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Trust Beneficiary’s Rights Protected

Spencer Fane helped a trust beneficiary secure the trust benefits she was entitled to, in the face of threats by the trustee to divert trust assets to others.

Spencer Fane’s client, a widow, was entitled to receive the income during her lifetime of two trusts established by her late husband, worth several hundred thousand dollars, and depended on that income for her support. The husband had been married previously, and had children from the prior marriage. The trust instrument establishing the larger trust provided that upon the widow’s death, the remaining trust principal would be distributed to the husband’s children from his first marriage. The husband named his brother trustee of both trusts.

After years of the widow being supported by the income from both trusts, the trustee announced his intention to terminate the larger trust and immediately distribute the proceeds to the children of the first marriage – all adults then in their 50s. The trustee, who was the uncle of the other beneficiaries, said he felt they should be able to enjoy the trust benefits at that point in their lives. The trustee’s plan would have deprived our client of the main source of her support.

Spencer Fane pursued court action to block the planned termination of the trust. Also, the Firm commenced aggressive discovery, which uncovered evidence of other improprieties by the trustee, and also took steps to preclude the trustee from using trust assets to pay for his defense costs – all of which provided significant leverage over the trustee.

Ultimately, Spencer Fane was able to engineer a creative, court-approved resolution whereby the trusts were terminated by agreement of all interested parties, and the bulk of the assets were distributed to our client. This resolution not only gave our client the benefit of receiving most of the trust assets, she also gained protection against future arbitrary or otherwise improper actions by the trustee.