April 29th, 2013

If we were to identify hot topics in fiduciary litigation during 2012 and 2013, this one would be scorching: what duties do trustees owe the remainder beneficiaries of revocable trusts?  We’ve explored the topic in some detail here, here, and yet again here.

Last week, over at Bryan Cave‘s Private Client Group blog, TrustBryanCave, Kathy Sherby and Stephanie Moll wrapped up a three part series on this topic.  Readers of this blog will definitely be interested:

Part 1 takes a look at Pennell v. Alverson, which we previously looked at here.

Part 2 explores the ongoing saga of In re Estate of Giraldin, which we briefly reviewed here.

Part 3 wraps up the discussion with In the Matter of Trust #T-1 of Mary Faye Trimble, which we took a look at here.

March 6th, 2013

Many fiduciary litigation concepts, like undue influence, lack of capacity, or breach of fiduciary duty, can be difficult for the lay people of a jury to understand.  For lay people, sometimes the actual law doesn’t always match up to what they may think is right or wrong.  So, when a case actually ends up going to the jury, the temptation for the lawyers litigating it may be to try to drive some last points home through the jury charges by repeating the law several times.

In Burkhalter v. Burkhalter, however, after a jury returned a verdict vindicating an alleged undue influencer, the Court of Appeals of Iowa granted a new trial on the claims because of a faulty jury charge regarding undue influence.  The appellate court found that the charge was either unduly repetitive and therefore faulty or through its unnecessary repetition gave undue emphasis to otherwise correct statements of law.

Let’s check out the faulty jury charge on undue influence. (more…)

February 4th, 2013

There is a surprising but growing split of authority on the extent of fiduciary duties a trustee owes to beneficiaries of a revocable trust other than the settlor.  Remarkably, state appellate courts are dealing with these issues for the first time now.  We previously took a look at this issue when a Missouri appellate court ruled in In re Stephen M. Gunther Revocable Living Trust that “[b]ecause the trustee owed no duty to the beneficiaries prior to the settlor’s death, they are not entitled to an accounting of trust transactions prior to that date.”  In ruling this way, Missouri joined other states, such as Louisiana, in reaching this conclusion.  We also looked at an Arizona appellate court apply Michigan law to reach the same conclusion.  Seemed to make sense.

But, in late 2012, a closely divided California Supreme Court ruled in In re Estate of Giraldin that after a settlor’s death, remainder beneficiaries of a revocable trust have standing to sue the trustee for breach of fiduciary duty to the settlor occurring while the trust was revocable “to the extent that violation harmed the beneficiaries interests.”  In ruling this way, California joined other states, such as Florida, in reaching this conclusion.  The gist for these states is that once the settlor dies, the beneficiaries succeed to the settlor’s interest in the trust and a trustee shouldn’t get away with wrongdoing it might have concealed during the settlor’s lifetime.

So, now in In the Matter of Trust #T-1 of Mary Faye Trimble, Judith R. Cunningham, Trustee, Iowa has weighed in for the first time.  What side did it come down on? (more…)

August 1st, 2012

It’s been a while since we last looked at spendthrift clauses in trusts.  If drafted correctly, they can be an effective tool for shielding assets.  Of course, if a beneficiary knows he or she is an actual or contingent remainder beneficiary of a trust, then it usually helps for that beneficiary to actually know whether a spendthrift clause exists.

In Estate of Hord, the Court of Appeals of Iowa had occasion to consider the enforceability and scope of the spendthrift clause in Carl Hord’s will.  Let’s take a look at what the clause said: (more…)