Trustees Did Not Breach their Fiduciary Duties or Commit Other Acts of Misconduct
In the trust litigation case of Alper v. Simon, 38-2-4380, N.J. App. Div. plaintiff Valerie Alper established the Valerie Alper Trust (VAT) in June 1997 with certain assets in various family businesses and for her benefit. Four months later, Valerie, her parents, and her brother, Jacob Simon, entered into an agreement that canceled the VAT and transferred her assets to the new Valerie B. Alper Trust (VBAT). The VBAT named Valerie’s father, Richard Simon, and Jacob co-trustees and gave them sole and absolute discretion to make distributions of income and principal to Valerie or her issue. It named Valerie’s mother, Betty Simon, as the successor trustee. This action arises from allegations by plaintiffs Valerie, individually and on behalf of the VBAT, and her two minor children, that defendants mismanaged the VBAT and committed acts of misconduct resulting in damages. They alleged, among other things, breaches of fiduciary duties, diversion of a business opportunity from the VBAT in connection with defendants’ purchase and sale of property for a substantial profit, and breach of contract for refusing to pay the construction costs for her house. They also alleged that the VAT was the controlling trust. The court granted defendants’ motion for partial summary judgment, finding plaintiffs’ claim to set aside the VBAT was barred by laches. After a bench trial, the court dismissed all claims except the contractual claim against Valerie’s brother. It also concluded that an independent trustee should be chosen to replace Valerie’s brother and mother, who had replaced her father after his death. The appellate panel affirms, rejecting plaintiffs’ arguments that the trial court erred by determining laches applied, failing to find that her brother breached various fiduciary duties, permitting the trustee to use VBAT assets to pay defendants’ legal fees, and allowing the payment of excessive compensation to the working partners. The panel further rejected defendants’ arguments in their cross-appeal that the court erred by removing Valerie’s brother and mother as co-trustees of the VBAT, ruling that the trustees were not entitled to commissions, and finding the VBAT was entitled to reimbursement by the corporate entities and five percent of legal fees paid on behalf of Valerie’s sister and brother-in-law.
Reference: Case & Analysis, New Jersey Law Journal, 216 N.J.L.J. 928 (June 30, 2014)
Filed Under: Trust & Estates; Estate and Trust Litigation; Trust Administration
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