In the Matter of Joanne Black

Holland & Hart - Fiduciary Law Blog

Holland & Hart - Fiduciary Law Blog

The third Colorado Court of Appeals opinion relating to the conservatorship of Joanne Black was issued recently.  The opinion addresses an issue of first impression in Colorado involving jurisdiction over a foreign trust funded with assets misappropriated from a Colorado conservatorship. 

The history of this case centers around assets that Joanne Black’s mother, Renata Black, left to her via payable-on-death (“POD”) designation.  The POD assets were disclaimed by Joanne’s brother, Bernard Black, while he was acting as Joanne’s conservator.  As a result of the disclaimer, the POD assets were diverted through Renata’s estate, two-thirds to a Supplemental Needs Trust (“SNT”) for Joanne’s benefit and one-third to a trust for Bernard and his children. 

After discovering that her brother diverted one-third of her inheritance to a trust for himself and his children, Joanne pursued claims against him.  Joanne ultimately obtained a $4.6 million dollar judgment against her brother for breach of fiduciary duty, surcharge, civil theft and attorney fees, which was upheld by the Colorado Court of Appeals (“Court”) in a prior published opinion.  Black v. Black, 422 P.3d 592 (Colo. App. 2018)(cert. denied).  The Court also issued an unpublished opinion in a second appeal in 2018, remanding for the Denver Probate Court (“Probate Court”) to make additional findings regarding the basis for the Probate Court’s jurisdiction over the SNT.

The most recent opinion primarily relates to orders from the Probate Court approving distributions from the SNT to Joanne Black for payment of attorney fees relating to ongoing litigation involving Bernard Black and related family members.  The opinion also addresses an order suspending Bernard Black and his son as trustees of the SNT and the Probate Court’s order on remand from the unpublished opinion mentioned above.   

In this recent opinion, the Court considered a matter of first impression in Colorado: “whether a Colorado probate court can exercise jurisdiction over the trustees and assets of a foreign trust when that trust was funded with assets misappropriated from a Colorado conservatorship.” 

The Court reasoned that the Probate Court had jurisdiction over the POD assets as part of the Colorado conservatorship, because the assets were in control of the conservator.  The Court then held that the Probate Court properly retained in rem jurisdiction over the POD assets, despite Bernard Black’s transfer of the POD assets into a foreign trust as a result of the disclaimer. 

The Court also addressed interesting issues relating to in personam jurisdiction over the trustees of a foreign trust, including the application of waiver and Colorado’s long arm statute. 

View the opinion (opinion dated April 9, 2020; Petition for Rehearing denied, and opinion modified June 11, 2020).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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