Beneficiaries Stated Claim for Breach of Fiduciary Duty and Breach of Trust Provisions Where Their Father Made a Gift from Marital/Family Trust to His New Wife

On Behalf of | Oct 17, 2016 | Firm News |

Gwinn v. Gwinn, 2016 IL App (2d) 150851

The Second District Appellate Court in Illinois has ruled that the gift provisions in a Marital/ Family Trust did not give the surviving Husband as trustee the discretion to make a large gift from the trust to his new wife. The Court held that even though the trust provisions permitted him to use the trust assets for what he deemed in his discretion to be “necessary or advisable” for his health, support and maintenance, that did not authorize him to use large amounts of money to pay for the construction of a home in Colorado and title it in his new wife’s name. The court relied with authority on the the Restatement (Third) of Trusts § 50 cmt. d(2) (2003),which explains that provisions for using trust assets for the support and maintenance of a beneficiary do not authorize distributions in order to enlarge the beneficiary’s personal estate or to enable the making of extraordinary gifts. The Court also relied on the principle of construction “expressio unius est exclusio alterius” to interpret the Trust provisions to decide that the express grant of power to make gifts of assets to the Grantor’s (deceased wife’s) descendants was an implied denial of power to make gifts of assets to any person other than the Grantor’s descendants. The case illustrates that practitioners and trustees should carefully review Marital/Family Trusts to be certain that the intended level of discretion is set forth in the trust provisions. In addition, in administering a Family Trust, a trustee/beneficiary must carefully consider whether contemplated distributions may be deemed to be outside the discretion granted by the Trust provisions. Peter M. StormCooper, Storm & Piscopo