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II-C-1 the PAST YEAR's MOST SIGNIFICANT, CURIOUS, OR DOWNRIGHT FASCINATING FIDUCIARY CASES (2018 Edition) * *At Least It Seems

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II-C-1 the PAST YEAR's MOST SIGNIFICANT, CURIOUS, OR DOWNRIGHT FASCINATING FIDUCIARY CASES (2018 Edition) * *At Least It Seems THE PAST YEAR’S MOST SIGNIFICANT, CURIOUS, OR DOWNRIGHT FASCINATING FIDUCIARY CASES (2018 Edition) * *At least it seems to me. Your mileage may vary. Dana G. Fitzsimons Jr. Principal and Fiduciary Counsel, Bessemer Trust 3455 Peachtree Road, N.E., Suite 850, Atlanta, Georgia 30326 Phone: (404) 965-9318 [email protected] SUPPLEMENT CONTENTS I. ELDER ABUSE, POWERS OF ATTORNEY, GUARDIANSHIP, SPECIAL NEEDS & DISABILITY .................................................................................................................. 4 A. Colburn v. Cooper, 2018 Ohio 5190 (2018). Daughter has standing under UPOAA to petition court for accounting of acts of agent under durable power of attorney, even after the death of the principal. ...................................................................................................... 4 II. STATE NEXUS & TAXATION ....................................................................................... 5 A. Estate of Chernowitz, 2018 N.J. Tax Unpub. LEXIS 63 (2018). Estate failed to rebut the presumption that gift within three years of death is subject to state inheritance taxes. ........ 5 III. BUSINESS INTERESTS ................................................................................................... 6 IV. INVESTMENTS................................................................................................................. 6 V. DISTRIBUTIONS & DISBURSEMENTS ...................................................................... 6 VI. ESTATE & TRUST ACCOUNT CLOSINGS ................................................................ 6 VII. LIMITATIONS & OTHER DEFENSES ......................................................................... 7 VIII. ARBITRATION ................................................................................................................. 7 IX. MEDIATION, SETTLEMENT, RELEASES & INDEMNIFICATION ...................... 7 X. NO CONTEST CLAUSES ................................................................................................ 7 XI. STANDING & PARTIES .................................................................................................. 7 XII. SITUS, JURISDICTION & VENUE ................................................................................ 7 XIII. DISCOSURE & INFORMATION ACCESS .................................................................. 7 A. In re Willard R. Sparks Revocable Trust 2004, 2018 Tenn. App. LEXIS 746 (2018). Court upholds sanctions against trustee for filing false demand for accounting from trustee. ............................................................................................................................................... 7 XIV. FIDUCIARY PRIVILEGES & EXCEPTIONS .............................................................. 8 A. United States v. Fridman, 2018 U.S. Dist. LEXIS 197038 (S.D.N.Y. 2018). The collective entity doctrine applies to a trust and is an exception to Fifth Amendment protections. ............................................................................................................................ 8 XV. CY PRES & CHARITABLE TRUSTS ............................................................................ 9 II-C-1 A. Kirgan v. M&T Trust Co., 2018 U.S. Dist. LEXIS 203039 (E.D. Va. 2018). Allegations about charitable gift contracts and failure to take meeting minutes are not sufficient to justify removal and surcharge of corporate trustee of charitable trust. ................................. 9 XVI. REVOCABLE TRUSTS .................................................................................................. 11 XVIII. DECANTING ................................................................................................................... 11 XIX. AMENDMENT, REVOCATION, REFORMATION, MODIFICATION & TERMINATION OF NON-CHARITABLE TRUSTS ................................................. 11 A. Estate of Sukenik, 2016 N.Y. Misc. LEXIS 2378 (2016); 75 N.Y.S.3d 422 (2018). Surrogate holds that trust and IRA beneficiary designation cannot be reformed to correct poor income tax planning. Appellate division reverses. ..................................................... 11 XX. SPENDTHRIFT & ASSET PROTECTION TRUSTS ................................................. 12 A. In re Will of David F. King v. King, 2018 ore. App. LEXIS 1547 (2018). Choice of law provision prevails over fiduciary powers clause, and spendthrift provision in Nevada trust does not preclude court from applying trustee-beneficiary’s income distributions towards satisfaction of surcharge award owed to the trust. .............................................................. 12 5. Lvb-Ogden Mktg., LLC v. Bingham, 2018 U.S. Dist. LEXIS 207154 (W.D. Washington 2018). Assets transferred by beneficiary to trust as repayment of trust loan are self-settled assets subject to seizure by creditors. .................................................................................. 14 XXI. CREDITOR CLAIMS & DEBTS ................................................................................... 15 A. Embassy Healthcare v. Bell, 2018 Ohio 4912 (2018). Nursing home must file claim with estate before making a claim against decedent’s spouse for payment under state necessaries statute. ............................................................................................................... 15 XXII. SPOUSAL RIGHTS & CLAIMS ................................................................................... 17 A. Acosta-Santana v. Santana, 2018 N.J. Super. Unpub. LEXIS 2667 (2018). Divorce proceedings abated upon death of one spouse. .................................................................... 17 XXIII. FIDUCIARY APPOINTMENT & SUCCESSION ....................................................... 17 A. Matter of Hettrick, 2018 N.Y. Misc. LEXIS 5367 (2018). Surrogate refuses to move trust situs to facilitate appointment of out of state private trust company selected by beneficiary as trustee. ............................................................................................................................. 17 XXIV. CAPACITY, UNDUE INFLUENCE & CONTESTS ................................................... 18 A. Estate of Luce, 2018 Tex. App. LEXIS 9341 (2018). Will executed by quadriplegic through “blinking system” valid. ......................................................................................... 18 XXV. WILLS, PROBATE & ADMINISTRATION ............................................................... 20 XXVI. CONSTRUCTION & CONDITIONS ............................................................................ 20 XXVII. ISSUE, BENEFICIARIES, PATERNITY & ADOPTION ........................................ 20 XXVIII. DISCLAIMERS & POWERS ..................................................................................... 20 XXIX. INSURANCE .................................................................................................................... 20 A. Feola v. Morello, No. 340008 (Mich. App. Unpub. 2018). Claims that trustee of ILIT should have stopped paying insurance premiums earlier dismissed as based on speculation. ............................................................................................................................................. 20 B. Jo Ann Howard & Associates v. Cassity, 2017 U.S. App. LEXUS 15621 (8th Cir. 2017); 2018 U.S. Dist. LEXIS 197542 (2018). Trustee of preneed funeral insurance trusts owes II-C-2 duties to funeral homes and consumers who have standing to sue, and claims against the trustee arise under trust law, are tried to the court and not a jury, and the damage measure is determined by trust law. Claims for aiding and abetting a fraud are rejected as not having been recognized under Missouri law. On remand following appeal, the trial court largely rejected attempts to narrow the court’s discretion to award damages through summary judgment motions. ............................................................................................... 22 XXX. TORTS, SLAYERS, & BAD ACTORS ......................................................................... 25 XXXI. THIRD PARTY LIABILITY .......................................................................................... 25 II-C-3 THE PAST YEAR’S MOST SIGNIFICANT, CURIOUS, OR DOWNRIGHT FASCINATING FIDUCIARY CASES (2018 Edition) * *At least it seems to me. Your mileage may vary. Dana G. Fitzsimons Jr. Principal and Fiduciary Counsel, Bessemer Trust 3455 Peachtree Road, N.E., Suite 850, Atlanta, Georgia 30326 Phone: (404) 965-9318 [email protected] SUPPLEMENT Updated as of December 28, 2018 I. ELDER ABUSE, POWERS OF ATTORNEY, GUARDIANSHIP, SPECIAL NEEDS & DISABILITY A. Colburn v. Cooper, 2018 Ohio 5190 (2018). Daughter has standing under UPOAA to petition court for accounting of acts of agent under durable power of attorney, even after the death of the principal. 1.Cheryl alleged that her brother mismanaged their mother’s assets when acting as her agent under a power of attorney from 2008 until 2016. She petitioned the court to compel him to provide an accounting (she brought other claims that were dismissed but did not pursue them on appeal). Their mother was placed into guardianship in 2016. 2.The court dismissed the claim and Cheryl appealed. Their mother died while the appeal was pending. On appeal, the court of appeals reversed on the following grounds: a. The Ohio UPOAA grants standing to petition the court for an accounting to persons including “presumptive
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