Brief Fact Summary. The plaintiffs, the great-grandchildren of Alice Sullivan, are the beneficiaries of a trust created under a will. The plaintiffs allege that the Bank trustee breached various fiduciary obligations under the trust.
Synopsis of Rule of Law. A trustee is under a duty to the beneficiary who is ultimately entitled to the principal not to retain property which is certain or likely to depreciate in value, although the property yields a large income, unless he makes adequate provision for amortizing the depreciation. A trustee can be removed even if the charges of his misconduct are not made out, if there is an ill feeling that it might interfere with the administration of the trust.
Whether the district court erred in finding that a Bank trustee acted unfairly in retaining buildings in 1950 instead of selling them?
Whether the court abused its powers in removing the trustee?
Yes. The Bank trustee did not act imprudently in failing to sell the buildings in 1950 because a trustee may indulge a preference for keeping the trust’s inception assts. However the Bank Trustee acted unfairly because he made a preference for benefiting the beneficiaries over the remainder men. The trustee made no did not attempt to modernize or renovate the buildings that were deteriorating. Instead he charged high rents and the building deteriorated over time to the disadvantage of the remainder men. The court correctly chose the date of 1950 as the date that the trustee should have sold the property because it marks a reasonable outer bound of time the trustee could allege that it was ignorant of the serious fairness problem. The trustee should have been aware of the changes of the community that would cause the property to depreciate.
No. The district court did not abuse its powers in removing the trustee. It properly concluded that the course of the litigation in the case demonstrated in an ill feeling that would interfere with the administration of the trust.
Discussion. In administering a trust, the trustee must consider the best interests of the beneficiaries and the remainder men, equally.