Posts tagged with "fiduciary duty"

Conveyance of Trust Assets Must Abide by the Clear and Unambiguous Terms of the Trust Instrument

Gabriele v. Williams, KNLCV096001373S, 2011 WL 2480535 (Conn. Super. Ct. May 26, 2011)

In a case before the Superior Court of Connecticut, a daughter, in her capacity as the conservator of her mother’s estate, petitioned the court to determine the rights of the family members to undeveloped land and to quiet title to the contested property. In her answer to the complaint, the mother requested that the court declare her trust terminated and declare her the sole title owner of the contested real estate. The court quieted title to the property in the trust and declared the attempted revocation of the trust to be null and void.

In 1992, at the age of 68, the mother established a nominee trust to assist with estate planning for approximately 170 acres of undeveloped land that she owned. On the same date that the trust was established, the mother conveyed her interest in the property to the trust, excepting a two acre lot with her residence. Keeping the land in the family and undeveloped as long as possible was a priority for the mother and, together with estate tax planning, were motivating reasons for establishing the trust. She named herself as the trustee and a beneficiary of the trust, and named her daughter and her daughter’s two sons as additional beneficiaries. All three additional beneficiaries agreed with her philosophy of keeping the land intact and undeveloped. The trust contained two provisions that limited the trustee’s powers to deal with the trust property except as directed by all beneficiaries. It also required that any amendments be signed by all the beneficiaries. An agreement was later provided to clarify the administrative provisions of the trust, stating that if the beneficiaries differed in opinion as to the directions that should be given to the trustee, a majority vote by beneficial interest would control. From 1992 to 1998, the mother made a series of gifts of percentages of interest in the trust to her daughter and to her daughter’s two sons. According to the percentage in the final schedule of beneficial interests dated 1998, the mother owned approximately 49-percent, the daughter owned approximately 21-percent, and the two grandsons each owned approximately 15-percent. The trust, the property conveyance and the later agreement were all recorded in the town land records in a timely fashion.

In 2004, at the age of 80, the mother began to have medical and cognitive difficulties. She was diagnosed with breast cancer. During a brief hospital stay in April, a neurologist also diagnosed her with mild dementia. In October 2004, her primary doctor re-examined the mother and diagnosed her with “senile dementia with depression, Alzheimer type.” Because of the mother’s ill health and the conflict her care was causing between family members, the town probate judge petitioned for an involuntary conservatorship of the mother. The daughter later requested that the petition for conservatorship be withdrawn because the hearings were causing her mother obvious distress. The acting judge withdrew the petition without making a finding of the mother’s capacity.

While the conservatorship hearings were in process, a family member who was not a beneficiary of the 1992 trust arranged for a new attorney to get involved with the mother’s affairs. In October 2004, the new attorney prepared a deed for the mother to sign as trustee purporting to convey all trust assets from the trust to herself individually. In November 2004, the attorney prepared a revocation of trust for the mother’s signature. The family attorney who wrote the trust and who represented the mother for many years was not consulted in any of the transactions. None of the beneficiaries of the 1992 trust were consulted or involved in the decision making process to convey the sole trust asset to the mother individually nor did they consent to the conveyance. When the family attorney learned of the deed and the attempted revocation, he prepared an affidavit and had it recorded in the town land records.

In 2006, the mother was formally declared incompetent through temporary conservatorship. A permanent involuntary conservatorship of the person and estate followed, and was still in effect at the time of the instant case.

In order to render judgment in a quiet title action, Connecticut courts are permitted to determine the construction of instruments that are the sources of contested title. Conn. Gen. Stat. § 47-31(f). The instant case required the court to examine four documents: the 1992 trust instrument, the 1998 final schedule of beneficial interests, the 2004 deed conveying the trust asset to the mother individually, and the 2004 revocation of trust. The construction of a trust instrument presents a question of law to be determined in the light of facts. According to Connecticut case law, a court’s role is to determine the meaning of what the grantor stated in the trust instrument and to not speculate upon what the grantor meant to state in the instrument. Connecticut Bank & Trust Co. v. Lyman, 148 Conn. 273, 278-79, 170 A.2d 130 (1961). Expressed intent must control the court’s interpretation of the instrument. In determining the intent of the grantor, the words used in the trust instrument are to be interpreted in their ordinary sense and all the provisions must be construed together. Tremaine v. Tremaine, 235 Conn. 45, 61, 663 A.2d 387 (1995). Therefore, the plain language of the trust instrument itself, rather than extrinsic evidence of actual intent, is determinative of the grantors’ intent. Heffernan v. Freedman, 177 Conn. 476, 481, 418 A.2d 895 (1979).

The 1992 trust instrument contained clear and unambiguous language that the trustee had no power to deal in or deal with the estate except as directed by all beneficiaries. At the time of the attempted conveyance of the contested property from the trust back to the mother individually, the trust had four beneficiaries. Three beneficiaries neither knew of nor agreed to the conveyance. Therefore, the court found that the attempted conveyance in 2004 was a violation of the trust document, and declared the conveyance to be void for that reason. Furthermore, any attempted transfer of the trust estate back to the grantor by deed or revocation without compliance with the clear and unequivocal terms of the trust constitutes a breach of the grantor’s fiduciary duty to the beneficiaries. The mother, in her capacity as trustee, was a fiduciary within the definition of Connecticut law, Conn. Gen. Stat. § 45a-199, and could not personally benefit from the trust. Therefore, the court declared the both conveyance and revocation were void due to the mother’s breach of fiduciary duty resulting from her violation of the terms of the trust agreement and her intention for personal benefit.

The court additionally determined that the mother lacked the necessary capacity to execute the 2004 documents due to her mental condition. The mental capacity to make a deed is defined as whether, at the time of executing the deed, the person possessed understanding sufficient to comprehend the nature, extent and consequences of the deed. Both the doctor who attended to the mother during a brief hospital stay and the mother’s primary doctor had diagnosed her with mild dementia in relatively close proximity to the attempted transactions. Additionally, the mother was not able to remember and understand the trust she created in 1992 and the gifts she had granted subsequent to its creation. These two factors taken together supported the court’s determination that the 2004 attempted conveyance of the contested property from the trust and the attempted revocation of the trust was null and void.

Even if the conveyance and revocation were otherwise effective, the court declared these transactions to be null and void because the family member involved in bringing them about did so through the exercise of undue influence. A deed procured by undue influence is voidable regardless of whether the undue influence was exerted by the grantee or another individual. Fritz v. Mazurek, 156 Conn. 555 (1968). Connecticut case law sets out four elements necessary for a finding of undue influence: (1) a person who is subject to influence, (2) an opportunity to exert undue influence, (3) a disposition to exert undue influence, and (4) a result indicating undue influence. Dinan v. Marchand, 279 Conn. 558, 560, fn.1 (2006). As evidence of these elements, the court cited the affidavit of the town probate judge who initiated the involuntary conservatorship proceedings to protect the mother from the family member. The affidavit described the family member’s intention to change the mother’s trust and will to benefit him, as well as the steps that he took to keep the mother isolated and locked in the house. The family member selected a new attorney, failed to contact the family’s regular attorney and attended all the conferences the new attorney held with his mother. The changes that would result from the conveyance and revocation would solely benefit the family member involved. Based on this evidence, taken together with other facts of the case, the court found the elements of undue influence satisfied and the two instruments to be null and void on this basis.

Because the trial court declared the 2004 property conveyance and revocation of trust to be null and void on several bases, the court determined that title to the contested property remained vested in the 1992 trust. Furthermore, the court clarified that the beneficiaries of the trust and the proportions of their interests are as described in the schedule of beneficial interests signed by the mother in 1998.

Should you have any questions relating to trusts, real estate and other personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.
________________________________________________________________________________
Our family law firm in Westport Connecticut serves clients with divorce, matrimonial, and family law issues from all over the state including the towns of: Bethel, Bridgeport, Brookfield, Danbury, Darien, Easton, Fairfield, Greenwich, Monroe, New Canaan, New Fairfield, Newton, Norwalk, Redding, Ridgefield, Shelton, Sherman, Stamford, Stratford, Trumbull, Weston, Westport, and Wilton. We have the best divorce attorneys and family attorneys in CT on staff that can help with your Connecticut divorce or New York divorce today.

If you have any questions or would like to speak to a divorce law attorney about a divorce or familial matter, please don’t hesitate to call our office at (203) 221-3100. We offer free divorce consultation as well as free consultation on all other familial matters. Divorce in CT and divorce in NYC is difficult, but education is power. Call our family law office in CT today.

Keywords: divorce attorney ct, divorce attorneys in ct, divorce attorneys ct, divorce attorney Connecticut, Connecticut divorce attorney, divorce attorney, divorce attorneys NYC, ct lawyers, Connecticut family attorney, divorce lawyer in ct, free divorce consultation, free consultation family law, divorce in ct, free consultation family law, Connecticut divorce lawyer, divorce attorney for men, divorce attorney for women, free divorce attorney, divorce lawyers in ct, ct divorce laws, ct divorce attorney, family law firm, divorce attorney Fairfield, attorneys in Connecticut, family law office, ct divorce mediation, best divorce attorney in ct, lawyers in ct, uncontested divorce, divorce lawyer nyc, Connecticut divorce laws, best divorce attorney, divorce attorney Hartford, new haven divorce attorney, divorce, lawyer, attorney, law firm ct, law office, legal advice in ct, ct divorce attorneys, family attorney, domestic violence rights, Connecticut, marital property rights, CT divorce mediation, legal separation Connecticut, child custody laws, child support litigation, contested, uncontested, annulments, alimony, mediator, spouse, spousal support law, asset division, visitation right, premarital agreements, prenup, prenuptial agreement, prenup NY, restraining orders, appeals, custody modifications, legal separation CT, prenup in CT, custody in CT, filing divorce in CT, filing, lawyers, attorneys, family law in CT, family in NY, Connecticut divorce attorney, divorce law NY, matrimonial law CT, custody NY, child custody CT, property division in CT, dissolution of marriage in CT, marriage, divorce NY, New York divorce, visitation in CT, visitation rights in CT, post marital agreements, divorce law firm CT, divorce law firm NY

Continue Reading

Trustee Interpretation of Ambiguous Trust Provisions will not be Changed by a Court Without Evidence of a Clear Abuse of Trustee Discretion

Trustee Interpretation of Ambiguous Trust Provisions will not be Changed by a Court Without Evidence of a Clear Abuse of Trustee Discretion

Heath v. Heath, CV094044709S, 2012 WL 2477953 (Conn. Super. Ct. June 5, 2012)

In a recent case before the Superior Court, four trust beneficiaries filed a three-part complaint against the trustees of a trust created by their mother. The complaint alleged breach of fiduciary duty, unjust enrichment, and other charges. The trial court ruled that the trustees had properly distributed the trust interests and entered judgment in their favor.

In 1953, a trust indenture known as the Hembdt Trust was drafted with assets consisting of royalty interests in oil, gas and mineral rights. During her lifetime, the settlor and beneficiary of this trust (“the decedent”) married and had ten children. Upon her death, the terms of the trust provided that the royalty interests would pass to “his or her legal representatives, heirs at law or next of kin in accordance with the provisions of law applicable to the domicile of the deceased beneficiary.” In 1967, the decedent died. Pursuant to her will, several testamentary trusts were created, including a testamentary trust for the benefit of her husband (“marital trust”) and a trust for her children (“children’s trust”). The trustees and executors of the decedent’s will determined that the provision in the Hembdt Trust required the trust’s royalty interests to pass into her estate which, in accordance with her will, resulted in these interests being distributed in a 54/46 ratio between the marital trust and the children’s trust.

The beneficiaries of the children’s trust argued that the entirety of the royalty interest should have been distributed to them as the decedent’s heirs at law because the term “legal representatives” in the Hembdt Trust provision, used under the circumstances provided, could only be interpreted to mean the children of the decedent. The decedent’s husband, in his capacity as a fiduciary of the trusts, argued that the beneficiaries’ interpretation was inconsistent with the language of the trust instrument and the law. He argued that the term “legal representatives” was used in conjunction with “heirs at law” and “next of kin;” therefore, the clear intent of the Hembdt Trust provision was that upon the death of the individual beneficiary, his or her interest would pass to: (1) the beneficiary’s legal representatives, which would be the beneficiary’s executors, if the person died testate, to be administered according to the beneficiary’s will, or the beneficiary’s administrators, if the person died intestate and a probate estate was opened; (2) the beneficiary’ heirs at law if the person died intestate and no probate estate was opened; and (3) the beneficiary’s next of kin if there were no heirs at law. The decedent’s husband further argued that if all three conditions existed, then the distributions would have to be in accordance with Connecticut law, which requires that, when a decedent leaves both a spouse and children, they both inherit. Finally, the decedent’s husband argued that Connecticut law requires that if a decedent leaves a will, a distribution is made according to the will. Conn. Gen. Stat. § 45a-431. The remaining trustees adopted the arguments of the decedent’s husband.

According to Connecticut case law, a court’s role in the construction of a trust instrument is to determine the meaning of what the grantor stated in the trust instrument and not to speculate upon what the grantor intended to state in the instrument. Connecticut Bank & Trust Co. v. Lyman, 148 Conn. 273, 278-79, 170 A.2d 130 (1961). Language in the trust instrument is to be accorded its common, natural and ordinary meaning and usage. WE 470 Murdock, LLC v. Cosmos Real Estate, LLC, 109 Conn.App. 605, 609, 952 A.2d 106, cert. denied, 289 Conn. 938, 958 A.2d 1248 (2008) (internal quotation marks omitted). Furthermore, no language will be construed as to remove a trustee from equitable control; courts may intervene only to protect and preserve the trust in circumstances where the trustees have abused their discretion. Gimbel v. Bernard F. & Alva B. Gimbel Foundation, Inc., 166 Conn. 21, 34, 347 A.2d 81 (1974)

Connecticut case law has established that the phrase “legal representatives” in a testamentary instrument is an ambiguous or equivocal term. Smith v. Groton, 147 Conn. 272, 274–75, 160 A.2d 262 (1960). In interpreting the trust provisions, the court determined that the language did not permit the decedent’s beneficial interest to pass to each of the three categories (“legal representatives, heirs at law and next of kin”) or to pass to different recipients depending on an exercise of discretion (“legal representatives, or heirs at law, or next of kin”). For that reason, the court found that the terms “legal representatives,” “heirs at law,” and “next of kin” did not conflict and that the provision required that the decedent’s beneficial interest pass to the recipients in the order clearly listed the trust instrument. Therefore, the trustees did not abuse their discretion in determining that the royalty interests passed to the executors, as the decedent’s legal representatives, to be distributed to the marital trust and children’s trust in accordance with the decedent’s will.

Because the trial court did not find that the trustees of the decedent’s trusts abused their discretion, the court refused to upset their determination of how the decedent’s interests should be distributed.

Should you have any questions relating to wills, trusts, estates and other personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

Continue Reading

Trustees May Evict Beneficiaries from Real Property Held by the Trust

Trustees May Evict Beneficiaries from Real Property Held by the Trust

Dudek v. Dudek, HDSP-150182, 2011 WL 767790 (Conn. Super. Ct. Feb. 9, 2011) aff’d, 136 Conn. App. 902, 44 A.3d 222 (2012)

In a case before the Superior Court of Connecticut, a sister, acting in her capacity as trustee of the family trust, brought a summary process action for possession of two properties against her brother, a beneficiary of the trust, alleging that his original right or privilege to occupy the contested properties had been terminated. The trial court entered judgment for immediate possession of the subject properties in favor of the trustee. The Connecticut Appellate Court affirmed this ruling in a later court proceeding.

Since 2006, the contested properties had been held in trust by the family trust, which was created by the siblings’ father and funded with his assets upon his death that year. The trust instrument named the sister as the trustee of the family trust and clearly laid out her duties. The brother lived at the contested properties for almost his entire life, and provided physical care and support to his parents at the properties in the years before their death. While the brother provided care for his parents, he did not pay rent to them because no rent was requested. After his parents’ death, the brother remained in possession of the contested properties, and did not pay rent or other monies to the trust. The trust paid all the real estate taxes, insurance bills and most utility bills for the properties. The sister alleged that the brother engaged in negative behaviors that prevented her from properly managing the properties as trustee. Such alleged behaviors included preventing an insurance company representative from inspecting the premises, which resulted in the loss of insurance on the property, and denying her access to the properties. She also alleged that her brother was unwilling to cooperate with her relocation to a portion of the property and to conduct repairs to another portion of the property so that it could be rented out to generate income for the trust.

According to Connecticut law, Conn. Gen. Stat. § 47a-23(a)(3), the essential elements of a summary process action are: (1) the plaintiff is the owner of the property; (2) the defendant originally had a right or privilege to occupy the premises but such right or privilege has terminated; (3) the plaintiff caused proper notice to quit possession to be served on the defendant to vacate the premises on or before a certain date; and (4) although the time given the defendant to vacate in the notice to quit possession has passed, the defendant remains in possession of the premises. The general burden of proof in a civil action is on the plaintiff, who must prove all the essential elements of the cause of action by a fair preponderance of the evidence. Upon reviewing the facts of the case, the trial court determined that that the trust was the legal owner of the contested properties, the actions that the sister took related to the summary process action were within her powers as trustee, and that she had established all the remaining essential elements of her case by a fair preponderance of the evidence.

The brother asserted several special defenses related to the nature of the family trust: (1) the intent of the grantors was to allow him to remain in possession of the subject premises during his lifetime; (2) as a trust beneficiary in current possession of the premises, he is co-owner of the premises and not subject to a summary process action; (3) his beneficial interest in the trust generally equates to an equitable interest in the individual assets of the premises as part of the trust estate; and (4) a constructive trust should be imposed on the premises based on the grantor’s promise that he could remain in possession for his lifetime and his sister would be unjustly enriched if he were to be dispossessed from the premises. Defendants have the burden of proving the allegations in their special defenses by a fair preponderance of the evidence.

According to Connecticut case law, a court’s role is to determine the meaning of what the grantor stated in the trust instrument and to not speculate upon what the grantor intended to state in the instrument. Connecticut Bank & Trust Co. v. Lyman, 148 Conn. 273, 278-79, 170 A.2d 130 (1961). Expressed intent must control the court’s interpretation of the instrument. Therefore, the plain language of the trust instrument itself, rather than extrinsic evidence of actual intent, is determinative of the grantors’ intent. Cooley v. Cooley, 32 Conn.App. 152, 159, cert. denied, 228 Conn. 901 (1993) (citing Heffernan v. Freedman, 177 Conn. 476, 481, 418 A.2d 895 (1979). Because the court found nothing within the plain language of the trust supported the brother’s proposition that the grantors intended for him to remain in possession of the contested properties during his lifetime, the court found that brother failed to establish his first special defense.

Connecticut case law further establishes that the trustee holds legal title and legal ownership of the property in the trust. Fandacone v. Fandacone, Superior Court Judicial District of New Britain, Housing Session, Docket No. NBSP-052634 (March 16, 2010, Gilligan, J.). A beneficiary of the trust enjoys only a beneficial interest in trust assets. Despite the beneficial or equitable interest that a beneficiary may hold in the trust estate, this does not equate to legal or equitable title to the individual assets of the trust. Stepney Pond Estates, Ltd. v. Monroe, 260 Conn. 406, 433 n. 28 (2002). Therefore, the court found that the brother failed to establish his second and third special defenses.

A constructive trust arises where an individual who holds title to a property is subject to an equitable duty to convey it to another on the grounds that he would be unjustly enriched if he were permitted to retain the property. See Filosi v. Hawkins, 1 Conn.App. 634, 639 (1984); Gulack v. Gulack, 30 Conn.App. 305, 311-12 (1993). A constructive trust may also be imposed to prevent the abuse of a confidential relationship. Schmaling v. Schmaling, 48 Conn.App. 1, 13, cert. denied, 244 Conn. 929 (1998). In order to find that a constructive trust exists and should be imposed, the court must first find that a special or confidential relationship existed between the parties. Id. In Connecticut, two types of confidential relationships give rise to a constructive trust: (1) where one party is under the domination of another and (2) where circumstances justify one party’s belief that the other party’s actions will be guided by his or her welfare or instructions. See Riccio v. Riccio, 75 Conn.App. 556, 559 (2003); Starzec v. Kida, 183 Conn. 41, 43 n. 1 (1981). The court found that the brother did not establish clear and satisfactory facts from which a constructive trust may be implied. He did not establish that his sister, in her capacity as trustee, had an equitable duty to convey the contested properties to him. The trust instrument did not dictate that the brother’s individual welfare was not the sole focus of the family trust; instead, the instrument dictated that the sister’s fiduciary duties as trustee extended to all trust beneficiaries. The brother did not establish that his sister, in any capacity, misappropriated or attempted to misappropriate trust assets. Finally, the brother did not establish that his sister, as an individual, would be unjustly enriched if the family trust were to regain possession of the contested properties. The sister would still be bound by the trust instrument, and the brother would still retain his recourse to legal action to safeguard his rights as a trust beneficiary. Therefore, the court found that the brother failed to establish his fourth special defense.

Because the court found that the sister had established the essential elements of her cause of action with a preponderance of the evidence and that the brother failed to establish any special defense, the court entered judgment for immediate possession of the subject properties in favor of the sister, acting in her capacity as the trustee of the family trust.

Should you have any questions relating to real estate or personal asset protection issues, please do not hesitate to contact Attorney Susan Maya, at SMaya@Mayalaw.com or 203-221-3100, and Attorney Russell Sweeting, at RSweeting@Mayalaw.com or 203-221-3100, in the Maya Murphy office in Westport, Fairfield County, Connecticut.

Continue Reading