Casebriefs » Wills, Trusts & Estates

Stanton v. Wells Fargo Bank and Union

admin — Mon, 31 Aug 2009 21:17:47 +0000

Citation. 1150 Cal. App. 2d 763,310 P.2d 1010,1957 Cal. App.

click the citation to view the entire case on

Brief Fact Summary. Respondent life beneficiaries (Respondents) sought revision of a testatmentory trust provision which limited the Trustee (Trustee) to investment of the trust property in various bonds. The lower court entered judgement for Respondents, and Trustees sought review.

Synopsis of Rule of Law. The rule against courts modifying the terms of a contract, and that they should construe it precisely as the parties had made it, does not apply to declarations of trust, where the primary purpose of the trust would not be accomplished by a strict adherence to the terms of the declaration of trust and that when it is made to appear in a court of equity that the benefits and advantages which the trustors desired to confer upon the beneficiaries would not accrue to them by a slavish adherence to the terms of the trust, the court may modify the terms of the trust to accomplish the real intent and purpose of the trustors.

Facts. Respondents sought to have a trust to which they were the life beneficiaries modified in order to obtain more profit interest from the property that composed the trust. The trust settlor had specifically stated a series of bonds in which the trust property was to be held. Respondents argue that given the change in economic circumstances that had occurred since the creation of the trust, which were, according to Respondents, not anticipated by the settlor when he executed the trust, the modification was necessary in order not to defeat the goal of the settlor. Therefore, the Respondents argue that strict adherence to the trust terms should be relaxed in order to fulfill the settlor’s purpose of assuring a continued income for the trust beneficiaries in as large an amount as was oncsistent with reasonable investment safety. The Trustee argues that the change in econmic circumstances did not defeat the goal of the settlor and therefore did not warrant an adjustment in the trust t
erms. The Trustee contends that Respondents simply want flexibility in the property investments. The lower court held for Respondents and Trustee seeks review.

Issue. Does the rule against courts modifying the terms of a contract, and that the court should construe the contract precisely as the parties had made it, apply to declarations of trust, where the primary purpose of the trust would not be accomplished by a strict adherence to the terms of the declaration of trust and when it is made to appear in a court of equity that the benefits and advantages which the trustors desired to confer upon the beneficiaries would not accrue to them by a slavish adherence to the terms of the trust?

In re Freihofer

admin — Mon, 31 Aug 2009 21:17:47 +0000

Citation. 172 Misc. 2d 260, 658 N.Y.S.2d 811 (N.Y.Sur. 1997)

Brief Fact Summary. Respondent Trustee Attorney (Respondent) acted on behalf of Petitioner Beneficiary Sons (Beneficiary) on other issues and who also had in an

Synopsis of Rule of Law. The failure of a trustee-attorney to fully disclose the potentially conflicting roles he played voids any receipt release and waiver he may have obtained from his beneficiary, particularly when he sought his own discharge from liability to that beneficiary while at the same time representing that beneficiary individually.

Facts. Charles Freihofer (Testator) died testate, survived by his wife (Wife) and two sons (Petitioners). By the terms of Testator’s will, the entire estate passed to his wife. However, under renunciation filed by Wife, a portion of Testator’s estate made up of properties affiliated with the Charles Freihofer Banking Company, Inc. passed into testamentary trusts for the benefit of Testator’s sons. Named as trustee was attorney Alan Steiner (Respondent), who had acted on behalf of the beneficiary on other issues and who also had an interest in the corporation that made the subject matter of the trust. Respondent failed to inform Petitioners of his interest and arranged for the sale of the stock on behalf of the trust. Respondent had obtained a waiver and release of claim from the beneficiary. Petitioners seek an accounting by respondent Trustee regarding the testamentary trust. Respondent files a motion to dismiss.

Issue. Does the failure of a trustee-attorney to fully disclose the potentially conflicting roles he played, void any receipt release and waiver he may have obtained from his beneficiary, particularly when he sought his own discharge from liability to that beneficiary while at the same time representing that beneficiary individually?

In re Estate of Cooper

admin — Mon, 31 Aug 2009 21:17:46 +0000

Citation. 187 A.D.2d 128,592 N.Y.S.2d 797;1993 N.Y. App. Div.

click the citation to view the entire case on

Brief Fact Summary. William Thomas Cooper lived in a homosexual life partnership with Ernest Chin. Cooper left everything to the petitioner in his will with the exception of certain real estate that constituted over 80% of the entire estate. The Petitioner sought to take an elective share of the estate as Cooper’s surviving spouse.

Synopsis of Rule of Law. A state surviving spouse election statute does not apply to homosexual life partners and does not violate the Equal Protection Clause of the State Constitution

Facts. The petitioner and Cooper lived together in a spousal-type situation for approximately four years. The two individuals were of the same sex and shared a common home. Their friends recognized them as spouses and they had a physical relationship. Cooper left all of his assets to the petitioner with the exception of certain real estate that amounted to over 80% of his estate. The Petitioner sought to take an elective share of the estate as Cooper’s surviving spouse.

Issue. Whether a statue that does not include a homosexual life partner in its definition of a surviving spouse violates the Equal Protection Clause of the State Constitution?

Estate of Kurkowski

admin — Mon, 31 Aug 2009 21:17:46 +0000

Citation. 486 Pa. 295, 409 A.2d 357 (Pa.1979)

Brief Fact Summary. Appellant Administratix, Ellen Kurkowski Simon (Appellant), appeals from a lower court decree, which dismissed her for improper administration of her Testator Husband’s (Testator) estate upon consideration of objections to the final account.

Synopsis of Rule of Law. A testator’s personal representative is under a fiduciary duty to take custody of his estate and administer it with the highest degree of good faith in such a way as to preserve and protect the property for distribution to the proper persons within a reasonable time.

Facts. Appellant was the wife of Testator, who prior to his death had been the president and sole shareholder of Monroe Cycle Center, Inc. which was in the business of selling and servicing motorcycles. After her husband’s death, Appellant was elected president, secretary, and treasurer of the business. Shortly after her election to these positions, the two other members of the business’s board of directors resigned. After this point, Appellant disregarded corporate policies in her business performances (including paying herself a large salary and paying her mechanic son a large amount for some vehicular repairs). Appellant operated the business at a loss for over 22 months. The lower court held that appellant should not have continued to operate the corporation without first securing the lower court’s authorization. The Appellant challenges this holding.

Issue. Is a testator’s personal representative under a fiduciary duty to take custody of his estate and administer it with the highest degree of good faith in such a way as to preserve and protect the property for distribution to the proper persons within a reasonable time?

In re Estate of Janes

admin — Mon, 31 Aug 2009 21:17:45 +0000

Citation. 90 N.Y.2d 41,681 N.E.2d 332,659 N.Y.S.2d 165,1997 N.Y.

click the citation to view the entire case on

Brief Fact Summary. Rodney B. Janes created a testamentary trust consisting of Kodak stock. He named wife, Cynthia Janes, and several charitable organizations as the beneficiaries under the trust. The trustees, the petitioner, Ellison Patterson and Richard Young, failed to divest the estate of the stock that had dropped in value.

Synopsis of Rule of Law. A trustee must diversity assets unless the trustee reasonably determines that it is in the interests of the beneficiaries not to diversify, taking into account the purposes and terms and provision of the governing instrument. In imposing liability upon a fiduciary on the basis of the capital lost, the court should determine the value of the stock on the date it should have been sold, and subtract from that figure the proceeds from the sale of the stock, or, if the stock is still retained by the estate, the value of the stock at the time of the accounting. The court has discretion on whether interest should be awarded. Dividends and other income attributable to the retained assets should offset any interest awarded.

Facts. The testator’s estate consisted of a $2,500,000 stock portfolio, approximately 71% of which consisted of 13,232 shares of common stock of the Eastman Kodak Company. The Kodak stock had a date-of-death value of $1,786,733. From July 1973 to February 1980, the trustees retained the Kodak stock, the value of which dropped to about one third of its date-of-death value. In August 1981, the petitioner sought to settle the account. Janes and the Attorney-General on behalf of the charitable beneficiaries appealed. The primary life income beneficiary of the trust was Janes. Janes was 72 years old when the testator died. A certain amount of the trust income was to be paid to Janes for her life. Annual distributions from the charitable trust’s assets were to be made to select charities. The trustees did not establish an investment plan consistent with the testator’s purposes of the trust.

Issue.
Whether a fiduciary’s duty of investment prudence may be limited to the opinion of investment bankers and analysts who follow the company’s stock, and an overall determination of the investment quality determined by (1)the capital structure of the company, (2) the competency of its management, (3) whether the company is a seasoned issuer of stock with a history of profitability, (4) whether the company has a history of paying dividends, (5) whether the company is an industry leader, and (6) the expected future direction of the company’s business?

Whether, under all of the facts and circumstances of this case, the fiduciary violated the prudent person standard in maintaining a concentration of the Kodak stock?

Whether August 9, 1973 was a reasonable time by which the petitioner should have divested the estate of the stock?

Whether the proper measure of damages for breach of a duty to act prudently is “lost profits” or the amount that the proceeds of the stock would have yielded, up to the time of trial, had they been invested in petitioner’s own diversity equity fund on August 9, 1973.

Allard v. Pacific National Bank

admin — Mon, 31 Aug 2009 21:17:44 +0000

Citation. 99 Wn.2d 394,663 P.2d 104,1983 Wash.

click the citation to view the entire case on

Brief Fact Summary. Trust beneficiaries claimed that the trustee breached his fiduciary duty when he sold the sole trust asset for less than its fair market value.

Synopsis of Rule of Law. Except where impossible, illegal, or where a change of circumstances would impair the purposes of a trust, the nature and extent of the duties and powers of a trustee are determined by the trust agreement.

Facts. J.T. and Georgia Stone, both deceased, created trusts in their wills conveying their property upon their deaths to Defendant, Pacific National Bank, to be held for their children, Plaintiffs, Freeman Allard and Evelyn Orkney. Plaintiffs are life income beneficiaries of the trusts and upon the death of either, the trustee is to pay the income from the trust to the issue of the deceased beneficiary. In 1978 the sole asset of the trust was a fee interest in a quarter block in downtown Seattle. The property was subject to a 99-year lease, entered into by the Stones in 1953 with Seattle-First National Bank (Seafirst Bank). In June 1977 Seafirst Bank assigned its leasehold interest in the property to the City Credit Union of Seattle (Credit Union). In June 1978, Credit Union offered Defendant $200,000 for the property, which Defendant accepted and deeded the property to Credit Union on August 17, 1978. On September 26, 1978, Defendant informed Plaintiffs of the sale to the Cre
dit Union. In May 1979 Plaintiffs commenced the present action against Defendant for breach of its fiduciary duties in regards to management of the trust, as well as against Credit Union and Seafirst Bank for participation in the alleged breach, and against Credit union for conversion. Plaintiff’s complaint requested money damages as well as the imposition of a constructive trust on the property and removal of the Defendant as trustee. Upon determining that Plaintiff’s cause of action was primarily equitable in nature the trial court struck Plaintiff’s request for a jury trial. Motions by Credit Union and Seafirst Bank for a partial summary judgment were granted, thus dismissing them from the case. At trial the primary dispute was over the degree of care owed by Defendant to the trust and the Plaintiffs. Plaintiffs attempted to show the degree of care owed through expert testimony but the Plaintiff’s proffered expert witnesses were excluded, leaving them with no direct testimony
regarding ordinary standards of trust administration. The court entered judgment for Defendant and Plaintiffs appeal.

Issue. Whether Defendant breached his fiduciary duty in managing the trust?
Whether Plaintiff’s were entitled to a jury trial in determination of whether Defendant breached its fiduciary duties in regards to management of the trust?

Whether the court improperly awarded attorney’s fees to Defendant?

Shriners Hospitals for Crippled Children v. Gardiner

admin — Mon, 31 Aug 2009 21:17:44 +0000

Citation. 152 Ariz. 527,733 P.2d 1110,1987 Ariz.

click the citation to view the entire case on

Brief Fact Summary. Laurabel Gardiner created a trust and appointed Mary Jane as trustee, Charles first alternate trustee, and Robert second alternate trustee. Jane did not have investment experience and left all the investment decisions to Charles. Charles, who was an investment counselor and stockbroker, embezzled $317,000 from the trust.

Synopsis of Rule of Law. A trustee is not permitted to delegate his responsibilities to a co-trustee. A trustee lacking investment experience must seek out expert advice. The trustee is not justified in relying on such advice but must exercise his own judgment. A trustee is not personally liable for losses not resulting from a breach of trust.

Facts. Gardiner created a trust and appointed Jane as trustee, Charles first alternate trustee, and Robert second alternate trustee. Jane did not have investment experience, so she left all the investment decisions to Charles, an investment counselor and stockbroker. Charles embezzled $317,000 from the trust. All of the investment decisions were made by Charles. Jane’s lawyer stated that for all practical purposes, Charles really served as trustee. Dean Witter Reynolds, a major brokerage house, gave Charles access to the trust account. Jane created the trust account and it held it in her name.

Issue.
Whether Jane breached her duty as a trustee when she delegated all investment decisions to Charles, the fist alternate trustee who was an investment counselor and stockbroker?

Whether Jane’s breach caused the breach and loss suffered by the trust?

Matter of Kinzler

admin — Mon, 31 Aug 2009 21:17:43 +0000

Citation. 195 A.D.2d 464, 600 N.Y.S.2d 126 (N.Y.A.D. 2 Dept.1993)

Brief Fact Summary. Appellant Executor Bertram Zweiborn (Appellant), son-in-law of Testator Pauline Kinzler (Testator), appeals a lower court order which was the result of a proceeding initiated by Respondent Beneficiary Daughters (Respondents) that he breached his fiduciary duties.

Synopsis of Rule of Law. Fiduciary duties are owed from an estate executor to its beneficiaries and must be discharged in an unbiased and unprejudiced manner that does not involve self-dealing.

Facts. Appellant appeals a lower court ruling that (1) awarded the objectants’ attorney $ 7,000 as and for legal fees, payable by the estate, (2) held that the sale of the decedent’s residence to one of the beneficiaries, who was also a testamentary trustee under the will, was tainted with a conflict of interest and self-dealing, (3) held the payment by the executor to himself of advance legal fees, without prior court order, to be improper and ordered him to refund $ 11,595.15, plus interest in the amount of $ 16,398.68, for a total of $ 27,993.83, and (4) fixed the legal fees of the executor in amounts less than requested. The matter arose as of the results of Respondents complaint that Plaintiff had violated his fiduciary duties because he was engaged in self-dealing and prejudiced and biased disposal of the estate. Appellant contends that he satisfactorily fulfilled his executor duties and appeals.

Issue. Are fiduciary duties owed from an estate executor to its beneficiaries and must these duties be discharged in an unbiased and unprejudiced manner that does not involve self-dealing?

Matter of Estate of Rothko

admin — Mon, 31 Aug 2009 21:17:43 +0000

Citation. 401 N.Y.S.2d 449, 372 N.E.2d 291 (N.Y. 1977)

Brief Fact Summary. Mark Rothko (Rothko) was a famous expressionist painter whose paintings were of substantial value. The issue underlying this matter is the manifestly improper behavior of his three executors. Appellant executors appeal a lower court ruling removing them as executors of the estate.

Synopsis of Rule of Law. Executors retain a fiduciary duty that prohibits dealings of self-interest.

Facts. Mark Rothko (Rothko) was a famous expressionist painter whose paintings were of substantial value. The principal sum of his estate was composed of 798 paintings. Within a three week period following Rothko’s death, the three executors whom he had named to manage his estate had dealt with all the paintings via two contracts with interested galleries. Two of the executors had interests in the galleries. Rothko’s children petitioned to have the executors removed from the estate management and sought to enjoin the galleries from disposing of the paintings. The children also sought to rescind the sales contracts and to recover damages for breach of fiduciary duties. The lower court held for the children and held that the appreciated value at the time of the trial should serve as the measure for damages for all unreturned paintings. Appellant executors appeal the lower court ruling removing them as executors of the estate.

Issue. Should executors who engage in self-dealing that jeopardizes the value of an estate be removed as executors of the estate?

Estate of Rolfe

admin — Mon, 31 Aug 2009 21:17:42 +0000

Citation. 138 N.H. 294, 615 A.2d 625 (N.H.1992)

Brief Fact Summary. Daughters (Beneficiaries) of Decedent Richard S. Rolfe (Decedent) appeal a probate court decree awarding total executor’s and attorney’s fees in the amount of $26,000.

Synopsis of Rule of Law. The amount of attorney’s and executor’s fees to be paid on an estate is dependable on a variety of factors, including the actual amount of time expended for work on the estate.

Facts. Decedent left the bulk of his estate to his surviving spouse and three daughters. The total estate, including probate and non-probate amounts, was valued at over one million dollars. First Capitol Bank was named as sole executor of the estate. The bank named Richards Edmunds as the trust officer. Decedent’s attorney, Frederic K. Upton, was hired by the executor to render services for the estate. Decedent’s financial affairs were in perfect order on his death and there were no complex issues that had to be handled by either the bank or his attorney. Aware of the potentially high cost of closing an estate, Beneficiaries sought an estimate of these costs soon after Decedent’s death. Rather than being given an estimate, Beneficiaries were provided with a schedule of fees. The Beneficiaries then determined that the fees could be in excess of $30,000. Having determined this, Beneficiaries sought detailed information as to the attorney’s and executor’s fees. No information was obtain
ed. Beneficiaries were then informed by the executor that it was too premature to set the fees because the amount of work that would be involved was indeterminable. Finally, when pressed by the Beneficiaries, the executor agreed that the fees could be set based upon the work done rather than by the court. Although the Beneficiaries had been sent a letter stating that due to the friendly relationship between the attorney and Decedent, the fees would be kept as minimal as possible, the executor sought the highest fees allowable. The executor and the attorney subsequently agreed to reduce their fees, but the amount was still higher than the Beneficiaries thought reasonable. The daughters challenged the fees in probate court. The probate court determined that based on the value of the estate, the complexities and risks involved in managing the estate, the executor’s and attorney’s expert qualifications, and the amount of work done on the estate, an amount of $26,000 was to be awarded in f
ees. Daughters challenge this contention.

Issue. Is the amount of attorney’s and executor’s fees to be paid on an estate is dependable on a variety of factors, including the actual amount of time expended for work on the estate?