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Is The Trustee Of A Revocable Trust Answerable To The Remainder Beneficiaries? Ever?

April 29, 2013

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If we were to identify hot topics in fiduciary litigation during 2012 and 2013, this one would be scorching: what duties do trustees owe the remainder beneficiaries of revocable trusts?  We’ve explored the topic in some detail here, here, and yet again here.

Last week, over at Bryan Cave‘s Private Client Group blog, TrustBryanCave, Kathy Sherby and Stephanie Moll wrapped up a three part series on this topic.  Readers of this blog will definitely be interested:

Part 1 takes a look at Pennell v. Alverson, which we previously looked at here.

Part 2 explores the ongoing saga of In re Estate of Giraldin, which we briefly reviewed here.

Part 3 wraps up the discussion with

Is the Trustee of a Revocable Trust Answerable to the Remainder Beneficiaries? Ever?

Part 3 of a 3 part series.

In a trilogy of new cases decided in the last couple of months, the courts in three states have addressed the issue of whether the trustee of a revocable trust has a duty to account to, and can be held liable to, the remainder beneficiaries of the trust, for a period during which the trust was revocable, after the death of the settlor. In reviewing the discussion of the courts in these three decisions, it is clear that, while a trust is revocable, the trustee has a duty only to the settlor, and that even after the death of the settlor when the interests of the remainder beneficiaries has vested, the trustee continues to have no duty to the remainder beneficiaries for any actions taken while the trust was revocable. In Part 1 of this series, we reviewed the case of Pennell

Insurance Company Not Liable For Cutting Life Insurance Check To Wrong Trust

April 24, 2013

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Thomas and Michael Tessier allegedly bilked Frederick and Thaddeus Jakobiec and the estate of their mother, Beatrice Jacobiec, out of millions of dollars.  One part of that scheme allegedly involved the theft of approximately $100,000 in life insurance proceeds due a trust benefiting Thaddeus.   After Beatrice’s death, Thomas was rummaging through Beatrice’s items and found that a life insurance policy existed on the life of Beatrice.  That policy was payable to a trust known as the Smillie Trust.  So began this alleged criminal enterprise.

Thomas and Michael filed an ex parte petition to remove Frederick as trustee and install Michael as the trustee of the Smillie Trust for the benefit of Thaddeus.  Nearly simultaneously, Thomas fraudulently created a second trust for Thaddeus.  Through alleged fraud, forgery, and subterfuge, Thomas convinced the insurance company to pay the death benefit to the

Is the Trustee of a Revocable Trust Answerable to the Remainder Beneficiaries? Ever?

Part 2 of a 3 part series.

In a trilogy of new cases decided in the last couple of months, the courts in three states have addressed the issue of whether the trustee of a revocable trust has a duty to account to, and can be held liable to, the remainder beneficiaries of the trust after the death of the settlor, for a period during which the trust was revocable. In reviewing the discussion of the courts in these three decisions, it is clear that, while a trust is revocable, the trustee has a duty only to the settlor, and that even after the death of the settlor when the interests of the remainder beneficiaries has vested, the trustee continues to have no duty to the remainder beneficiaries for any actions taken while the trust was revocable. In this series of blogs, we review these cases.  In Part 1

Is the Trustee of a Revocable Trust Answerable to the Remainder Beneficiaries? Ever?

Part 1 of a 3 part series.

In a trilogy of new cases decided in the last couple of months, the courts in three states have addressed the issue of whether the trustee of a revocable trust has a duty to account to, and can be held liable to, the remainder beneficiaries of the trust after the death of the settlor, for a period during which the trust was revocable. In reviewing the discussion of the courts in these three decisions, it is clear that, while a trust is revocable, the trustee has a duty only to the settlor, and that even after the death of the settlor when the interests of the remainder beneficiaries has vested, the trustee continues to have no duty to the remainder beneficiaries for any actions taken while the trust was revocable. In this series of blogs, we will review these cases.

In the first

Purported Trust Beneficiary Not A Necessary Party To Trust Litigation

April 19, 2013

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We’ve looked at a lot of cases to figure out who needs to be named as a party in trust litigation.  And we’ve assumed that, if a party is suing to have the trust declared invalid or is suing the trustee for breach of fiduciary duty, then all trust beneficiaries need to be joined as parties to the litigation.  That may be the rule, but where there’s a rule there’s apparently an exception.  In Harvill v. Harvill (link provided by Justia.com), a federal court in Tennessee gives us guidance on possible exceptions.

Form Health Care Power Of Attorney Does Not Create A Presumption Of Undue Influence For Property Transactions

April 16, 2013

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We’ve previously noted that litigation involving powers of attorney is popular right now.  Powers of attorney take on particular importance in undue influence cases because they can turn the case on its head by creating a presumption of undue influence.  The reason why is that a power of attorney can create a fiduciary relationship between the principal and agent.

But not all powers of attorney are created equal.  In In re: Estate of Stahling, an Illinois appellate court recently answered the important question of whether a health care power of attorney creates a fiduciary relationship with respect to the execution of a deed transferring property to the agent which, as a matter of law, raises a presumption of undue influence.

President Obama Proposes Changes to the Transfer Taxes

On Wednesday, President Obama released his FY 2014 budget which calls for $3.8 trillion in spending over the next fiscal year and $1 trillion in tax increases over the next 10 years.

Among the proposals in the budget plan, President Obama proposes a return of the estate tax to the law in effect in 2009, which changes would go into effect beginning in 2018.  If this proposal is adopted, it would be a quick end to the “permanency” of the transfer tax law that was enacted at the end of last year.

 

Federal Court Orders Trustee To Provide A Trust Accounting

April 10, 2013

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We often see trust beneficiaries sue a trustee to compel an accounting of the trust’s receipts, disbursements and assets.  A court should start with the trust instrument to determine whether an accounting is required and, if so, to whom and what it should contain.  That’s what an Illinois federal court did in Drewry v. Keltz.

The trust instrument there required that “[e]ach Successor Trustee shall render an account of his/her receipts and disbursements and a statement of assets to each adult vested beneficiary.”  The plaintiffs were adult vested beneficiaries of the trust who had made requests for the successor trustee to provide an accounting, which the trustee did not provide.  The federal court ordered the trustee to provide the plaintiffs with an accounting of his receipts and disbursements on behalf of the trust and a

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