If Something Seems Wrong... The Case of the Overreaching Trustee

Many charitable bequest dollars pass through trusts that become irrevocable at the donor’s death. The probate process is then perfunctory, involving a simple pour-over will that points to the trust. Many of these estate plans give broad, seemingly unlimited, discretion to the fiduciary to administer and even modify the trust.

Discretion may seem unlimited, but there are always restraints. Garner v. University of Texas, et al., 2024 WL 3058387 (D.C.App. 2024) is a great example. Four nonprofits – a major university and three Catholic organizations (“Beneficiaries”) -- came within a hair’s breadth of losing significant bequests owing to a trustee’s self-serving exercise of the broad discretion granted in the trust.

John Garner created a trust in 2001. The Beneficiaries were to receive the remaining funds (eventually $3,000,000) at his death. He named his nephew Patrick as successor trustee. John became seriously ill in 2021. Upon assuming his role as trustee, Patrick amended the trust to remove the Beneficiaries and redirect the multi-million-dollar remainder to himself. Although sections of the trust may have provided nominal support for this self-serving action, it was clearly not in keeping with the tenor of John’s estate plan.

When John died, Patrick filed for probate of the pour-over will, seeking an “accelerated” process. He also failed to identify the Beneficiaries as interested parties. Luckily, and perhaps presciently, the DC court rejected the filing and ordered disclosure of the full estate plan, including the trust as it stood prior to the 2021 amendment.

Litigation ensued between Patrick and the Beneficiaries. At the end of the day, the Beneficiaries prevailed and received their bequests. The court found that the self-enriching “amendment” was antithetical to John’s estate plan and that Patrick had breached his fiduciary responsibilities to the Beneficiaries. The sneaky probate filing also came back to haunt Patrick:

“We also find it relevant that, after he made himself the sole beneficiary of the Decedent’s trust, [Patrick] tried to probate the Decedent’s will through an abbreviated process that would not have alerted the prior trust beneficiaries of the Decedent’s designation.”?

THE MORAL OF THE STORY:? Bequest managers should not automatically roll over if a trustee’s actions jeopardize a gift. If something seems wrong . . . it probably is!

To learn more about CCK Bequest Management, visit cckbequest.com.