Recent Cases of Interest to Fiduciaries

August 12, 2019

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:

Smith v. Szeyller, 31 Cal. App. 5th 450 (2019). A beneficiary who received notice but did not participate in litigation between another beneficiary and the trustees found herself with no recourse to object to the settlement reached between the litigating beneficiary and the trustees, even where the settlement agreement provided that a portion of the litigating beneficiary’s legal fees be paid out of the non-participating beneficiary’s trust share.

Matter of Fund for Encouragement of Self Reliance, 440 P. 3d 30 (2019) (4th Dist., April 25, 2019). Where the terms of a charitable trust appointed multiple trustees and did not explicitly provide that the trustees could act alone, consent by all of the co-trustees was required to decant the trust, despite the reference in the decanting statute to “a Trustee,” in the singular.

In re Deborah Dereede Living Trust dated December 18, 2013, 2019 WL 1549157 (S.C. App. April 10, 2019). A trustee’s reasonable, good-faith departure from the express terms of a trust nevertheless constituted a breach of fiduciary duty.

Campbell v. Commissioner, T.C. Memo 2019-4 (2019). U.S. Tax Court respected a foreign asset protection trust and held that the IRS could not consider the trust assets in determining the taxpayer’s assets for purposes of collecting a tax liability.

Gibbons v. Anderson, 2019 Ark. App. 193 (April 3, 2019). Arkansas Court of Appeals held that the arbitration provision in a trust agreement was unenforceable in a suit challenging the validity of the trust on grounds of undue influence.

In re Antonia Gualtieri Living Trust, 2019 WL 1265167 (Mich. Ct. App. March 19, 2019). The court could not compel income distributions for payment of child support from a discretionary trust.

Ray v. Ready, 296 Va. 553 (Dec. 20, 2018). Supreme Court of Virginia affirmed the dismissal of a lawsuit that named the estate of the decedent rather than the personal representative as a party. The court further held that the plaintiff could not amend her complaint under the “safe harbor.”

In re Estate of Rabin, 2018 WL 6801812. Colorado Court of Appeals held that the personal representative was entitled to the decedent’s file with the decedent’s former attorney.

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