Monday, August 26, 2013
In some cases, complying with trust terms governing the withdrawal of assets is not necessary for a trustee who is also the sole beneficiary.
After the death of her husband, his wife became sole trustee and sole beneficiary for her life of the trust created by her husband. The trust terms gave the trustee the authority to pay the wife “so much of the trust principal, even to its complete exhaustion” as she might request in writing to the trustee.
Before her death, she withdrew all of the trust property, and after her death several remainder beneficiaries of the trust sued her estate on the grounds that she had violated her fiduciary duty by withdrawing all of the trust property without first making a written request to herself as trustee. The trial court granted summary judgment to the estate and a divided intermediate appellate court affirmed, holding that the trust terms allowed her to withdraw all of the trust property and that requiring her to make a written request to herself for the withdrawal would be requiring the performance of a vain act contrary to law. Scanlon v. Scanlon, Nos. 99028 & 99052, 2013 WL 3328266 (Ohio Ct. App. June 27, 2013).
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.