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Federal Courts Don’t Want To Hear Your Domestic Disputes Involving Trusts

October 29, 2015

Authors

Luke Lantta

Federal Courts Don’t Want To Hear Your Domestic Disputes Involving Trusts

October 29, 2015

by: Luke Lantta

There may be good strategic reasons to get a trust litigation case into federal court, especially if you’re the trustee.  But, just because you meet the diversity jurisdiction requirements to get the case into federal court doesn’t mean the federal court will hear the case.  The court may still find that an exception to otherwise perfectly good diversity jurisdiction exists.  While we more regularly see federal courts invoke the probate exception to diversity jurisdiction in fiduciary litigation cases, in McCavey v. McCavey-Barnett (unpublished), a federal appellate court affirmed a Georgia district court’s decision to not hear a trust dispute based on the domestic relations exception to diversity jurisdiction.

The case that the federal court declined to hear involved allegations concerning an inter vivos family trust.  A husband and wife deeded a

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Beneficiary Ratification Of A Trustee’s Unauthorized Act

March 12, 2015

Authors

Luke Lantta

Beneficiary Ratification Of A Trustee’s Unauthorized Act

March 12, 2015

by: Luke Lantta

The trustee-beneficiary relationship can be a little bit like a marriage, so perhaps it’s not surprising that the phrase “speak now or forever hold your peace” has meaning for both.  If a trustee commits a breach of trust, a beneficiary may expressly or impliedly demonstrate satisfaction with the wrongful act thereby preventing that beneficiary from later challenging the act.  In other words, the beneficiary may ratify the trustee’s wrongful or unauthorized act by expressly agreeing to it or by failing to object to it.  In order for a beneficiary to ratify a breach of fiduciary duty, typically there must be proof that the beneficiary had full knowledge of all material facts.  All the more reason for trustees to consider giving beneficiaries more information about the trust administration and the trustee’s actions.  If the beneficiary gets the material information and

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What’s The Correct Fiduciary Standard When A Trustee Controls Family Entities Held By The Trust?

March 27, 2014

Authors

Luke Lantta

What’s The Correct Fiduciary Standard When A Trustee Controls Family Entities Held By The Trust?

March 27, 2014

by: Luke Lantta

As part of wealth planning, trustees are frequently put in charge of corporate entities in which the trust owns an interest.  When it comes to the trustee’s corporate duties and actions with respect to the corporate entity, what is the appropriate standard of care?  Is it a corporate level fiduciary standard or is it the heightened trustee level fiduciary standard? Jurisdictions are split on this issue.  The Georgia Supreme Court in the case of Rollins v. Rollins, is the latest state to weigh in on the issue.  In reaching its opinion, the Georgia Supreme Court resolved some issues, set some thresholds, and left open a few questions.

To understand the Court’s opinion, we must first understand the structure of the trusts and family entities involved.  O. Wayne Rollins established ten irrevocable trusts, the Rollins Children’s Trust (“RCT”), and

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Statute Of Limitations Barred Successor Trustee From Pursuing Claims Against Predecessor

October 3, 2013

Authors

Luke Lantta

Statute Of Limitations Barred Successor Trustee From Pursuing Claims Against Predecessor

October 3, 2013

by: Luke Lantta

To the extent that a successor trustee must pursue claims against the predecessor trustee, when does the clock start ticking for the successor to bring those claims?  The answer to that question likely ends up being state specific, but in Robert K. Ward Living Trust v. Peck, we get some guidance under North Carolina law, including some clarification on whether the “continuing wrong doctrine” applies to breach of trust claims against a trustee.

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Federal Court Dismisses Civil Theft Claim Against Corporate Trustee

September 26, 2013

Authors

Luke Lantta

Federal Court Dismisses Civil Theft Claim Against Corporate Trustee

September 26, 2013

by: Luke Lantta

Plaintiffs are becoming more creative in the claims they bring against fiduciaries.  So, too, are the fiduciaries when they get sued.   In two opinions in Berlinger v. Wells Fargo Bank, N.A., here and here (links via Justia), a federal court in Florida dismissed some claims brought against a corporate trustee while allowing some of the corporate trustee’s claims against its individual co-trustee to go forward.

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Georgia Appellate Court Adds Uncertainty For Recipients Of Charitable Gifts

January 14, 2013

Authors

Luke Lantta

Georgia Appellate Court Adds Uncertainty For Recipients Of Charitable Gifts

January 14, 2013

by: Luke Lantta

We’ve all probably seen some coverage of a few recent highly publicized disputes about charitable gifts supposedly not being used for their intended purpose.  2012 opened with country-music legend Garth Brooks scoring a $1 million jury verdict against Integris Rural Health, Inc. over a donation that was allegedly not used for its intended purpose.  And, 2012 closed with another dispute involving a music legend getting resolved when Albany State University returned $1.2 million in donations from the Ray Charles Foundation because the school did not use the money to build a new performing arts center.

In these two thorny examples of gift-giving and gift-returning, the recipients of the gifts were accused of not following through on the donor’s intended use of the gift.  In other words, the donor accused the recipient of doing something wrong.  But what happens when the tables are turned and it is

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Florida Appellate Court Distinguishes Between Two Limitations Periods For Breach Of Trust Suits Against Trustees

May 23, 2012

Authors

Luke Lantta

Florida Appellate Court Distinguishes Between Two Limitations Periods For Breach Of Trust Suits Against Trustees

May 23, 2012

by: Luke Lantta

Section 737.307 of the Florida Statutes provides for a limitation of actions against a trustee in two circumstances.  The first limitations period is six-months.  The second limitations period is four years.  So, what’s the distinguishing characteristic between the two limitations periods?

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