Recent Cases of Interest to Fiduciaries: July 2022

July 19, 2022

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:

Wellin v. Farace, 2021 WL 5445968 (4th Cir. Nov. 22, 2021) (unpublished). The Fourth Circuit held that the statute of limitations for attorney malpractice did not begin when the client became aware of the attorney’s divided loyalty, and instead began to run when the client consulted with a new attorney regarding the transaction at issue.

McMurtrie v. McMurtrie, No. 200404, 2021 WL 1569396 (Va. Apr. 22, 2021). The Virginia Supreme Court held that a trust’s no-contest clause applied to the settlor’s suit against the trustees after a co-trustee refused to distribute the trust proceeds to him.

Sacks v. Dissinger, 178 N.E.3d 388 (Mass. 2021). The Supreme Judicial Court of Massachusetts held that claims for intentional interference with expectancy and unjust enrichment did not challenge the validity of a trust and therefore were not time-barred under the one-year statute of limitations.

Trust under Deed of Walter R. Garrison, 264 A.3d 398 (Pennsylvania 2021). In a non-precedential decision, the Superior Court of Pennsylvania denied a petition for declaratory judgment and ruled that (1) nonjudicial trust modification agreements between the settlor and beneficiaries of three irrevocable trusts and purporting to grant the beneficiaries the power to remove and replace the independent trustees after the settlor’s death were ineffective and invalid under the Pennsylvania Uniform Trust Act; and (2) the purported removals and replacements of trustees pursuant to the nonjudicial trust modification agreements were also invalid. 

In the Matter of Falkowsky, 197 A.D.3d 1300, 154 N.Y.S.3d 125 (2021). The New York Supreme Court, Appellate Division, Second Department, affirmed the decision of the Westchester County Surrogate’s Court to deny the admission of a decedent’s will to probate because the proponent of the decedent’s will failed to prove that the decedent possessed testamentary capacity at the time the purported will was executed due to his failure to know the nature and extent of the property of which he was disposing.

In the Matter of the Colecchia Fam. Irrevocable Tr., 180 N.E.3d 988 (Mass. App. Ct. 2021). In this case of first impression, the Massachusetts Appellate Court held that, for purposes of a trustee’s duty to inform and account, an individual becomes a qualified beneficiary on the date when a beneficiary’s entitlement under the trust is triggered.

In re Tr. B Created Under Karam Fam. Tr., No. 2 CA-CV 2021-0018, 2021 WL 6013442 (Ariz. Ct. App. 2021). The Court of Appeals of Arizona held that where a beneficiary properly removed a remainder beneficiary through the exercise of her limited power of appointment, a subsequent trust termination with the consent of the remaining beneficiaries was valid. 

Newsome v. Peoples Bancshares Inc., 328 So.3d 87 (November 4, 2021). A bank was not liable for breach of contract where it reasonably relied on the apparent authority of an attorney to authorize disbursements from a conservatorship account.

Van Horn, Metz & Co., Inc. v. Crisafulli, No. 21-01128 (FLW), 2021 WL 4317186 (D. N.J. Sept. 23, 2021). Imposing a constructive trust as a preliminary injunction on the wife of a deceased husband who allegedly embezzled funds from the plaintiff. 

Nelson V. Burr, 492 P.3d 1234 (Ct. App. Nevada. 2021). The Nevada Court of Appeals held  that the statute of limitations for legal malpractice claims arising from negligent estate planning advice begins to run when the plaintiff suffers actual damages. 

Dae v. Traver, 69 Cal. App. 5th 447, 284 Cal. Rptr. 3d 495 (Cal. App. 2021). The Second Appellate District of the Court of Appeal of California held that a trustee provided sufficient evidence that his no-contest petition had “minimal merit” to defeat a trust beneficiary’s anti-SLAPP motion because, under the former no-contest law applicable to the trust, a petition challenging a trustee’s investment decisions can amount to a contest since it seeks to impair provisions in the trust giving the trustee discretion to manage trust assets. 

Skarsten-Dinerman v. Milton Skarsten Living Trust, 2021 WL 6109571 (Minnesota 2021) (Nonprecedential Opinion). A petition to modify the terms of an irrevocable trust, which would have allowed the sale of certain real property owned by the trust, was denied because a material purpose of the trust was to hold the real property in trust to provide stable income to the beneficiaries of the trust. 

Galiotos v. Galiotos, 300 Va. 1, 858 S.E.2d 653 (Virginia 2021). The Supreme Court of Virginia held that two brothers serving as co-executors of their mother’s estate were appropriately removed where each brother showed a pattern of acting in his own self-interest and obstructed the administration of the estate. For the same reason, neither brother received compensation from the estate or reimbursement for attorney’s fees.

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