REMAINDER BENEFICIARY’S CLAIMS AGAINST TRUSTEE FOR PURCHASE OF HIGH RISK LIMITED PARTNERSHIP ASSETS DENIED DUE TO SETTLOR’S ACQUIESCENCE

• Monday, June 24, 2019
• Category: Wills, Trusts and Estate Litigation

Trial court properly denied daughters’ objections to appellee’s final accounting as trustee of decedent mother’s revocable trust but court affirmed on other grounds because court found daughters lacked standing to appeal since decedent’s acquiescence in the investments made by appellee was binding on daughters and they were not aggrieved by appellee’s conduct as trustee. Affirmed.

Decedent funded a revocable trust in 2001, designated appellee as trustee and provided that remaining trust assets would be split between her daughters. Appellee diversified the trust assets to include illiquid high-risk investments in limited partnerships. Decedent died in 2015 and the trust assets were distributed to daughters. Appellee filed a first and final account to finalize administration of the trust and daughters filed objections as beneficiaries of the estate asserting appellee breached its duty by investing in the private limited partnerships. Daughters sought to amend their objections to add a claim under the UTPCPL and to add the estate as a party-plaintiff. Daughters also filed a separate action in the court of common pleas raising the same unfair trade practice claims and listing the estate as a party-plaintiff. Daughters also filed a separate action in the court of common pleas raising the same unfair trade practice claims and listing the estate as a party-plaintiff. Daughters’ request to amend the original objections was denied and the trial court overruled their objections after a trial. Daughters appealed.

Appellee argued daughters lacked standing to pursue their appeal because a trustee’s duty inured solely to the benefit of the settlor’s life-time. Additionally, a settlor could ignore a breach of trust which would preclude any action on the part of remainder beneficiaries. The court noted that decedent created the trust and designated appellee as trustee in 2001. Appellee acquired the interests in a limited partnership between 2003 and 2014. During those years, there were over 40 separate purchases of limited partnership interests. Daughters conceded that decedent interacted with appellee as to investments and distributions and that appellee provided decedent with monthly account statements detailing the investments held in trust and the performance of such investments. Daughters also testified that decedent was capable of understanding the nature and risks of alternative investments.

The investments that daughters alleged were a breach of appellee’s duty occurred during decedent’s lifetime, she consented and approved of the investments and her acquiescence in the investments was binding on daughters and relieved appellee of any liability to them.

Reference:

Digest of Recent Opinions, Pennsylvania Law Weekly, 42 PLW 41, Tuesday, May 7, 2019, In re: Trust Under Agreement of Walker, PICS Case No. 19-0522 (Pa. Super. April 22, 2019) Shogan, J.

Kindly visit our Estate Litigation and Trust and Estate Planning websites or contact one of our Wills, Trusts and Estate Litigation Attorneys at 215-977-8200 for more information on this topic.