Justia Trusts & Estates Opinion Summaries

In 2007, beneficiaries of the Edison 401(k) Savings Plan sued Plan fiduciaries, to recover damages for alleged losses suffered because of alleged breaches of fiduciary duties. The beneficiaries claimed violations with respect to mutual funds added to the Plan in 1999 and mutual funds added to the Plan in 2002, by acted imprudently in offering higher priced retail-class mutual funds as Plan investments when materially identical lower priced institutional-class mutual funds were available. Because ERISA requires a breach of fiduciary duty complaint to be filed no more than six years after “the date of the last action which constitutes a part of the breach or violation” or “in the case of an omission the latest date on which the fiduciary could have cured the breach or violation,” 29 U.S.C. 1113, the district court found the complaint as to the 1999 funds untimely. The Ninth Circuit affirmed, concluding that beneficiaries had not established a change in circumstances that might trigger an obligation to conduct a full due diligence review of the funds within the six-year period. A unanimous Supreme Court vacated. ERISA’s fiduciary duty is derived from the common law of trusts, which provides that a trustee has a continuing duty, separate from the duty to exercise prudence in initially selecting investments, to monitor, and remove imprudent trust investments. So long as a claim alleging breach of the continuing duty of prudence occurred within six years of suit, the claim is timely. The Court remanded for the Ninth Circuit to consider claims that the fiduciaries breached their duties within the relevant 6-year statutory period, considering analogous trust law. View "Tibble v. Edison Int’l" on Justia Law

Roland Gerrish created a trust consisting of certain property. The trust instrument provided that Julie and Shirley Gauthier would be the remainder beneficiaries upon Roland’s death. When Roland died, Shirley and Roland’s widow, Jacqueline, disputed the maintenance of property. Shirley filed a complaint for equitable partition against Jacqueline and the Gerrish Corporation and then requested an entry of default. The court issued default judgment and denied Jacqueline’s and the Corporation’s motion to join Julie as a necessary party. The superior court entered an order denying the motions to set aside the default and to join Julie, concluding that all necessary parties were joined, and granted the relief requested by Shirley. Jacqueline, the Corporation, and Julie appealed. The Supreme Judicial Court vacated the judgment, holding that the court erred in concluding that all necessary parties were joined and in failing to hold an evidentiary hearing before issuing the default judgment. Remanded. View "Gauthier v. Gerrish" on Justia Law

Plaintiffs and their older brother, Kenneth Stuart, Jr. (Kenneth) were the children of Kenneth Stuart, Sr. (Stuart). When Stuart died, Plaintiffs filed a complaint alleging that Kenneth, who became an estate fiduciary, unduly influenced Stuart and breached numerous fiduciary duties owed to them as estate beneficiaries. Throughout much of Plaintiffs’ litigation against Kenneth, Kenneth engaged Defendant as a certified public accountant. Ultimately, the trial judge ruled against Kenneth and awarded monetary damages to Stuart’s estate. Plaintiffs then commenced the present action against Defendant alleging that Defendant prepared inaccurate and misleading financial statements that facilitated the misappropriation of estate funds by Kenneth. The trial court granted summary judgment in favor of Defendant. The Appellate Division reversed in part and remanded. The Supreme Court reversed, holding that Plaintiffs, in objecting to summary judgment, did not present sufficient counterevidence of their reliance on Defendant’s financial statements or a casual connection between his financial statements and their alleged injuries, as was necessary to demonstrate that a genuine issue of material fact existed on the counts of fraud, negligent misrepresentation, and accounting malpractice. View "Stuart v. Freiberg" on Justia Law

The issue this case presented for the Supreme Court's review centered on whether (and to what extent) the Colorado Probate Code displaced a court's authority to award an equitable adjustment supplementing a spouse's elective share of the decedent's estate. By the date of final distribution, the estate at issue here had grown in value from $73 million to more than $250 million. The probate court concluded that it would have been unfair for the elective share to be "frozen in time" while litigation concerning its computation eroded its value in relation to the appreciating estate. The Court exercised its equitable authority by supplementing the elective share, and awarded the surviving spouse $26 million plus an equitable award of approximately $24.5 million. The Court of Appeals reversed, holding that the Probate Code displaced the probate court's authority with regard to the elective share, as a matter of law. Reading the elective-share statutes together with the probate court's equitable authority, the Supreme Court concluded that the Code's plain language demonstrated that 15-11-202(1) C.R.S. (2014), fixed the value of the property comprising the augmented estate on the decedent's date of death. Accordingly, the Supreme Court concluded the probate court erred in linking its equitable award to appreciation and income to the entire augmented estate. Nevertheless, 15-10-103 expressly reserved the probate court's equitable authority to the extent that it was not displaced by a specific statutory provision. The Supreme Court affirmed in part, reversed in part the court of appeals' judgment, and remanded this case. The court of appeals judgment requiring the surviving spouse repay $24.4 million was set aside, and the probate court was mandated to determine on remand what equitable relief was available under the specific facts of this case. View "Beren v. Beren" on Justia Law

The conservators of Soon San Pak's estate filed suit against their two attorneys, Harrison County, the Harrison County Chancery Clerk, John McAdams, and the guardian ad litem appointed for Mrs. Pak, after the previously appointed conservator, Woodrow W. Pringle III, embezzled money from the estate. The claims were dismissed when the circuit court found that the applicable statutes of limitation had lapsed. The conservators appealed. McAdams cross-appealed, asserting that the trial court improperly held that the conservators asserted a Section 1983 claim by implication against him and that Pringle was a state actor for whom McAdams and Harrison County could be vicariously liable. In affirming the circuit court, the Supreme Court concluded that the Conservators should have discovered, by reasonable diligence, that Pringle was misappropriating funds from the estate no later than January 24, 2008, when the coconservators (using due diligence) would have received an accounting and bank statements regarding Pak's estate, and would have “by reasonable diligence. . . discovered the injury.” The statute of limitations issue was not a question of fact for the jury because reasonable minds could not differ as to when the Conservators knew or should have known of Pringle's failure to file an accounting and, thus, Harrison County's and McAdams's failure in requiring an accounting to be filed. Based on the circuit court record, the trial court properly held that the Conservators' claims were barred by the applicable statutes of limitation. View "Benvenutti v. McAdams" on Justia Law

Jeanne Johnson died in June 2010. Her survivors included her children, Sandra Mark, Stuart Johnson, and Steven Johnson, and her grandson, Scott Johnson. Her will was admitted to informal probate, and Mark was appointed personal representative of the estate in August 2010. Under Jeanne Johnson's will, her residuary estate was devised to Stuart Johnson, Mark and Scott Johnson. Scott and Steven appealed a judgment denying their application for an order directing distribution of farmland to them and restraining Sandra, as personal representative of Jeanne Johnson's estate, from selling the farmland to Stuart. The estate argued the appeal was moot because the farmland was sold. The Supreme Court concluded the appeal was not moot and the evidence was insufficient to support the district court's finding that Mark was acting reasonably for the benefit of the interested persons. The Court reversed and remanded for further proceedings. View "Estate of Johnson" on Justia Law

Marvin Shell died in 2012. Jane Voboril, Shell’s niece, and Sharon Vanosdall, Shell’s sister-in-law, were the two beneficiaries of Shell’s will. The distributions to Voboril and Vanosdall were subject to different amounts of inheritance taxes. Voboril’s lawyer, however, argued that the will showed Shell’s intent to treat inheritance taxes as an expense of the estate. The county court agreed and entered an order treating the inheritance taxes as an expense of the estate. Vanosdall appealed, arguing that the will did not clearly express this intent. the Supreme Court affirmed, holding that the will showed Shell’s intent to treat inheritance taxes as an expense of his estate. View "In re Estate of Shell" on Justia Law

In 2010, Rudolph Bettez died. Rudolph was survived by his three sons - Robert, Ronald, and William - and his second wife, Joyce. Robert Bettez petitioned the probate court to admit Rudolph’s September 2009 to probate. In July 2012, The will was admitted to probate by a consent order. In August 2012, William Bettez appealed, alleging that Defendants - Robert, Ronald, and attorney Daniel Stone - collectively exerted undue influence over Rudolph in order that he exclude William from any share of his estate and that Rudolph lacked testamentary capacity when he executed the will. The superior court granted summary judgment for Defendants. The Supreme Court affirmed, holding that the trial justice did not err in its determination that no evidence of undue influence had been set forth in opposition to Defendants’ motion for summary judgment. View "Bettez v. Bettez" on Justia Law

At issue in this case was the number of mineral acres owned by Todd Hall in a tract of land in Dunn County as a result of a conveyance from Harry L. Malloy to Todd Hall's predecessor in interest, Edwin Hall. Todd Hall claimed he owned 9 net mineral acres in the land and the "Family Mineral Trust" claimed he owns 4.5 net mineral acres in the land. After review of the chain of title for the disputed mineral interests, the Supreme Court concluded that the trial court did not err in determining that the Family Mineral Trust had no right, title, or interest in disputed mineral interests in a tract of land in Dunn County and in quieting title in the disputed mineral interests to Todd Hall. The Court concluded Harry L. and Lorraine Malloy's 1983 divorce judgment did not convey Harry L. Malloy's after-acquired title in the disputed mineral interests to Lorraine Malloy, which then would have passed the interests to the Family Mineral Trust. View "Hall v. Malloy" on Justia Law

Plaintiffs are trustees under “Coogan Trust Accounts,” which are statutorily required accounts to preserve 15 percent of a minor’s gross earnings for artistic or creative services for the benefit of the minor until the minor turns 18 or is emancipated (Fam. Code, 6750.) They filed a class action lawsuit on behalf of themselves and others against Bank of America, alleging breach of written contract, breach of the implied covenant of good faith and fair dealing, conversion, and unlawful and unfair business practices. The complaint claimed that the bank made withdrawals from Cogan Trust Accounts, including for monthly service fees, without court approval. The trial court dismissed. The court of appeal reversed. A bank may not debit a Coogan Trust Account for service fees without court approval (section 6753 (b)). The state law prohibition on a debit by a national bank is not preempted by federal law. View "Phillips v. Bank of America" on Justia Law