Justia Trusts & Estates Opinion Summaries

Articles Posted in Virginia Supreme Court
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Dewey Monroe, a member of a limited liability company, died. Through his will, Dewey bequeathed his entire estate to his daughter, Janet. Janet asserted that Dewey transferred his membership in the company to her. Lou Ann Monroe, the company's managing member, responded that Janet had inherited only Dewey's right to share in profits and losses of the company and to receive distributions to which he would be entitled. Janet filed a complaint in the circuit court seeking declaratory judgment that she had inherited her father's full membership in the company and that Lou Ann and Joseph Monroe, who was named in the company's operating agreement as a successor managing member, had been validly removed from their positions. The circuit court ruled that Janet was not a member of the company and thus lacked the authority to remove Lou Ann and Joseph from their positions. The Supreme Court affirmed, holding (1) the company's operating agreement lacked specific language that would constitute an exception to the rule of dissociation set forth in Va. Code Ann. 13.1-1040.1; and (2) therefore, Dewey was dissociated from the company upon his death and Janet became a mere assignee, entitled only to Dewey's financial interest.

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A limited liability company (MIC) was formed for the purpose of building and operating a hotel. The original members of MIC were a revocable trust (the Trust), trustee Michael Siska, and Thomas, Jane, and Jason Dowdy. Later, Thomas and Jane Dowdy transferred, without the Trust's involvement, MIC's assets to Milestone Development, the Dowdy's family company. The Trust filed an amended complaint derivatively on behalf of MIC against Defendants, Milestone and the Dowdys. In its amended complaint, the Trust claimed that the transfer of assets to Milestone was not in the best interests of MIC or its members and alleging, inter alia, breach of fiduciary duty, breach of contract, unlawful distribution, and conversion, and seeking to recover damages. The Trust, however, did not join MIC as a party to the derivative action. The circuit court dismissed the Trust's amended complaint, holding that the Trust lacked standing to maintain the derivative action on behalf of MIC because the Trust could not fairly represent the interests of the Defendant shareholders. The Supreme Court reversed, holding that it would not entertain the appeal on the merits because MIC was a necessary party to the proceeding and had not been joined. Remanded.

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Justine Critzer died intestate with, apparently, no spouse, siblings, children or parents to survive her. Nancy Donak, the administratrix of Critzer's estate, subsequently discovered that the Mary Kummer ("Mrs. Kummer"), the deceased mother of Richard and Charles Kummer and Jane Kummer Stolte ("Kummer children"), was the biological sister of Critzer. Consequently, the Kummer children were Critzer's closest surviving heirs. After the Kummer children began to administer the estate, Donak filed a motion for rule to show cause against distribution based upon the fact that Mrs. Kummer had been adopted at the age of fifty-three by her aunt by marriage. At a hearing to determine the effect of Mrs. Kummer's adoption, the court held (1) the Kummer children were not Critzer's heirs at law because Mrs. Kummer's adoption severed their legal ties to Critzer and her estate, and (2) Virginia's statutory scheme does not distinguish between the adoption of an adult and the adoption of a minor. The Supreme Court affirmed, holding that the circuit court did not err in finding that the Kummer children were not heirs-at-law of the Critzer estate because their mother's adult adoption severed their inheritance rights.

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These appeals arose out of two cases brought after Mother was shot and killed by her only child, Clayton Lynn. Mother's will identified Lynn as the sole beneficiary of her estate. Lynn's daughters (Granddaughters) filed separate actions seeking declaratory judgment that Lynn be declared a "slayer" for the purposes of the Slayer Statute and that the Granddaughters be declared the sole heirs of Mother's estate. The circuit court consolidated the two actions and held that Mother's mother was the sole and rightful heir to Mother's estate. The Supreme Court affirmed, holding (1) the version of the Slayer Statute in effect on the date of Mother's murder controlled the distribution of Mother's estate in this case, and as a result, the trial court was correct in concluding that under the laws of intestate succession at the time of Mother's death, as modified by the Slayer Statute in effect, Mother's estate passed to the next living person who was neither the slayer nor making a claim through the slayer; and (2) the version of the Slayer Statute in effect on the date of Mother's murder neither implicated nor violated Virginia's prohibition against corruption of blood or forfeiture of estate.

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Appellee Donald Gunter originally filed an action against Appellant Robbie Martin individually and in her capacity as administrator of the estate of George Martin in 2005. Gunter alleged that the decedent died intestate. She listed herself as sole heir, but he was the biological child of the decedent, therefore the list of heirs filed with the estate was incorrect. Gunter petitioned the court to allow an amended list of heirs to be filed; Martin moved to dismiss on the grounds that Gunter failed to bring his action within one year of the decedent's death. The court granted the motion and dismissed the action. In 2009, Gunter filed a complaint for quiet title and for allotment or sale or real property, naming Martin in her individual capacity as sole defendant. Gunter alleged that the decedent died intestate, Martin was his widow, he was the biological son of the decedent, and that the real property in question could not be partitioned conveniently. Martin filed a plea in bar of res judicata, arguing that the relief Gunter seeks relies on a determination of whether he is the decedent's biological child, which had been decided in the 2005 matter. The circuit court sustained the plea in bar. On appeal, the Supreme Court held that the remedy sought in the 2005 action was different from the remedy in the 2009 action, and reversed the lower court decision and remanded the case for further proceedings.

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Appellant Sara Forbes (Trustee) created a trust to convey a parcel of real estate to the City of Newport News in which she acted as trustee. The trust provisions prohibit the trustee from selling the property except to a condemner in the event the property is condemned. The provisions require the trustee to distribute all net income generated by the trust to grantor for her lifetime. The principal of the trust would be distributed to Appellee Riverside Healthcare Association (Riverside). In 2008, the Commonwealth acquired a portion of the property in trust by certificate of take. Because the trustee and Riverside disagreed as to whether the compensation received in the eminent domain action should be allocated to principal or income, they entered an escrow agreement directing the escrow agents to hold the condemnation compensation and disburse the fund in accordance with future directions from the trustee and Riverside. Subsequently, the Trustee sought declaratory relief against Riverside asking that the condemnation compensation be paid as income for distribution to the grantor according to the terms of the trust. The parties filed cross-motions for summary judgment on the issue of who got the compensation; the circuit court granted partial summary judgment in favor of the Trustee. Riverside appealed, seeking Supreme Court review of whether the state Uniform Principal and Income Act controlled the distribution of the condemnation compensation, and whether the remainder beneficiary could bring suit seeking an equitable accounting of the trust. The Court found the lower court did not err in granting partial summary judgment to the Trustee, but reversed the lower court's ruling on the equitable accounting issue, and remanded for further proceedings.