Scott v. McDonald

After trial, the probate court approved, subject to a $93,036.75 surcharge, the first and final account and report of trustee (First Report), filed by Melodie Scott, trustee of The A’Yana McDonald Special Needs Trust (the trust). The Beneficiary, through court-appointed counsel, objected to the First Report and to the petition for settlement and termination of the trust, alleging the trustee failed to file court-mandated reports, had no supporting records for fees paid to the trustee, and that the money was not spent solely for her benefit. Beneficiary requested that Trustee be surcharged $259,309.38 for missing interest payments and for improper disbursements. The court found the beneficiary proved the trustee expended various funds without sufficient care or justification, and without reference to the text or purpose of the trust; "and once that money is gone, of course legal damages result.” The trustee raised three issues on appeal: (1) the probate court did not apply the correct legal standard (without specifying what was incorrect); (2) the trustee asserted substantial evidence does not support the finding of breach; and (3) the trustee contended the probate court erred by denying compensation for Trustee’s services. The Court of Appeal found that "given Trustee’s mismanagement of the trust estate, failure to make the required court filings, and continued service when she lacked a license, the probate court could reasonably conclude that Trustee was not entitled to compensation because any compensation for the service rendered would be inequitable due to Trustee’s multiple failures in administering the trust." The total amount of the surcharge was modified to $92,036.75. In all other respects, the judgment was affirmed. View "Scott v. McDonald" on Justia Law