Justia Trusts & Estates Opinion Summaries

Wack Jills USA, Inc., formerly known as Jack Wills, Inc., assigned all its property and assets to SM Financial Services Corporation in August 2019 as part of an assignment for the benefit of creditors (ABC) proceeding. SM Financial, acting as trustee of the JW ABC Trust, sought court approval for final distributions and to close the case. Home Club Realty Trust, a general unsecured creditor, objected to the motion, citing concerns over the handling of certain assets and compliance with statutory requirements.The Court of Chancery of the State of Delaware reviewed the case. The Assignee failed to comply with several statutory requirements under the Delaware ABC Statute, including not filing an affidavit of inventory within 30 days of the assignment, not seeking the court’s appointment of two appraisers, and not filing annual accountings. The Assignee also unilaterally posted a bond without court approval and retained its affiliated law firm, SM Law, as counsel, which raised concerns about the compensation structure and potential conflicts of interest.The court found that the Assignee’s pervasive non-compliance with the ABC Statute and its conduct in managing the assignment estate constituted sufficient cause for removal. The court denied the motion to approve final distributions and close the case, and removed SM Financial as Assignee pursuant to 10 Del. C. § 7386. The court extended the term of the Trust until further order and prohibited any distributions from the Trust without court approval. The bond remains in place and may be subject to further proceedings. View "In re Wack Jills, Inc." on Justia Law

The Court of Chancery denied Paul Petigrow's motion to dismiss the claims against him for aiding and abetting breaches of fiduciary duty in connection with a share withdrawal (Count IV) and tortiously interfering with a trust instrument (Count V), holding that Petigrow was not entitled to relief.Plaintiffs were three of the children of Dr. Robert M Harris, Sr. and Mary Ellen Harris. Plaintiffs alleged that Mary Ellen and her advisors scheme to seize control of a family-owned corporation as Dr. Harris's health was failing. Petigrow, one of Mary Ellen's advisors, asserted that the Court of Chancery could not exercise personal jurisdiction over him for purposes of a claim for tortious interference with a trust instrument. The Court of Chancery denied his motion to dismiss, holding (1) the exercise of personal jurisdiction for purposes of Count V was consistent with traditional notions of due process, and the claim stated a claim against Pedigrow; and (2) Pedigrow's motion to dismiss Count IV was moot. View "Harris v. Harris" on Justia Law

The Court of Chancery held that the petition in this case alleging that Respondent, a former teacher, befriended and manipulated a woman, now deceased, through coercion into receiving millions of dollars of the woman's inheritances should be dismissed in full, with prejudice.Petitioner filed a verified petition to, among other things, invalidate will and trust agreements, for breach of a fiduciary duty, and demand for accounting. Respondent filed a motion to dismiss. The Court of Chancery granted the motion, holding (1) most of Petitioner's claims were either expressly time barred or sought a collateral attack on the incontestable final wishes of the decedent and that there was no viable basis for tolling the applicable limitations; and (2) Petitioner did not have standing to assert her remaining claims. View "Rambo v. Fischer" on Justia Law

In this case involving disputes over how several related Delaware statutory trusts should be governed and how they should operate the Court of Chancery held that the Trusts have no beneficial interest in the student loans that serve as collateral for the debt instruments (Notes) and that the holders of residual beneficial interests in the Trusts (the Owners) owe certain fiduciary duties to the indenture trustee, the note holders, and the reinsurer for certain of the notes (Indenture Parties).When several constituents brought separate operational controversies in separate lawsuits the actions were consolidated. At issue were offshoots of the National Collegiate Student Loan Master Trust I (the Trusts), each of which were Delaware statutory trusts formed for the purpose of acquiring and servicing a portfolio of student loans (the Student Loans). The Trusts acquired the Student Loans with the proceeds from the issuance of Notes and then entered into an Indenture granting interest in the Student Loans to the Indenture Trustee. The Indenture made Clea that the Trusts transferred the Student Loans for the benefit of the Noteholders. The Trusts then promised to service the Student Loans. The Owner Trustee, which possessed the right to act on behalf of the Trusts, found itself in the middle of a dispute between the Owners and the Indenture Parties, who had various economic interests in the Trusts. The Court of Chancery held as set forth above. View "In re National Collegiate Student Loan Trusts Litigation" on Justia Law

The trustees sought instructions as to the proper distribution of the principal and income of the trust, which granted the donee a limited testamentary power of appointment. The issue is whether a divorce decree incorporating a settlement agreement in which the donee agreed to exercise his power of appointment to benefit the children of his first marriage, bound the donee and the trust, or whether the donee’s last will and testament, which subsequently exercised the donee’s power of appointment to benefit his granddaughter from his second marriage, controls. The master found that the settlement agreement incorporated in a Nevada divorce decree did not bind the trust, nor did it represent a partial release of the donee’s power of appointment. Imposing a constructive trust over the trust property is not appropriate in these circumstances, the master concluded, and recommended that the court grant the granddaughter’s motion for summary judgment and order the trustee to distribute the trust principal and income consistent with the exercise of the donee’s power of appointment in his last will and testament. View "In re: Trust for the Benefit of Samuel Frances duPont" on Justia Law

Petitioners sought a statutory partition of a house and lot owned by Petitioners and Respondent. Respondent objected and brought her objections as a counterclaim in which Respondent requested a private sale of the property and alleged that she was entitled to money from her mother’s estate. The master’s final report issued finding that Respondent had not raised a cognizable defense or counterclaim regarding the statutory partition and that the court lacked jurisdiction over the probate issues. The Court of Chancery affirmed the report in all respects based upon its independent findings of fact and law, holding that the Master correctly recommended that Respondent’s claims be dismissed without prejudice for lack of jurisdiction. View "Collins v. Collins" on Justia Law

The beneficial owner of a Delaware statutory trust sought to inspect certain of the trust’s books and records. The trust denied the beneficial owner’s request, asserting that the form of the request and the motivations underlying the request were improper. The beneficial owner filed a complaint asserting both a contractual demand and a statutory demand. The Court of Chancery granted the beneficial owner’s motion for summary judgment, holding that the beneficial owner was entitled to inspect, examine, and copy the requested information under its contractual demand. View "Grand Acquisition, LLC v. Passco Indian Springs DST" on Justia Law

After a beneficial owner (Grand Acquisition) of a Delaware statutory trust sought to inspect certain of the trust's books and records, the trust (Passco Trust) denied the request, arguing that the form of the request and the motivations underlying the request both were improper. The bulk of the parties’ dispute centers on whether the trust agreement incorporates the statutory requirements of 12 Del. C. 3819 and, if so, whether the beneficial owner has satisfied those requirements. In this case, the court concluded that Grand Acquisition is entitled to the requested information under its contractual demand where the owners' right to books and records under the Trust Agreement is not subject to the Delaware Statutory Trust Act's, 12 Del. C. 3801-3826, preconditions and defenses, the owners' right to books and records under the Trust Agreement includes the requested information, and Passco Trust has failed to prove its implied improper purpose defense. Accordingly, The court granted Grand Acquisition's motion for summary judgment and denied Passco Trust's motion for summary judgment. View "Grand Aquisition, LLC v. Passco Indian Springs DST" on Justia Law

Before Russell Banks died, Russell and his brother, David Banks, owned together fifteen parcels of real estate in Sussex County, Delaware. The granting language of the deed to each parcel stated that the property was conveyed to the brothers as “joint tenants with right of survivorship.” David asserted that this language granted joint tenancies with right of survivorship (WROS) and that the properties passed to him in full upon Russell’s death. Mackie Banks, the executrix of Russell’s estate, filed an inventory for Russell’s estate asserting that the properties were conveyed to the brothers as tenants in common and that the Estate held a fifty percent ownership interest in the properties. David filed a petition to quiet title on the properties. The Court of Chancery granted David’s motion for judgment on the pleadings, holding that the language conveying the property as “joint tenants with right of survivorship” was sufficient to create a joint tenancy WROS and not a tenancy in common. View "Banks v. Banks" on Justia Law

Bennie Farren died leaving a will under which he bequeathed his former residence and other assets to a trust. The trust contemplated that Patricia McGlaughlin could live in Bennie’s former residence for the remainder of her life. Rebecca Courson, Bennie’s ex-wife, filed a claim against the Estate based on a child support order entered by a Florida court in 1986 and modified in 1987. Andrew Farren, Courson’s biological son and the executor of Bennie’s estate, accepted Courson’s claim as a valid debt of the Estate. Thereafter, Andrew filed a petition to sell Bennie’s former residence to raise additional funds. McGlaughlin opposed Andrew’s petition and also petitioned to remove Andrew as executor. The Court of Chancery (1) granted Andrew’s motion in part, holding that the Florida orders constituted a final judgment entitled to full faith and credit under the federal Constitution but that there was insufficient evidence in the record to consider the facts and equities involved in ordering a sale of Bennie’s residence; and (2) denied McGlaughlin’s motion for summary judgment, holding that the evidence was insufficient to support judgment as a matter of law as to Courson’s claim that Andrew breached his fiduciary duties by accepting his mother’s claim. View "In re Estate of Bennie P. Farren" on Justia Law