Removed Corporate Trustee’s Refusal to Turn Over Trust Assets to Individual Trustee Was Prudent and Appropriate

Ronald and Marsha Sinzheimer established an irrevocable trust designed to provide for Marsha’s “health, support maintenance and education.” The trust was also drafted with a requirement that a corporate trustee would serve along with another individual trustee. Ronald and Marsha’s son, Andrew, eventually took over the individual co-trustee position after the death of his father and subsequent to the prior trustee’s resignation. Before resigning, the previous individual trustee chose to exercise his right to remove the corporate co-trustee. The corporate co-trustee refused to hand over the trust assets to Andrew until a new corporate co-trustee was appointed.

Andrew and his mother filed suit for conversion. The court held that “given Andrew’s stated intent to terminate the Trust without regard to the rights of the remainder beneficiaries – a class that does not include himself, a measuring life – the Bank’s position was reasonable. … The Bank’s uncontroverted conduct here was prudent and appropriate in the circumstances, particularly in consideration of its fiduciary duty to the remainder beneficiaries.”

See Brian Corrigan, Removed Corporate Trustee’s Refusal to Turn Over Trust Assets to Individual Trustee Was Prudent and Appropriate, FarrellFritz, August 21, 2017.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.