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House Held In Trust Lost Marital Asset Status

December 22, 2016

Authors

Luke Lantta

House Held In Trust Lost Marital Asset Status

December 22, 2016

by: Luke Lantta

In the afterglow of a wedding, the spouses probably don’t immediately start thinking how the bliss they feel may end spectacularly and expensively.  Chances are they may even start estate planning, thinking how they can seamlessly transfer assets to the other.  In Nelson v. Nelson, a Florida appellate court reminded us that the estate planning choices spouses make, however, have far-reaching consequences if before death they doth part.

Husband and wife bought a house together in California and titled it in both of their names.  They then transferred the home into an irrevocable trust established for the benefit of the wife and her descendants, and named the wife as the sole trustee of the trust.  Husband and wife divorced and a Florida trial court characterized the house as a marital asset subject to equitable distribution.  The Florida appellate

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The Four Corners Of The Trust Instrument Get Tighter

September 28, 2016

Authors

Luke Lantta

The Four Corners Of The Trust Instrument Get Tighter

September 28, 2016

by: Luke Lantta

When a court is called upon to decide a trust dispute, it starts by looking at the intent of the settlor.  Invariably there is some statement about the court being bound by the “four corners” of the trust.  Only if the language within the trust instrument is ambiguous can the court then look at evidence outside of the trust instrument.  Just how serious are Georgia‘s appellate courts when it comes to sticking to the language in the trust instrument? In Jackson v. Nowland, the Georgia Court of Appeals refused to look at outside evidence that created a pretty clear ambiguity with the trust termination language.

The trust at issue contained a provision that the trust would continue during the settlor’s life and until her youngest named family members had reached the age of 27.  Pretty easy,

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Failure To Fulfill Trust Requirements As Grounds For Trust Termination

November 11, 2015

Authors

Luke Lantta

Failure To Fulfill Trust Requirements As Grounds For Trust Termination

November 11, 2015

by: Luke Lantta

Trust instruments occasionally permit the trustees – sometimes with or without the beneficiaries’ consent – to terminate the trust early under certain circumstances.  Why continue a trust or be forced to go into court when, for example, its purpose has been fulfilled?  The Elaine Radlick-Trupp Revocable Trust gave the trustees broad authority to terminate the trust.  The trustees could discontinue the trust when they determined discontinuance to be justified, when it was not economically sound to continue, or when they determined that termination was in the best interests of the beneficiaries because of unforeseen circumstances.  In the Michigan case of Trupp v. Naughton (unpublished), several of the co-trustees of the trust may have inadvertently triggered the termination provision through their actions.

The trust contained two real properties and we will focus on

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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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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

Alaska Supreme Court Refuses To Reform Or Terminate Irrevocable Trust

May 28, 2014

Authors

Luke Lantta

Alaska Supreme Court Refuses To Reform Or Terminate Irrevocable Trust

May 28, 2014

by: Luke Lantta

An irrevocable trust, once set up, can be a difficult thing to terminate or modify.  In Purcella v. Olive Kathryn Purcella Trust, we see how difficult it is to modify or terminate a trust even in a friendly jurisdiction like Alaska.  Therefore, those considering an irrevocable trust need to consider that irrevocable means what it says, and those advising persons in their wealth planning should make sure that they explain that irrevocable means what it says.

Olive Kathryn Purcella sought to terminate her trust or to modify her trust, claiming that she did not intend to execute an irrevocable trust or that the irrevocable trust was the product of undue influence.  Ms. Purcella’s lawyer had suggested that she create a trust because she was going to receive some money from a dispute

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Trust Was Modified, Not Terminated

February 11, 2014

Authors

Luke Lantta

Trust Was Modified, Not Terminated

February 11, 2014

by: Luke Lantta

When a trust instrument sets a time for termination of the trust, it terminates, right?  Well, maybe not.  According to the Kansas Court of Appeals in Lindholm v. Melland (2014 WL 278774) (unpublished), under certain circumstances a trust may continue in existence beyond a termination event.  What happened here to keep the Francis G. Melland Trust going over a decade after it was supposed to terminate?

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Termination Clause In Trust Was Not Triggered

October 15, 2013

Authors

Luke Lantta

Termination Clause In Trust Was Not Triggered

October 15, 2013

by: Luke Lantta

What if all the termination events in a testamentary trust occured before the testator dies?  In Whitehead v. Whitehead, a Mississippi appellate court suggested that we still have to read the documents constructing the testamentary scheme together to effectuate the intent of the testator.

What did John J. Whitehead, Jr.’s will and codicils show when read together?

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When The General Powers Granted To A Trustee Conflict With A Specific Trust Provision

May 10, 2013

Authors

Luke Lantta

When The General Powers Granted To A Trustee Conflict With A Specific Trust Provision

May 10, 2013

by: Luke Lantta

Almost invariably, settlors give their trustees broad powers regarding trust property.  Often these broad powers include the power to convey and encumber trust property and the power to loan trust property.  But, sometimes, the settlor also gives the trustee specific instructions with respect to specific trust property.  In Hamel v. Hamel, the Kansas Supreme Court interpreted a trust instrument that gave the trustee broad general powers, but also specific directions regarding a specific piece of real property, and examined the interplay between the two provisions.

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Trust Termination Failed Where Petitioner Could Not Demonstrate Circumstances Not Anticipated By The Settlor

March 13, 2013

Authors

Luke Lantta

Trust Termination Failed Where Petitioner Could Not Demonstrate Circumstances Not Anticipated By The Settlor

March 13, 2013

by: Luke Lantta

It usually takes a lot to convince a judge to terminate a trust.  The grantor wanted assets held in trust for a reason.  Therefore, if you want to go against the grantor’s intent and terminate a trust, then you better give the court a very good reason why termination is appropriate.  And, there may very well be good reasons to terminate a trust.  That’s why many states have a statutory method for terminating or modifying a trust.

In Kristoff v. Centier Bank, Amy Jean Kristoff tried to use Indiana‘s statute to terminate or modify a trust created by her mother.  The Court of Appeals of Indiana found that Amy did not satisfy her burden under the statute because Amy could not demonstrate the existence of circumstances not anticipated by the settlor of the trust.

What were the unanticipated circumstances Amy was claiming warranted termination of the trust?

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