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More Authority For Trust Decanting?

August 19, 2014

Authors

Luke Lantta

More Authority For Trust Decanting?

August 19, 2014

by: Luke Lantta

Does the settlor’s grant of a broader power to a trustee necessarily, by implication, include the grant of the lesser power?  Practitioners have often answered “yes” to this question when it comes to justify so-called ‘common law’ trust decanting.  So, for example, if the settlor gave the trustee the discretionary authority to distribute the entirety of the corpus without regard to any standard, the argument is that the grant of that broad power would necessarily include the lesser power to decant.

In a different context, in an unpublished opinion in Leonard v. Maher (2014 Mass. App. Unpub. LEXIS 885) (Rule 1:28 decision), the Appeals Court of Massachusetts used similar logic to conclude that where the settlors, trustees, grantors and beneficiaries of a trust are the same people, the power to Read More

Express Language Of Trust Instrument Prevented Plaintiff From Making Certain Claims Against Trustee

March 6, 2014

Authors

Luke Lantta

Express Language Of Trust Instrument Prevented Plaintiff From Making Certain Claims Against Trustee

March 6, 2014

by: Luke Lantta

The words within the four corners of a trust instrument mean something.  In Harvill v. Harvill, a federal case from Tennessee that we’ve previously looked at here, we see that sometimes those express words mean so much that a plaintiff is prevented from making a claim based on allegations that directly contradict the words in the trust.  But, it’s also the part of the opinion about an amendment of the trust pursuant to a power of attorney – something that the court didn’t need to address – that also interests us.  But, before we get into that, let’s first look at what the court had to say about the trustee’s exercise of discretion under the trust instrument.

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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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Equity Will Not Interfere With Plain Language Of Trust Instrument And Trust Settlement Agreement

August 6, 2013

Authors

Luke Lantta

Equity Will Not Interfere With Plain Language Of Trust Instrument And Trust Settlement Agreement

August 6, 2013

by: Luke Lantta

Just how controlling is a trust instrument?  Even though a court may have the equitable power to modify a trust instrument or trust settlement agreement, the Court of Appeals of Michigan‘s opinion in In re George W. Scheer Inter-Vivos Trust reminds us of just how reluctant a court may be to allow equity to interfere with the plain language of a trust.

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Trustee That Reinvested Trust Assets Through Its Insurance Affiliate Did Not Impermissibly Self Deal

August 2, 2013

Authors

Luke Lantta

Trustee That Reinvested Trust Assets Through Its Insurance Affiliate Did Not Impermissibly Self Deal

August 2, 2013

by: Luke Lantta

Corporate trustees have wrestled with investing trust assets in their own stock, their own proprietary mutual funds, or through their affiliates.  State trust laws take varied approaches to these practices as have the corporate trustees themselves.  Some options – where permitted by law – include refunding the entire commissions, reducing the commissions, offsetting the commissions by reducing the trustee fees, or taking the full commissions.  Needless to say, any approach may be met with hostility from the beneficiaries and claims of improper self-dealing.  In French v. Wachovia Bank, N.A., a federal appellate court has given us a watershed opinion on one of these approaches taken by a corporate trustee.

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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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