SW Legal studies in Business

Trustee Beneficiaries Can Intervene in Trust When Interest Becomes Known
Description

Montana high court held that beneficiaries of a trust, who had been ignorant of their interest for years by the trustee, could now sue the trustee for an accounting of the handling of the trust in prior decades.

Topic Wills, Estates, and Trusts
Key Words

Trust, Beneficiary, Accounting, Trial

C A S E   S U M M A R Y
Facts

Zona and Rose are two beneficiaries of a trust created by their grandfather, Dunham, in a will written in 1966. Wells Fargo Bank was named as trustee. Dunham named his only child, Mary, to receive fixed income from the trust during her life, and then his four granddaughters, including Zona and Rose, were to become vested remainder beneficiaries upon Mary’s death. The granddaughters were unaware that they were beneficiaries of the trust as neither Mary nor the bank told them of their interest. At Mary’s instructions, the bank kept funds in the trust invested only in bonds. Over the decades, earnings were lower than they would have been had some of the trust been in stocks. Eventually, before Mary’s death, Zona and Rose came to realize that they may have an interest in the trust and hired a lawyer to investigate. They sued the bank for mishandling the trust. Had 40 percent of the trust been invested in stocks, the trust would have been worth $10 million rather than $3 million. The bank protested that Zona and Rose had no right to intervene at this point in prior handling of the trust. The trial court held that they did have the right to bring suit as beneficiaries of the trust. The bank appealed.

Decision

Affirmed and remanded. The beneficiaries did not know of their interest in the trust earlier, so did not participate in supervision or control of the trust for many years. The trustee may have misrepresented or misadvised Zona and Rose about their rights and interest in the trust. They have the right to intervene at this point. The statute of limitations does not apply because they were unaware of their interests during the time they claim the trust was mishandled.

Citation

In the Matter of Trust B, 184 P.3d 296 (Sup. Ct., Mont., 2008

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