Survey: 2015 Trusts and Estates Law

Survey of New York Trusts and Estates law for 2014–2015.

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Steven Cunningham is an Associate, Bond, Schoeneck & King, PLLC, Syracuse, New York; J.D., Syracuse University College of Law; B.A. & M.A., Boston University. The author would like to thank Lisabeth Jorgensen, Bill Rubenstein, Jim Seeley, Marty Schwab and Georgia Crinnin for their guidance in producing the article, and the editorial staff of the Syracuse Law Review for their helpful suggestions.

In re JP Morgan Chase Bank, N.A.

This appeal addresses a motion to dismiss based on a breach of fiduciary duty claim. In 1983, Lucy Gair Gill’s will established a trust for the benefit of her daughter, Mary Gill Roby and her grandchildren and great-grandchildren. The trust terminated upon Mary Gill Roby’s death. Before her death, she exercised her power of appointment to have the trust assets distributed to her three children and two grandchildren. Three of the beneficiaries objected to the accounting and brought a claim for breach of fiduciary duty against the trustee JPMorgan Chase. The objectants argued that the “petitioner’s refusal to consider investment in nonproprietary funds was a breach of fiduciary duty that caused objectants “great loss.””

The Monroe County Surrogate’s Court granted JPMorgan Chase Bank’s motion to dismiss and held that the defense of laches barred the objections. The Surrogate further held that the open repudiation rule did not apply to the defense of laches. The Fourth Department affirmed the motion to dismiss on other grounds. The court expressly found that the open repudiation rule applies to the defense of laches. The court concluded, “that petitioner’s refusal to consider investing trust assets in nonproprietary funds in accordance with the desires of the beneficiaries did not constitute an open repudiation of petitioner’s role as fiduciary.”

The court instead affirmed the motion to dismiss for a failure to state a claim. The court rejected each objections in the objectants’ breach of fiduciary duty claim. First the court looked at the claim that JPMorgan Chase breached its fiduciary duty by not investing in nonproprietary funds after the beneficiaries asked. On that objection it found that the Prudent Investor Act allows for trustees to invest in proprietary funds. Furthermore, the court found that an underperforming investment alone is insufficient to meet the standard for breach of fiduciary duty. The court reiterated that the test is prudence and not performance. Here, the objection was insufficient to support the breach claim.

The court went on to reject the objectors’ objection based on JPMorgan Chase not considering tax consequences. On this objection, it found that JPMorgan Chase did consider the tax consequences and communicated the investment strategy to the objectants in letters. The court also rejected the objections based on failure to communicate and failure to advise beneficiaries on changes in the law. The court found on those objections that that “the record supports the conclusion that the beneficiaries merely disagreed with the strategy as properly communicated by petitioner.” Finally the court found that there was a failure to state a claim the creation of a litigation reserve.

996 N.Y.S.2d 816 (4th Dep’t 2014)

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Survey: 2011 Trusts and Estates

Emilee Lawson Hatch provides an update on Trusts and Estates Law between July 1, 2010 and June 30, 2011. in the State of New York.  This article discusses Federal and New York Legislation, Regulatory Announcements, and New York State Cases.

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Emilee Lawson Hatch is an Associate at Bousquet Holstein PLLC in Syracuse, NY.

 

 

Survey: 2010 Trusts and Estates

Martin W. O’Toole provides an update of Trusts and Estates law from July 1, 2009 to June 30, 2010.  This article discusses recent legislation, regulatory announcements, along with federal and New York case law.

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Martin W. O’Toole is a partner at Harter, Secrest, & Emery LLP.