Wills, Trusts, Guardianships, and Fiduciary Administration
| Publication year | 2014 |
Wills, Trusts, Guardianships, and Fiduciary Administration
Mary F. Radford
[Page 231]
This Article describes selected cases and significant legislation from June 1, 2013 through May 31, 2014 pertaining to Georgia fiduciary law and estate planning.1
A. Will Construction
The case of Banner v. Vandeford2 confirms the long-standing rule that if a will is clear and unambiguous on its face, a court will not, by construction, reform the will to give it a different meaning or effect.3 In this case, the Georgia Supreme Court was asked to construe a will that
[Page 232]
contained no residuary clause.4 The testator, John Huscusson, was survived by three adult daughters: Tina, Deborah, and Karen.5 John executed a will in 2006 that left his entire estate to his three daughters equally. In 2012, John executed another will, specifically revoking his previous will. The 2012 will expressed his extreme disappointment with Deborah and Karen, leaving bequests of $10 to each of them. He did not give Tina a bequest of money, but he did name her as executrix of his estate.6 The appellant's brief7 explained that the original draft of the will contained a residuary clause that left the remainder of John's estate to his daughter Tina. The testator made a revision on the first page, which the testator's lawyer incorporated into the draft. Unfortunately, the lawyer then printed only the first page on which the revision had been made, not realizing that the residuary clause had been pushed to the second page.8
The supreme court noted that the 2012 will consisted of seven consecutively numbered pages that were each initialed by John, contained no incomplete sentences, and was made up of numbered paragraphs that appeared to properly follow each other.9 Deborah and Karen filed a declaratory judgment action in probate court seeking an interpretation of the will. The probate court found that the will was plain and unambiguous and that without a residuary clause, the gift of the residue lapsed and was required to pass by intestacy.10 The intestate heirs11 of the testator were all three of the daughters. Tina appealed to the supreme court. She first argued that the probate court did not follow John's true intentions in that he desired to disinherit Deborah and Karen. She claimed the probate court should have interpreted the will as leaving the residue of the estate to her alone.12
The supreme court disagreed and affirmed the probate court's ruling.13 The court noted that courts do not have the authority to
[Page 233]
rewrite, by construction, an unambiguous will.14 The paramount object of construction is to determine "the intention of the testator by looking to [the] four corners [of the will] and giving consideration to all of its parts."15 Here, the will flowed clearly, did not have any page or paragraph breaks, and its terms were plain and unambiguous; thus, its terms must control.16 The court recognized that, while it is unusual for a testator to omit a residuary clause, the court could not supply one.17 Tina tried to persuade the court that the will's residuary distribution scheme was ambiguous because it provided that "[i]f. . . no beneficiaries . . . survive me, I give all my estate to those persons who would have been entitled thereto under the laws of descent and distribution . . . as if I had died intestate."18 However, the court found the provision shed no light on John's intention regarding how the remainder should be distributed to the named beneficiaries who did actually survive him.19 Finally, Tina contended that the probate court erred in refusing to allow the attorney who drafted John's will to testify that John wanted Tina to inherit the remainder of his estate.20 The court held that, because the will contained no ambiguities, parol evidence could not be introduced to contradict its terms even if the terms express a meaning that is entirely at variance with the real intention of the testator.21 Without that rule, the court noted that no will would be able to "hold up to parol evidence of witnesses who come forward after the testator's demise."22
B. Trusts and Trustees
During the reporting period, the Georgia appellate courts dealt with four trust cases that discussed whether the trustees had breached their fiduciary duties and, in that context, examined the statute of limitations for bringing actions for such a breach. Two of these cases, Reliance Trust Co. v. Candler23 and Rollins v. Rollins,24 had already been reviewed by the supreme court and have been discussed in previous
[Page 234]
issues of the Mercer Law Review.25 The decision in Rollins is discussed in this year's Annual Survey of Georgia Law by Crystal J. Clark and Kristi K. North,26 and the decision in Reliance is discussed below. The other two cases, Hasty v. Castleberry27 and Smith v. SunTrust Bank,28 were appealed from the trial courts to the Georgia Supreme Court and the Georgia Court of Appeals respectively.
1. Statute of Limitations. Section 53-12-307 of the Official Code of Georgia Annotated (O.C.G.A.)29 provides that the statute of limitations for actions against a trustee will be either two or six years.30 The six-year period begins to run at the time "the beneficiary discovered, or reasonably should have discovered, the subject of such claim."31 The six-year period is narrowed to two years if the beneficiary "received a report which adequately discloses the existence of a claim against the trustee for a breach of trust."32
The trustee in Hasty v. Castleberry was sued by his sister for breach of fiduciary duty, mismanagement of the trust's assets, and the collection of excessive trustee fees. The trust was designed to support the children's mother for her life and then pay the remainder to the trustee, his sister, and another sibling.33 The support provided for the mother consisted of both a mandatory payment to her of the income from the trust and any encroachments on the trust corpus that the trustee deemed necessary to provide for the mother's "proper support [or] maintenance, or to enable her to meet any difficulty produced by sickness, accident, or similar cause."34 While the mother was alive, the trustee, who was the co-chair of a fundraising campaign for a local university, used trust funds to make a $1 million donation to the university on his mother's behalf.35 The trial court granted partial
[Page 235]
summary judgment to the sister, and the trustee appealed. When sued by his sister, the trustee contended that she had failed to file her claim within the applicable statute of limitations of two years. The trustee claimed that an accountant's letter, which he showed his sister and which disclosed the donation, constituted a sufficient report to narrow the statute of limitations to two years.36 Although the term "report" is not defined in that particular statute,37 the supreme court adopted a definition from the statute on trustee accounting, O.C.G.A. § 53-12-243(a),38 which requires a report from a trustee to a beneficiary to include "the assets, liabilities, receipts, and disbursements of the trust, . . . including the trust provisions that describe or affect such beneficiary's interest."39 The supreme court held that the accountant's letter, which was simply a general correspondence without any details, did not constitute a sufficient report to shorten the statute of limitations and that the sister filed her claim within the six-year time frame.40
The co-trustees in Smith v. SunTrust Bank were the co-trustees of the 1969 Fisher Family trust. The sole original asset of the trust was a 15% interest in a piece of Atlanta real estate, "Century Center," which was under a ninety-year lease for a large office park development. The trust established three subtrusts: Trust A, Trust B, and Trust C.41 The income from Trust A was allocated to Fisher's only child, Emily Fisher Crum. Trust B's income was to be equally distributed among seventeen named beneficiaries or their descendants per stirpes.42 The income of Trust C was to be distributed to any one or more of a group consisting of the Trust A and Trust B beneficiaries as the corporate trustee, SunTrust, determined "necessary for the maintenance, health, support and education of each member of such group, taking into consideration any means of support which any such member is known by [SunTrust] to have, and accumulating any income not so paid."43 The trust required an annual accounting to the beneficiaries who held a present interest in the subtrust. Emily and another individual were named as
[Page 236]
individual trustees, and SunTrust was named as the corporate trustee. The complaining beneficiaries were Rob Smith, one of the seventeen named B beneficiaries, and the three children of Roy Smith, Sr., who was one of the seventeen named B beneficiaries.44
On October 1, 1979, the trustees conveyed the trust's entire interest in the Century Center property to the settlor's widow, Bessie, for $300,000, the appraisal price from five months earlier. Minutes later, Bessie conveyed the property interest to Emily and her husband.45 The trust account statements for the fourth quarter of 1979 contained a notation stating that the property had been "Sold to Bessie."46 Rob Smith contended he never received this statement; however, the remaining beneficiaries conceded that their father received the statement. All four beneficiaries claimed they did not know of the "straw-man" conveyance that occurred until this litigation commenced in 2011. The beneficiaries also alleged that the property interest, which had not been otherwise exposed to the market, was substantially undervalued at $300,000. In addition, they contended that SunTrust breached its fiduciary duty by distributing all of Trust C's income to Emily, beginning in 1969, despite the means test applicable to distributions from Trust C.47 A trust officer sent a...
To continue reading
Request your trial