Tuesday, August 19, 2014
Improper assignment is not a basis for trustee liability. A trust beneficiary assigned his interest in the trust for the benefit of other beneficiaries, even though the trust terms contained a valid spendthrift provision prohibiting voluntary and involuntary alienation, in exchange for a cash payment from the trust. The trustee made distributions in accord with the assignment. Twelve years later, after the trust’s termination, the assignor brought an accounting action. In affirming summary judgment for the trustee and another beneficiary, the intermediate Arizona appellate court held that the trustee was not liable for payments made in accord with an invalid assignment, that the assignor was not entitled to an accounting because he was no longer a beneficiary, and that in any event the assignor’s action was barred by laches. In re Indenture of Trust Dated January 13, 1964, 326 P.3d 307 (Ariz. Ct. App. 2014).
Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.