351 Ga. App. 1
Ga. Ct. App.2019Background
- Marjorie H. Durham created an irrevocable trust in 2000 naming herself lifetime beneficiary and William Callaway trustee; on her death (May 3, 2009) the trust directed distribution of Trust Tract A to Lawrence and Trust Tract B to Bryant, Lee, and Lucinda, with equalization and certain debts to be handled before final distribution.
- Callaway did not distribute trust real property after Durham’s death; Lucinda (one remainder beneficiary) filed for a final accounting and later moved for partial summary judgment (seeking liability rulings and that certain credits be fixed by the factfinder).
- The trial court granted partial summary judgment to Lucinda on multiple issues, including that (1) distribution was required within a reasonable time and Callaway’s 9-year delay was unreasonable as a matter of law; (2) Callaway must disgorge trustee/attorney fees and costs paid from trust assets after May 3, 2012; (3) a pre-litigation settlement demand conditioning distribution on a release violated the trustee’s duty of loyalty; and (4) Dowdy Farm did not become trust property until a 2017 deed to Callaway as trustee.
- Callaway appealed, arguing among other things that the court wrongly struck affidavits, misinterpreted trust provisions (36-month period, payment of debts), improperly found breaches before resolving set-off/accounting motions, and erred about Dowdy Farm title.
- The Court of Appeals affirmed: it upheld relevance rulings on affidavits, construed the trust according to its plain language, found the long delay unreasonable as a matter of law, affirmed disgorgement of post-2012 fees, upheld finding of breach for conditioning distribution on release, and agreed the 2007 deed did not convey legal title to the trustee prior to the 2017 correction.
Issues
| Issue | Plaintiff's Argument (Willard) | Defendant's Argument (Callaway) | Held |
|---|---|---|---|
| Whether trustee had to distribute corpus after settlor’s death and timing | Trust requires distribution to children on settlor’s death; delay unreasonable | Claimed provisions (36-month equalization, payment of debts) allowed extended post-death administration | Trustee had duty to distribute within a reasonable time; nine-year delay unreasonable as a matter of law; summary judgment for beneficiaries |
| Whether trustee must disgorge trustee/attorney fees and costs taken after trust termination | Fees/costs taken after termination were unauthorized and must be repaid; exact amount partly for factfinder | Claimed 36-month wind-down and contractual fee entitlements justified post-death payments | Court excluded 36-month post-termination wind-down for this purpose and required disgorgement of fees/costs taken after May 3, 2012 (amounts largely ascertainable as matter of law) |
| Whether conditioning distribution on a release violated duty of loyalty | Conditioning mandatory distribution on release is impermissible and benefits trustee, breaching OCGA § 53-12-246(a) | Claimed offer was a practical step to effect distribution and protect trustee; not a breach | Offer clearly required release as condition to perform mandatory duty; violates duty of loyalty; summary judgment for beneficiaries |
| Whether Dowdy Farm became trust property in 2007 deed or only after 2017 corrected deed | 2007 deed to trust was insufficient under law to convey legal title to trustee; thus trust did not hold title until 2017 correction | Argued equitable possession/prescription or that post-2010 Trust Code retroactivity rules favor validity of 2007 conveyance | Applying pre-2010 law and Gibson, property had to be formally conveyed to trustee in 2007; 2007 deed did not vest legal title in trustee; trust received title by corrected 2017 conveyance; affirmation despite trial court’s miscitation of § 53-12-25(a) retroactivity |
Key Cases Cited
- Smith v. Hallum, 286 Ga. 834 (discussing trust construction and settlor intent)
- Gibson v. Gibson, 301 Ga. 622 (clarifying requirement of formal conveyance to trustee for non-self-settled trusts)
- Rose v. Waldrip, 316 Ga. App. 812 (treatment of Revised Trust Code and retroactivity issues for vested remainder interests)
- Hanson v. First State Bank & Tr. Co., 259 Ga. 710 (trustee duty of loyalty and prohibition on self‑advantage)
- Munford v. Peeples, 152 Ga. 31 (trustee discretion must be exercised reasonably; fiduciary cannot arbitrarily prolong trust)