McGuire Woods – Recent Cases of Interest to Fiduciaries (Nov. 27, 2017)

McGuire Woods Fiduciary Advisory Services has made available for download its most recent update, dated November 27, 2017.  In the most recent installment of the McGuireWoods Fiduciary Advisory Services annual multipart series on recent fiduciary cases, developments in the law concerning various topics are examined through the following:

  • Vassil v. Office of Pers. Mgmt. et al., Case No. 16-13176 (E.D. Mich. Jan. 31, 2017).  Regarding beneficiary designation of life insurance policy, the Federal Employees Group Life Insurance Act provisions outlining designation procedures preempt state law and strict compliance is required.
  • In re Bradley K. Brakke Trust, 890 N.W.2d 549 (N.D. Feb. 23, 2017). The Uniform Probate Code governs settlement agreement involving disposition of estate and trust assets at settler’s death and allegations of lack of capacity rather than Uniform Trust Code.
  • Ruiz v. Publix Super Markets, Inc., 2017 WL 1180095 (M.D. Fla., Mar. 30, 2017). A federal district court held that a beneficiary designation change in an ERISA plan must strictly comply with the plan’s written policies for changing beneficiaries.
  • Inglis v. Wells Fargo Bank, N.A., 2017 WL 637485 (M.D. Fla., Feb. 16, 2017). Corporate co-trustee was not liable for civil theft where it transferred trust assets to the successor co-trustee within 60 days of its removal as corporate co-trustee.
  • Lee v. Rogers Agency, No. 06-15-00037-CV, 2017 Tex. App. LEXIS 1069 (App. Feb. 8, 2017). The Settlor had standing to assert extra-contractual misrepresentation claims regarding insurance policies that were previously transferred to an irrevocable insurance trust.
  • Nelson v. Nelson, 206 So. 3d 818 (Fla. Dist. Ct. App. 2016). Property held in an irrevocable trust was not marital property subject to equitable distribution.
  • Beardmore v. JPMorgan Chase Bank, N.A., No. 2014-CA-001536-MR, 2017 Ky. App. LEXIS 60 (Ct. App. Mar. 31, 2017). Under the UTC and Kentucky law, trusts were property modified to add directed trust provisions and to transfer the trusts to Delaware.
  • Williamson v. Brooks, 7 Cal.App.5th 1294 (Jan. 31, 2017). A beneficiary did not suffer any compensable damages upon the loss of her house as a result of the trustees’ alleged failure to inform the beneficiary of a trust for her benefit where the beneficiary was aware of the trust’s existence and had other options by which to avoid the loss of her house.
  • Bresler v. Wilmington Trust Company, 855 F.3d 178 (2017). The trustee’s failure to continue paying the policy premiums and overfunding of the trust’s life insurance policies constituted a breach of the agreement between the trustee and plaintiff where the language of the agreement was clear as to the trustee’s obligations and the plaintiff suffered reasonably foreseeable damages as a result.
  • Pizarro v. Reynoso, 10 Cal.App.5th 172 (2017). An incoherent and unorganized brief caused an appellant to forfeit his arguments, and a beneficiary, who participated in the lawsuit in bad faith, taking unfounded positions, subjected her share of the trust to charge for attorney’s fees and costs, though neither she nor the appellant could be personally charged with attorney’s fees and costs.
  • Hickory Point Bank & Trust, FSB v. Natural Concepts, Inc., No. 3-16-0260, 2017 IL App (3d) 160260-U (Apr. 11, 2017). A judgment creditor cannot reach an irrevocable trust that the judgment debtor created for the benefit of his parents during their lifetime when that trust was not a self-settled trust.
  • In re Hoppenstein, No. 2015-2918, 2017 N.Y. Slip Op. 30940(U), 2017 WL 1969401 (N.Y. Sur. Mar. 31, 2017). Failure to give required Crummey notices did not prevent withdrawal rights from lapsing and did not give the beneficiaries a vested right in trust principal sufficient to void the transfer of those assets to a new trust.
  • Ferri v. Powell-Ferri, 72 N.E. 3d 451, 476 Mass. 651 (2017). Massachusetts does not recognize the inherent power to decant; instead, a trustee may decant a trust under the laws of Massachusetts if the settlor intended to grant the decanting power as determined from the language of the trust instrument and other evidence of the settlor’s intent.
  • United States v. Harris, 854 F.3d 1053 (9th Cir. April 20, 2017). U.S Government’s garnishment could attach to current or future distributions to the beneficiary from a discretionary spendthrift trust, although the Government did not seek to compel the trust to make a distribution.
  • Klabacka v. Nelson, 394 P.3d 940 (Nev. 2017). Nevada self-settled spendthrift trust is protected from a child support claim.
  • In re Boisseau, 2017 U.S. Dist. LEXIS 11964, (N.D.N.Y. Jan. 30, 2017). The probate exception to federal jurisdiction applied to the challenge to the lien of an ERISA plan against funds an estate had received in settlement of a personal injury claim and, thus, this ERISA lien dispute could not be removed to federal court.
  • Fiduciary Trust Int’l of Cal. V. Klein, 9 Cal. App. 5th 1184, 216 Cal. Rptr. 3d 61, 2017 Cal. App. Lexis 254 (Cal. Ct. App. Mar. 21, 2017). The attorney-client privilege may not be applicable to communications rendered in concert with advice concerning trust administration and may be discoverable.
  • Stephenson v. Prudential Ins. Co. of Am., 2016 WL 6568085 (M.D. Fla. Nov. 4, 2016). Slayer statute does not apply in case of self defense.
  • Cohen v. Minneapolis Jewish Federation, 2017 WL 108087 (W.D. Wisc., Jan. 11, 2017). District Court for the Western District of Wisconsin distinguishes between rights of trustees and “rights with respect to the trust” to deny trustees payment of their attorney’s fees.

Download full report by clicking here. 

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.

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