Trustees

News & Analysis as of

Delaware Court of Chancery Dismisses Derivative Suit Brought by Expired Trust

The Delaware Court of Chancery recently held that the trustee of an expired trust does not have capacity to pursue a derivative suit unless authorized by state law, or in the trust instrument. In April 2009, shareholders of...more

Affiliate Transfer: Fraudulent Conveyance or Unwinding Resulting Trust?

A chapter 7 trustee sought to set aside as a debtor’s transfer of her interest in property held jointly with her husband to her husband’s corporation as a constructive fraudulent conveyance. The bankruptcy court agreed that...more

Trustee’s Repurchase Suit Against Quicken Loans Dismissed as Time-Barred

On August 4, Judge Paul A. Crotty of the Southern District of New York granted Quicken Loans’ motion to dismiss a lawsuit brought by Deutsche Bank National Trust Co. (as Trustee of the GSR 2007-OA1 trust), alleging that...more

Accounting Is Not Only Important - It's Mandatory

Imagine how you would feel if you walked into your bank, asked for a summary of your account activity and the bank told you that it had no idea how much money was in your account or how it had been spent. Of course, this...more

Wills, Trusts and Estates Newsletter - August 2014

In This Issue: - Thinking of Moving to Florida? Maybe a Little Further South is a Better Option - New Investment Thinking for Trustees? - Excerpt from New Investment Thinking for...more

Choosing a Trustee for a Special Needs Trust

Choosing a trustee is one of the most important and difficult issues in creating a special needs trust (SNT). Trustees must have the necessary expertise to manage the trust, including making proper investments, paying bills,...more

Avoid the “Insolvency Exclusion” Trap in E&O Policies: Tennessee Federal Court Confirms That Insolvency Exclusion Does Not Apply...

As the wave of litigation spawned by the 2008 financial crisis begins to ebb, insurance-coverage litigation arising out of the credit crisis continues unabated. Financial institutions have successfully pursued insurance...more

New Investment Thinking for Trustees?

Traditionally, trustees invest the assets within a trust to ensure the assets are preserved for when they are distributed to the beneficiaries, often when the beneficiaries reach a certain age. However, this “cautious”...more

The enforceability of a trust accounting clause’s failure-to-object provision (the non-judicial settlement of trustees’ accounts)

It is common for the accounting clause of an inter vivos trust instrument to contain a provision along the lines of the following: “The written approval of such an account by the person or persons thus entitled to such...more

Decisions Do Not Apply "Jewel Doctrine" to Departed Partners' Fees - Legal Fees Earned by Departed Partners in Now-Defunct Law...

A California District Court recently held that a bankruptcy trustee could not claim a property interest in the hourly fee matters pending at the now-dissolved Heller Ehrman LLP law firm. This June California decision was...more

July 2014: Bankruptcy and Restructuring Update

Intellectual Property Licenses in Bankruptcy—Uncertainties Remain Following the Eighth Circuit’s En Banc Decision in Interstate Bakeries. The bankruptcy of a party to an intellectual property license presents serious...more

Court Grants in Part and Denies in Part Nomura’s Motion to Dismiss Trustee Repurchase Action

On July 18, Justice Marcy Friedman of the New York County Supreme Court, Commercial Division, granted in part and denied in part Nomura Credit & Capital Inc.’s motion to dismiss claims brought by HSBC, as Trustee for the NAAC...more

What Should the Trustee of a Private ESOP Do?

The Department of Labor (DOL) recently entered into an agreement with GreatBanc Trust Company settling claims relating to its service as trustee of an employee stock ownership plan (ESOP) holding stock of a private company....more

DOL Settlement Is a Cautionary Tale for ESOP Trustees

The Department of Labor (DOL) recently settled a case involving an employee stock ownership plan (ESOP) that provides guidance but also a warning for trustees and employers contemplating ESOP transactions that later go awry....more

Caution Required When Creating Self-Directed IRA's

You may be one of the many entrepreneurial folks who have created or want to create a self-directed IRA in order to make investments in real property, oil and gas interests, operating businesses, private placements and the...more

In Frank Aragona Trust, Tax Court Holds that Trustees’ Activities as Employees Count for Purposes of Material Participation Under...

The issue of whether a trust has passive or non-passive income from its investment in a pass-through entity has taken on increased importance in light of the tax imposed on net investment income under Code Section 1411 of the...more

Does the settlor of a trust have standing to seek its enforcement in the courts?

As a general rule, any beneficiary of a trust would have standing to seek its enforcement in the courts. The Restatement (Third) of Trusts is sending mixed signals as to whether the settlor of a trust, qua settlor, would have...more

Flaa v. Montano, C.A. No. 9146-VCG (Del. Ch. May 29, 2014) (Glasscock, V.C.)

In this post-trial decision in a proceeding pursuant to 8 Del. C. § 225, the Court of Chancery invalidated stockholder action by written consent on the ground that the proxy solicitation materials failed to disclose an...more

Borrowers Can Avoid Liability Even After a Trustee’s Sale

Since a lender must have a valid debt and valid lien to conduct a trustee’s sale, a borrower that allows the foreclosure sale to occur impliedly agrees that the debt and lien are valid. In Madison v. Groseth and BT Capital,...more

Sixth Circuit: ERISA’s Whistleblower Provision Doesn’t Protect Giving Information

The Sixth Circuit (in a 2-1 decision) recently held that ERISA Section 510 does not protect unsolicited employee complaints. See Sexton v. Panel Processing, Inc., 2014 U.S. App. LEXIS 8752 (6th Cir. May 9, 2014). Plaintiff...more

Lenders Beware – the Steinberger decision leaves lenders vulnerable to a defaulting homeowner's delay tactics

As if lenders don't have enough on their plates, dealing with a slowly rebounding economy and debtors struggling to make payments, on January 30, 2014, the Arizona Court of Appeals issued a decision that is bound to wreak...more

Filing Obligations for Trusts in France: Annual Filing Deadline One Month From Today on 15 June

The annual filing imposed on trustees must be submitted by 15 June on new, dedicated forms published by the French tax authorities, and in the French language. ...more

Wealth Management Update - May 2014

May Interest Rates for GRATs, Sales to Defective Grantor Trusts, Intra-Family Loans and Split Interest Charitable Trusts - The May § 7520 rate for use with estate planning techniques such as CRTs, CLTs, QPRTs and...more

Bankruptcy Trustee’s Action For Crop Reinsurance Proceeds Is Time-Barred

A federal district court has held that a bankruptcy trustee’s action to compel payment of crop insurance proceeds is time-barred by virtue of the Federal Crop Insurance Act (FCIA) and the insurance policies’ arbitration...more

Frank Aragona Trust: A Taxpayer Win

In a case of first impression, Frank Aragona Trust v. Commissioner, 142 T.C. No. 9 (Mar. 27, 2014), the Tax Court held that a trust could materially participate in a trade or business based upon the activities of the...more

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