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Trustee Did Not Breach Fiduciary Duty By Favoring One Beneficiary In Distributions And Investments

October 17, 2013

Authors

Luke Lantta

Trustee Did Not Breach Fiduciary Duty By Favoring One Beneficiary In Distributions And Investments

October 17, 2013

by: Luke Lantta

The words in a trust instrument mean something.  So, too, does the absence of words in the trust instrument.  Therefore, when in a trust instrument a grantor gives a trustee the authority to favor one beneficiary over another, gives broad discretion in making discretionary distributions, does not require the trustee to consider certain information in making discretionary distributions, or permits a concentration of assets, the trustee – and a court – should carefully consider those words.

In O’Riley v. U.S. Bank, N.A., a Missouri appellate court reviewed a situation where a trustee supposedly favored a grantor’s spouse over his children in making discretionary distributions and in investing trust assets.

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Massachusetts Supreme Court Approves Decanting in Kraft Family Trust

August 19, 2013

Authors

Tiffany McKenzie

Massachusetts Supreme Court Approves Decanting in Kraft Family Trust

August 19, 2013

by: Tiffany McKenzie

What does a trustee do when an irrevocable trust needs to be modified?  Circumstances or laws may have changed in ways that could not have been anticipated at the time the trust was drafted.  In the past, a trustee who wanted to change some aspect of an irrevocable trust had few options, other than a court order to reform the trust which can be a costly and lengthy process.  Now, many states have alleviated the necessity of court approval to modify trusts by permitting “decanting.”

Decanting is the term generally used to describe the distribution of trust property to another trust pursuant to the trustee’s discretionary authority to make distributions to, or for the benefit of, one or more beneficiaries.  Decanting may be permitted by statute, by the terms of the original trust or by court-created law.  Currently, Massachusetts has

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Trustee Was Authorized To Convey – Not Distribute – Property To Estate Of Deceased Trust Beneficiary

March 19, 2013

Authors

Luke Lantta

Trustee Was Authorized To Convey – Not Distribute – Property To Estate Of Deceased Trust Beneficiary

March 19, 2013

by: Luke Lantta

Time to get into the weeds on the scope of a trustee‘s powers.  There are basically two sources of power for a trustee – the trust instrument and state law.  Where those two intersect, overlap, conflict, or diverge is where you will likely find the bulk of fiduciary litigation about trustee powers.

In Rendall v. Black, the Court of Appeals of Kentucky dug into both the trust instrument and Kentucky trust law to reverse a local circuit court’s ruling that declared a 1994 deed void ab initio based upon the language of a trust agreement.  In doing so, the appellate court got to differentiate between the trustee’s power to distribute income versus the trustee’s power to sell off the corpus of the trust.  And we saw a brief – and curious – appearance of the trust pursuit rule.

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What Happens When Your Client Regrets Settling A Probate Matter?

August 23, 2012

Authors

Luke Lantta

What Happens When Your Client Regrets Settling A Probate Matter?

August 23, 2012

by: Luke Lantta

Settlement regret.

A lot of litigants end up getting it, especially in such emotionally-charged litigation as probate litigation.  Most of the time those litigants just end up expressing those feelings of regret to their lawyers.  Sometimes they try to take it further.  How can the regretful party’s lawyer see it coming and how can that lawyer guard against it?

New Jersey trial court in In the Matter of the Estate of Lillian A. Hogan (not for publication) provides some clues. 

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Applying A Massachusetts Discretionary Distribution Clause

July 9, 2012

Authors

Luke Lantta

Applying A Massachusetts Discretionary Distribution Clause

July 9, 2012

by: Luke Lantta

Most grantors understand that their trustee shouldn’t have a court looking over its shoulder every time it exercises a discretionary power.  That’s why trustees are granted discretionary powers.

Despite a grantor’s broad grant of authority to a trustee, however, trustees often find themselves embroiled in litigation over the exercise of a discretionary power, particularly with respect to discretionary distributions.

In Thompson v. Anthony (unpublished), in the context of an unjust enrichment claim, the Appeals Court of Massachusetts considered the implication of a trust provision giving the trustees “absolute discretion” over distributions.

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Massachusetts Standards For Encroaching Upon Trust Corpus

November 2, 2011

Authors

Luke Lantta

Massachusetts Standards For Encroaching Upon Trust Corpus

November 2, 2011

by: Luke Lantta

Discretionary distributions of trust corpus probably rank near the top of trustees‘ or trust administrators‘ headaches.  No matter how the discretion is exercised someone is going to be angry – maybe even angry enough to sue.  Either the beneficiary requesting the encroachment will complain that it’s not enough or the remainder beneficiaries will complain that it was too much.

Corporate trustees have gotten pretty good at documenting and formalizing the manner in which they handle discretionary distributions, usually routing the requests through committees.  In making a discretionary distribution, one question will always come up: “Do I have to consider the beneficiary’s other means of support?”  Some states, like Georgia, have statutes stating that, in the absence of a trust provision to the contrary, a trustee has no duty to investigate a beneficiary’s resources prior to making a discretionary distribution.  Other

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