Recent Cases of Interest to Fiduciaries

October 14, 2014

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:

Defenses and Limitations

  • Beck, et al. v. Mueller, 2014 Wisc. App. LEXIS 377 (Ct. App. Wisc., May 8, 2014)
    The statute of limitations barred beneficiaries’ claims where each beneficiary had previously received a copy of the trust agreement long before the trusts should have terminated and their claims were not filed until well after the trust termination should have occurred.
  • Davis v. Rael, No. B244897, 2014 Cal. App. Unpub. LEXIS 3914 (Cal. Ct. App. 2014)
    Appellate court reversed trial court’s surcharge of the trustee in excess of $1,200,000, where the statute of limitations barred the claim even though beneficiary claimed he had not received a copy of the trustee’s accounting.
  • In re Demesyeux, 978 N.Y.S.2d 608 (Nassau County Ct. 2013)
    A mother who pled not guilty by reason of insanity to charges of murder was disqualified from sharing in the wrongful death proceeds arising from her children’s deaths.

Resignation and Removal of Trustees

  • Spencer v. Di Cola, 2014 Ill. App. LEXIS 289 (App. Ct. Ill., May 1, 2014)
    An individual trustee was entitled to summary judgment where the trust beneficiaries effectively sought to replace the trustee with a corporate trustee without cause for removal or the authority to replace the trustee under the terms of the trust.

Administration and Compensation

  • Weinstein v. Weinstein (In re Indenture Trust Dated January 13, 1964), 326 P.3d 307 (Ariz. Ct. App. 2014)
    Beneficiary of a spendthrift trust cannot voluntarily assign his interest or ratify the assignment.
  • Gray v. Director, Div. of Taxation, 28 N.J. Tax 28 (N.J. Tax Ct. 2014)
    Transfers to trusts made more than three years before the grantor’s death were not deemed transfers in contemplation of death.
  • Prestidge v. Dep’t of Revenue, 2014 Ore. Tax LEXIS 75 (Or. T.C. 2014)
    Decedent’s beneficial interest in trust creates sufficient nexus in his state of residence for state inheritance tax to apply.
  • Greenberg v. JP Morgan Chase Bank, N.A., 2014 N.Y. Misc. LEXIS 2011 (N.Y. Sup. Ct. 2014)
    Evidence of trustee’s failure to reallocate assets in light of economic downturn sufficient to plead a case of breach of fiduciary duty.
  • Abbot v. Brennemann (In re Brennemann Testamentary Trust), 288 Neb. 389 (June 27, 2014)
    Trustees found not liable for breach of duty to inform and report where the breach was harmless.
  • In re Robert Stout Revocable Trust, No. 313063 2014 WL 265553, 2014 Mich. App. LEXIS 137 (Mich. Ct. App. Jan. 23, 2014)
    Trustee breached fiduciary duties by failing to notify beneficiaries of change of trustee compensation and by requiring the beneficiaries to sign a release as a condition of receiving a trust distribution.
  • Wehle v. Bradley, 2014 WL 982973, 2014 Ala. LEXIS 37 (Ala. March 14, 2014)
    Executor’s total fee of almost five percent (5%) was reasonable but prepayment of executor fees without court approval was improper and the executors were required to pay interest on the fees from the date of payment.
  • Ferri v. Powell-Ferri, 2014 WL 3397927 (Conn. Super. Ct. 2014)

Creation, Funding and Construction

  • Lidstrom v. Wilson-Blanc, 2014 Cal. App. Unpub. LEXIS 3085 (Cal. App. 2d Dist. Apr. 30, 2014)
    California’s Court of Appeals interpreted survivorship provision and found that estate of deceased beneficiary was entitled to distribution from trust where he was living at the grantor’s death.

Amendment, Modification and Termination

  • Mendoza v. Luquin, 2014 WL 1619161 (Cal. App. 4th Dist. Apr. 23, 2014)
    California Court of Appeals finds that an instrument intended to be a trust may validly revoke an earlier trust instrument even if the instrument fails to meet the technical requirements for an enforceable trust.

Jurisdiction and Standing

  • Cartwright v. Garner, 751 F.3d 752 (6th Cir. 2014)
    Princess Lida doctrine applied to alleged tort claims for fraud, mismanagement and conversion.
  • Thea v. Kleinhandler, No. 13 Civ. 4895, 2014 U.S. Dist. LEXIS 67583 (S.D.N.Y. May 13, 2014)
    An estate’s administrator or executor is a necessary party to any action to enforce a contract to make a will.
  • Moore v. Chase, No. 14-CV-2119, 2014 U.S. Dist. LEXIS 82778 (D. Kan. June 17, 2014)
    The “probate exception” does not preclude a federal court from asserting jurisdiction over trust assets, which are separate from the probate estate.
  • Kazeminy v. Kazeminy, A12-1701, 2014 Minn. App. Unpub. LEXIS 428 (May 5, 2014)
    A court can enjoin a probate court from conducting parallel proceedings to ongoing litigation where the parties are substantially similar, the issues are similar and the first action can dispose of the action to be enjoined.

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