A Strong Offense
A Stronger Defense
Fiduciaries should know what they’re getting into before they accept the responsibilities and duties that come with that role. People or institutions named as successor fiduciaries may also want to be careful about being named as a successor. As we have previously seen, successor fiduciaries and even non-fiduciaries may wind up with breach of fiduciary duty claims against them even if they have not stepped up to the main role. In Wellin v. Wellin (2014 WL 234216), a federal court in South Carolina recently weighed into this arena.
There have been multiple opinions from the South Carolina federal court regarding the litigation concerning Keith Wellin and the fortune he amassed. For our purposes here, we are concerned with the breach of fiduciary duty allegations in his complaint against his son, Peter, and his daughter, Cynthia.
Keith alleged that Cynthia breached her fiduciary duties to him as successor power of attorney and as “back-up” successor trustee of the Keith S. Wellin Florida Revocable Living Trust. While Cynthia was named as successor attorney-in-fact and as “back-up” successor trustee, Keith did not allege that Cynthia ever actually acted in either fiduciary capacity. As such, Keith failed to allege that Cynthia owed any fiduciary duty to him in these roles. Therefore, the court dismissed the breach of fiduciary duty claims against Cynthia.
Peter, on the other hand, is a slightly different story. Like Cynthia, Peter never became trustee of the living trust, so any breach of fiduciary duty claims against Peter based upon the trust could not stand. Peter, however, held a power of attorney for Keith for several years, including during a period of time relevant to claims in the litigation. Because Peter was Keith’s attorney-in-fact during the relevant time periods, and because the complaint alleged that Peter misled his father, retained his father’s funds for his own benefit, and violated his duties as attorney-in-fact, Keith had sufficiently pleaded a breach of fiduciary duty claim against Peter.