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Settlement Agreement Could Not Conflict With Trust Instrument

July 25, 2012

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A trustee‘s intent is an awfully important thing, but for some reason it often gets forgotten or ignored by courts, lawyers, and litigants.  An area in which the trustee’s intent and the four corners of the trust instrument may be most at risk is when the parties in trust litigation start hammering out a settlement agreement.  What deference is given the trust instrument when the parties settle trust litigation?

In In re the Matter of the Frank J. Rekucki, Sr. Revocable Trust under agreement dated September 8, 1997 (unpublished), the Court of Appeals of Minnesota answered that question under Minnesota law: a lot.

New Illinois Directed Trusts Statute

Typically, a Trustee is an individual or entity who is responsible for all of the duties necessary to administer a trust, but, in this new statute, the Illinois legislature has created new roles to assist the Trustee in the performance of his or its duties.

On May 16, a bill entitled “Directed Trusts” passed both houses of the Illinois legislature. According to the synopsis of the bill, the amendment to the Illinois Trusts and Trustees Act “adds provisions establishing a directed trust as a type of trust and establishes responsibilities among” different directing parties.  The bill was sent to the governor for signature on June 14.  If the governor does not veto the bill, or sign it before then, the bill will become law on August 13.

The bill creates three types of directing parties: (1) an investment trust advisor, (2) a distribution trust advisor, and (3) a trust protector.

Accounting Firm Not Required To Maintain Trust Records Or To Account For Financial Activities Of Trust

July 23, 2012

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Trustees aren’t always one-stop shops.  In some states, trustees can delegate certain investment decisions.  Also, most trust instruments allow trustees to hire people to help them perform certain activities, such as lawyers and accountants.  Occasionally, an aggrieved party sues these people hired to help the trustee.  In these circumstances, the question becomes what duty was owed by the person hired by the trustee.  That question can often be answered by figuring out what that person was hired to do for the trustee.

In Taylor v. Barberino, the Appellate Court of Connecticut recently considered that question as applied to an accounting firm.  A successor trustee sued an accounting firm that was engaged by the trusts to provide accounting services on the grounds that the accounting firm failed to accurately maintain records of the operation of the trusts and failed to properly account for the financial

Georgia Statute Of Limitation For Setting Aside A Deed Based On Fraud

July 18, 2012

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Last month, the Georgia Court of Appeals was busy addressing cases involving efforts to set aside deeds based on fraud.  So, we’ll take another look at a Georgia fraud case this week: Dunkley v. Evans.  While the appellate court had to address several legal issues, we’ll focus on the statute of limitations.  Here’s how the Georgia Court of Appeals said it worked in a fraud case:

Transfer Planning with Interests in Private Equity and Hedge Funds

Transfer Planning with Interests in Private Equity and Hedge Funds

July 16, 2012

Authored by: Stacie J. Rottenstreich and Karin Barkhorn

Much has been written about the potentially unique opportunities available to people to make gifts before year-end (for example, see our prior posts here and here). If Congress does not act, the increased $5,120,000 gift tax exemption will decrease dramatically. However, if you are the owner of an interest in a private equity or hedge fund, planning to gift part or all your interest in such fund requires particular care and attention.

Private equity funds are usually created as limited partnerships with two classes of owners. The limited partners are the investors in the fund, while the general partner is typically a business entity created as a limited liability company (“LLC”). A carried interest is normally held in and allocated to the LLC/general partner. A carried interest is the right to receive some of the profits of the fund. The initial value of a carried interest is

Georgia Appellate Court Clarifies Threshhold For Setting Aside Deed Based On Fraud

July 16, 2012

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It’s no easy task to set aside a deed based on fraud.  Yet, because fraud is so difficult to prove through direct evidence, courts have established ways for plaintiffs to prove fraud by circumstantial evidence.  In Georgia, great inadequacy of of consideration, joined with great disparity of mental ability in contracting a bargain, may justify equity in setting aside a sale or other contract.  Where these two elements exist, a deed may be set aside without proof of anything else as to fraud.

In Slaick v. Arnold, the Georgia Court of Appeals recently got to apply this framework.

There Is A Difference Between Individual And Representative Capacities

July 11, 2012

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In fiduciary litigation cases, it’s common to encounter courts and practitioners who don’t really appreciate the difference between a litigant’s individual capacity and that litigant’s representative, fiduciary capacity.  In other words, the two capacities tend to get conflated.

In Beekhuis v. Morris, a Florida appellate court reminds us that there really is a difference between someone acting individually and that same person acting in a representative capacity as a fiduciary.

New Article Published by Our Lawyers

Two of our Atlanta attorneys, partner Kim Civins and associate Tiffany McKenzie, recently published an article in the Summer 2012 issue of Insights Magazine entitled “Estate Planning With Conservation Easements”.  Check it out here!

Mission: Possible — Saving Estate Taxes on Life Insurance

Since Tom is back in the news this week, and because I finally watched Ghost Protocol this weekend, I thought I’d re-post this November 2011 blog on Tom Cruise’s possible use of life insurance in his estate planning.  Keep in mind, based on any divorce settlement agreement he reaches with Katie Holmes, Tom’s need to maintain life insurance may change.

When I first saw this video of Tom Cruise performing his own stunts on the outside the Burj Khalifa in Dubai (the tallest building in the world), a mile and a half above the earth, for the movie Mission: Impossible — Ghost Protocol (aka Mission: Impossible IV),  my first thought was, “Wow, how much life insurance do you think he has?”  My next thought was “Think of the estate taxes his estate will have to pay on those life insurance proceeds if the life insurance isn’t held in a proper

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