September 30th, 2011

In Avery v. Avery, the Indiana Supreme Court resolved what had apparently been an open question under Indiana law when it ruled that filing of an answer as required by Indiana Trial Rule 7 is required in a will contest action. (more…)

September 28th, 2011

Iowa’s Code contains strict limitations on what acts a conservator can take without prior court approval.  For example, Iowa Code section 633.647 provides that “[c]onservators shall have the following powers subject to the approval of the court after hearing on such notice, if any, as the court may prescribe: . . . [t]o invest the funds belonging to the ward.”  (Emphasis added.)

On their face, these limitations seem like a lot of unnecessary hassle, increase the fees and expenses of conservatorships, and potentially cause the conservatorship estate to miss out on financial opportunities.  On the other hand, the statutory limitations would also seem to protect conservators who get the court’s blessing before taking any acts that might jeopardize the ward’s assets.

In In the Matter of the Conservatorship of Rose V. Alessio, the Iowa Supreme Court answered the question of what happens to a conservator who fails to get court approval before investing a ward’s property.  The answer appears to be that prior approval doesn’t really matter.  Conservator liability will rest on whether there is a showing that there was otherwise a breach of fiduciary duty owed by the conservator to the ward. (more…)

September 26th, 2011

Sean Swendsen was a remainder beneficiary of the Richard Swendsen Trust.  Sean sued Richard Corey, the trustee of the Trust, alleging breach of trust and wrongful dissipation of trust assets.  Sean also sued Clayne Corey, who was Richard’s son, alleging claims that (1) Clayne acquired trust property with knowledge of a potential breach of trust by or conflict of interest on the part of the Trustee, and (2) Clayne committed trespass on trust property.

The question before the United States District Court for the District of Idaho in Swendsen v. Corey (2011 WL 4352363) was whether Clayne – a stranger to the trust – owed Sean a duty of care.  The court determined that Clayne did, in fact, owe Sean a duty of care concerning the trust even though Clayne was not a trustee or a beneficiary of the trust. (more…)

September 21st, 2011

If you actually want to forego the courtroom and cast your lot with an arbitrator, incorporating an arbitration provision into your standard client contracts can be an effective tool because these provisions tend to be strictly enforced by courts.  It’s an example of where boilerplate may have some benefits.  Recently, in Hemenway v. Millennium Trust Company, LLC, the United States District Court for the Northern District of Illinois essentially terminated – at least least temporarily – a lawsuit against Millennium Trust Company by enforcing an arbitration agreement contained in a standard client contract.

Edward L. Hemenway”s Roth Individual Retirement Account Agreement and his Traditional Individual Retirement Account Custodial Agreement had an identical and standard arbitration provision which broadly encompassed “disputes between the parties.”

Nevertheless, Hemenway filed a lawsuit in federal court alleging that the money he contributed to his Roth and IRA accounts was lost, that Millennium Trust Company failed to follow his instructions regarding his contributions, and that Millennium misrepresented itself, its services, and the amount of money in his accounts.  Hemenway’s complaint made claims for breach of contract, breach of fiduciary duty, fraud, negligent misrepresentation, and violation of state law.  Millennium sought to stay the lawsuit pending arbitration of Hemenway’s claims.

Hemenway unsuccessfully tried to get out of the arbitration provisions by raising some of the usual arguments. (more…)

September 19th, 2011

Instead of making specific bequests of specific property to specific beneficiaries, testators often simply distribute their personal property “per stirpes” to a group of beneficiaries, such as their children or nephews and nieces.  In these circumstances, the executor is typically given discretion in how the property is divided so long as it is divided equally.  This distribution scheme is begging for a fight between siblings on who gets dad’s gun with the executor stuck in the middle.  Of course, conflict increases tenfold when the executor is one of the legatees who might receive the property.

In Stewart v. Ray, the Georgia Supreme Court had occasion to interpret language in a will that set up one of these distribution schemes and confirmed how we were all probably interpreting them anyway. (more…)

September 16th, 2011

While it’s still rare for an undue influence case to make it to a jury, it seems that courts have been gradually loosening the requirements to allow more plaintiffs to present their cases to a jury.  Perhaps it’s simply a matter of numbers as more aging Baby Boomers are beginning to succumb to “old age and physical and mental weakness,” which opens the door to an undue influence claim.

Whatever the reasons, we are seeing more appellate decisions involving plaintiffs having won undue influence claims at the trial court level.  Earlier this month, in In the Matter of the Estate of Raney, the North Carolina Court of Appeals considered the appeal of a jury verdict in which a jury – after being presented with a lot of bad and good facts – concluded that the propounder of a will had exerted undue influence over the testatrix.  In light of these mixed facts, the appellate court called it a “close” case.

Because these undue influence cases are fact intensive, let’s look at what a “close” undue influence case looks like. (more…)

September 14th, 2011

In the event that a corporate fiduciary must repay executor’s fees or trustee’s fees, reimburse an estate or trust the fiduciary’s attorney’s fees, or pay a damages award, it usually has the resources available to make such a payment.  An individual fiduciary, on the other hand, often does not.  An individual fiduciary may bleed the trust or estate dry through litigation and leave nothing behind at its conclusion for the winning party to recover.  Therefore, even if a wronged beneficiary or heir is successful in a lawsuit against an individual fiduciary, the winning party may find him or herself with a piece of paper confirming the victory but not much else.

Fortunately, there are some effective trial techniques available to avoid that scenario – one of which was on display in In re Garibay [2011 WL 3795253 (unpublished)].  On appeal the Kansas Court of Appeals affirmed a trial court’s creative solution to this problem. (more…)

September 12th, 2011

A lot of family trust disputes get resolved either through pre-litigation settlement agreements or pre-trial settlement.  Unfortunately, poor drafting of a settlement agreement often defeats the purpose of the original settlement by leading to litigation concerning the settlement agreement itself.  In Purcella v. Purcella, the Wyoming Supreme Court reminds us that if you are going to enter an agreement altering the terms of an original trust, you need to be explicit that you are actually altering the terms of the original trust. (more…)

September 8th, 2011

In Foster v. Professional Guardian Services Corporation, the Alaska Supreme Court determined that a court-appointed conservator breached its fiduciary duties through a number of acts and a failure to timely act.  Even though the conservator prevailed on a majority of the claims brought against it,  and thus prevailed in the “global” scheme of the litigation, the Alaska Supreme Court determined that the conservator could not have its attorney’s fees paid from the ward’s estate for those claims on which it lost.

In reaching its decision, the Alaska Supreme Court suggested that there is no such thing as a de minimis breach of fiduciary duty. (more…)

September 6th, 2011

In Florida, there was a split between the courts of appeals on the time limit in which someone could object to the qualifications of a personal representative.  One court of appeals had decided that there was no time limit where the personal representative was a nonresident.  Another court of appeals had held that there was a three-month time limit.  In Hill v. Davis, the Florida Supreme Court resolved this split.

When Katherine Davis died, Douglas Davis, a resident of New York, filed a petition for administration claiming he was qualified to serve because he was the decedent’s stepson and was nominated under the will.  Davis was appointed as personal representative and a copy of the notice of administration was served on Solveig Edna Hill, the decedent’s mother, on July 24, 2007.  Over a year later, on August 6, 2008, Hill filed a motion challenging Davis’s qualifications to serve as a nonresident personal representative.  Hill alleged that because Davis’s father predeceased the decedent, Davis did not fall within the categories of persons entitled to serve as a nonresident personal representative under Florida Stat. 733.304.  The trial court found that Davis was qualified to serve as a nonresident personal representative and that Hill’s objection was not filed within the three-month time frame set forth in Florida Stat. 733.212(3).

The applicable statute seems awfully clear on its face. (more…)