A Strong Offense
A Stronger Defense
We have previously looked at issues in the Wellin trust litigation pending in South Carolina here. Today, in Schwartz v. Wellin (link via Leagle.com), we look at one of the latest installments dealing with removal of a trust protector.
Under the Wellin Family 2009 Irrevocable Trust, the beneficiaries had the right to remove the trust protector and appoint another. The beneficiaries exercised that right to remove the trust protector on April 29, 2014, but did not appoint a new trust protector until July 18, 2014. In the interim, on May 2, 2014, the trust protector – who the beneficiaries sought to remove – exercised the trust protector’s right to appoint a new trustee of the trust. The beneficiaries claimed that the trust protector’s appointment of a new trustee was invalid.
We start where we always start – the terms of the trust instrument. The Trust instrument provided that “[t]here shall always be a Trust Protector for each separate trust.” The district court found that this meant that removal of the old trust protector and appointment of a successor trust protector had to be simultaneous (or nearly simultaneous) because the Trust instrument required there to be a trust protector at all times.
The court, therefore, held that the beneficiaries’ removal of the trust protector was procedurally invalid because they violated the terms of the Trust by not appointing a new trust protector when removing the old one. Accordingly, the old trust protector’s appointment of the new trustee was valid.