary's needs on the basis of the duty owed to all classes of beneficiaries.
In light of the unusual circumstances of the trust, the court found Merrill
Lynch's heavy investment in equities to be reasonable.
The court also rejected Mary's claim that the investment mix was changed
solely due to her request and without a deliberative process. The court
acknowledged that had Merrill Lynch acted solely on Mary's request, Merrill
Lynch's failure to exercise any judgment would have been an abuse of discretion.
However, the court held that although the record was thin, it did indicate that
Merrill Lynch had standard practices concerning investment changes, and there
was no evidence that those processes were not followed. The court also observed
that the unusual nature of the trust supported Merrill Lynch's investment
decisions, even though those decisions would not have been appropriate in a more
conventional trust or a trust with a lower payout requirement or shorter term.
The court approved the payment of Merrill Lynch's attorneys' fees for the
accounting action out of the trust because of language in the trust instrument
specifically approving the fees (and observed that in the absence of such
language, Merrill Lynch might be required to pay those fees directly because the
action was brought for its own benefit). However, the court ordered Merrill
Lynch to reimburse the trust for the attorneys' fees incurred in connection with
the arbitration, with interest, because those fees were for the protection of
its affiliate Pierce, and not for the trust or its beneficiaries. The court also
required Mary to bear her own attorneys' fees.
Estate of Fridenberg, 2009 WL 2581731 (Pennsylvania Superior Court, Aug. 24,
Anna Fridenberg died in 1940, leaving a will under which she established a
perpetual charitable trust that ultimately provided for the distribution of net
income for the support of a surgical floor at the Albert Einstein Medical
Center. A corporate predecessor to Wachovia Bank served as executor under the
will, and Wachovia served first as co-trustee, and eventually sole trustee of
the charitable trust.
After the death of the individual co-trustee in 2005, Wachovia filed an
accounting for 1978 through 2005, seeking commissions from principal for the
time period from 1998 through 2005.
The state attorney general filed 12 objections to the accounting, but
eventually withdrew all of them except the one to the additional commissions on
the market value of the trust paid out of the trust principal. The attorney
general's objection was based on a 1917 statute, in effect at the time of Ms.
Fridenberg's death, that prohibited a trustee from receiving a second commission
for trust services if the trustee received compensation for services as executor
under the will that also established the trust. The attorney general relied on
the decision of the Pennsylvania Supreme Court in In re Williamson's Estate
holding that the repeal of the 1917 statute was not to be applied retroactively.
The Orphan's Court sustained the attorney general's objection based on the
On appeal, the Superior Court reversed on the basis that: (1) the
Pennsylvania legislature amended the law in 1953, 1972, 1982, 1984 and 2006, so
as to permit compensation based on market value of the trust assets regardless
of when the trust was created; and (2) subsequent cases had effectively ended
the precedential authority of Williamson.
The court refused to address Wachovia's assertion that the attorney general
was improperly challenging, rather than enforcing, state statutes because the
court found that Wachovia had failed to raise the issue with the trial court or
preserve it for appellate review. The court noted that the attorney general
expressly refrained from challenging the facial constitutionality of the state
statutes, and that it was the prerogative of the legislature to amend the trust
laws to respond to significant historical changes in the nature of trust
administration and investment, including the development of total return
The court reversed the Orphan's Court, approved the additional fees, and
remanded the case for further proceedings.
Cundall v. U.S. Bank, 122 Ohio St. 3d 188 (June 4, 2009)
In 1976, John Koons and his wife, Ethel, created a trust for their children
and funded it with thousands of shares of stock in their family company, Central
Investment Corporation (CIC), which owned a brewery and bottling companies. The
Koonses appointed their son, Bud, as trustee. Bud also served as president and
CEO of CIC. The trust was divided into two separate trusts – one for Bud's
children, called Share A; and one for the children of Bud's sister, Betty
Cundall, called Share B.
The next year, Betty created her own trust for the benefit of herself, her
spouse, and her children, and funded it with stock in a family holding company
that held only CIC stock. Betty named a predecessor to U.S. Bank as trustee.
U.S. Bank served as trustee until 1996, and was also the commercial banker for
In 1983, Bud offered to buy all of the family's shares in CIC, including the
shares held in Share B and the Cundall trust, at $155 per share, which the
family refused. Around the same time, CIC purchased its own stock from another
shareholder for $328 per share. Eventually, Bud purchased the CIC shares from
Share B and the Cundall trust for $210 per share. The Cundall family members, as
beneficiaries of Share B and the Cundall trust, signed releases at the time of
the sale releasing Bud and U.S. Bank from any and all liability in connection
with the sale.
Bud died in 2005. One of Betty's children, Michael, alleged that after Bud's
death, he discovered for the first time that CIC was sold for $400 million, and
as a result of Trust B having sold its CIC stock for a low price, Trust B was
worth only $800,000 while Trust A (which was for the benefit of Bud's family)
was worth more than $30 million.
Michael was appointed as successor trustee of Trust B in November 2005, and
four months later sued Bud's estate, U.S. Bank, other trustees of related
trusts, and more than 20 members of Bud's family and the Cundall family.
Michael's claims were based on the allegations that: (1) Bud breached his
fiduciary duties as trustee by acquiring CIC shares through intimidation,
coercion, and misrepresentation about the value of the shares; and (2) U.S. Bank
breached its fiduciary duties by enabling the sale and knowingly concealing the
value of the CIC shares.
All of the defendants moved to dismiss the claims. U.S. Bank moved to dismiss
based on the statute of limitations and the releases, and other defendants moved
to dismiss on lack of jurisdiction and failure to tender back the consideration
received in the sale before filing suits. The trial court granted the motions to
On appeal, the First District Court of Appeals affirmed the dismissal of U.S.
Bank on statute of limitations grounds, but rejected the application of the
tender offer rule in a fiduciary context.
The First District also found the releases "highly suspect" and concluded
that in order for the releases to be valid, the trustees had to meet the burden
of showing that the trustees acted "with the utmost good faith, and exercised
the most scrupulous honesty toward the beneficiaries, placed the beneficiaries'
interests before their own, did not use the advantage of their trustee positions
to gain any benefit at the beneficiaries' expense, and did not place themselves
in a position in which their interests might have conflicted with their
fiduciary obligations." The First District found that the claims against Bud and
the other trustees were not barred by the statute of limitations.
On appeal, the Ohio Supreme Court found that all of the claims were barred by
the statute of limitations because: (1) the rule that the statute of limitations
does not run until the trustee repudiates the trust only applies where the
trustee's action is "surreptitious or obscured and remains so until the
trustee's death or removal"; and (2) where the beneficiary knows about the
breach of duty, or by the exercise of reasonable skill could have learned of it,
the statute of limitations begins to run at the time of the breach.
The court found that the beneficiaries knew or should have known about the
alleged fraud and wrongdoing at the time of the sale of the CIC stock in 1984,
and therefore the statute of limitations began to run at that time.
Consequently, the court held that all of the claims were time barred.
MacIntyre v. Wedell, 12 So. 3d 273 (Florida District Court of Appeals, May
Helen Wedell executed and transferred her assets to a revocable trust during
her lifetime. The trust provided for the distribution of the trust assets among
her three sisters, after her death.
After Ms. Wedell's death, one of her sisters, Liz, as trustee of the trust,
filed suit against another sister, Agnes, alleging that weeks prior to Ms.
Wedell's death, as a result of undue influence by Agnes, Ms. Wedell removed
assets from the trust and transferred them to Agnes or accounts in Agnes's name.
The trial court dismissed the claim on the basis that the decision of the
Florida Supreme Court in Florida National Bank of Palm Beach County v. Genova
barred an undue influence challenge to a settlor's removal of funds from her
On appeal, the Court of Appeals affirmed the dismissal of the claims, noting
that a settlor, prior to her death, has the right to revoke the trust in the
absence of a judicial determination or medical certification of her physical and
mental incapacity. The court also noted that revocable trusts are unique types
of transfers where the settlor retains the right to regain absolute ownership of
the trust property, which is distinguishable from other types of conveyances
where claims for undue influence might apply, such as gifts, deeds, wills, and
The court also noted that the courts "have no place in trying to save
persons…from what may or may not be her own imprudence." The court affirmed the
trial court's holding that "even after the settlor's death, the settlor's
revocation of her revocable trust during her lifetime is not subject to
challenge on the ground that the revocation was the product of undue influence."
McGuireWoods Fiduciary Advisory Services
Our Fiduciary Advisory Services assists financial institutions in an array of areas in which questions or
concerns may arise. This includes advising corporate trustees on how to avoid
litigation before it arises, and how to address litigation when it does arise.
Fiduciary Advisory Services is an offering of our Private Wealth Services
Group. Our Private Wealth Services Group serves individuals, business clients, banks
and trust companies, executors and trustees, and private and public charities in
all areas of private wealth services. These include estate planning, tax
planning, charitable giving, will contests, fiduciary litigation, risk
management, closely held and family business planning, business succession
planning, estate and trust administration, tax controversies and IRS ruling
requests. The team is one of the largest and most respected groups in the
country, and is focused on handling the needs of high net worth clients. Our
size, extensive experience, unmatched list of clients, and strong presence
throughout the country sets us apart from our competitors. Chambers, the
international rating service for attorneys, recently recognized the Private
Wealth Services Group as one of the two best wealth management legal practices
in the United States.