In re Estate of Skinner
2017 N.C. LEXIS 692
| N.C. | 2017Background
- Cathleen Skinner was adjudicated incompetent in 2010; Wake County Human Services initially served as guardian. Her friend/husband Mark Skinner was later appointed guardian of person (2011) and guardian of estate (2013) subject to bond and creation of a Special Needs Trust to preserve benefits.
- Ms. Skinner inherited ~$170,086.67 from her mother; those funds were deposited into the court‑approved Cathleen Bass Skinner Special Needs Trust in June 2014.
- Within ~2 months, only $10,313.66 remained: trust funds were used to pay The Violin Shop (Mr. Skinner’s business) including reimbursements for pre‑appointment attorney fees, to purchase a house titled to the Trust, furnishings, appliances, and a prepaid burial policy.
- Petitioners (Douglass Bass and Nancy Clark) sought removal of Mr. Skinner as trustee and guardian for breaching fiduciary duties; the Assistant Clerk removed him, ordered repayment/accounting, and appointed Ms. Clark successor trustee/guardian. The trial court affirmed.
- The Court of Appeals reversed, finding the Assistant Clerk misinterpreted the Special Needs Trust and erred on several legal points (permitted uses, funeral policy, attorney fees), concluding removal was not justified. The Supreme Court granted review on the question whether the Assistant Clerk’s order was an abuse of discretion or erroneous as a matter of law.
Issues
| Issue | Plaintiff's Argument (Bass/Clark) | Defendant's Argument (Skinner) | Held |
|---|---|---|---|
| Whether grounds for removal existed based on waste, conversion, mismanagement, or breach of fiduciary duty | Mr. Skinner wasted/misused trust funds, reimbursed himself improperly, purchased assets that benefitted him — removal appropriate | Actions were within trustee/guardian discretion, benefitted Ms. Skinner, some payments were honest mistakes | Held for Bass/Clark: unchallenged findings show waste, self‑dealing, mismanagement and serious breach; removal justified |
| Proper standard of appellate review (abuse of discretion vs. de novo review of legal conclusions) | Deferential — removal is discretionary and review is limited to abuse of discretion | Court of Appeals applied de novo review to legal errors; Skinner argued misinterpretation of law warrants reversal | Held: review focuses on whether Assistant Clerk committed errors of law; but many factual findings supported removal and discretionary remedy was not an abuse of discretion |
| Whether Trust terms authorized the challenged expenditures (house, furniture, prepaid burial, attorney fees) | Terms and trustee duties require prudence; expenditures here amounted to self‑benefit and violated fiduciary duties regardless of literal trust language | Trust permits discretionary payments for beneficiary’s special needs; purchases (house, furnishings, burial policy) and certain reimbursements arguably authorized or ambiguous | Held: even if some trust provisions were misread, statutory fiduciary duties and unchallenged facts (rapid depletion, self‑benefit, reimbursements) supported removal; consistency with trust terms does not shield fiduciary breach |
| Remedy and scope of relief (removal vs. remand for legal reanalysis) | Removal appropriate given statutory grounds and Clerk’s discretion; no remand required | Court of Appeals should have remanded for correct legal application rather than reverse outright | Held: Assistant Clerk’s removal order affirmed; Court of Appeals erred in reversing — misreading of some trust provisions did not undermine core findings justifying removal |
Key Cases Cited
- White v. White, 312 N.C. 770 (deferential abuse‑of‑discretion standard for review of clerk’s exercise of statutory discretion)
- Koon v. U.S., 518 U.S. 81 (a legal error by a discretionary tribunal can be reviewed and corrected)
- In re Simmons, 266 N.C. 702 (clerk’s removal powers and appellate scope when superior court exercises derivative jurisdiction)
- Bailey v. State, 348 N.C. 130 (findings of fact in non‑jury trials are binding if supported by competent evidence)
- Lichtenfels v. N.C. Nat'l Bank, 268 N.C. 467 (courts won’t disturb trustee discretion exercised in good faith; will intervene for dishonesty or improper motive)
- In re Greene, 328 N.C. 639 (erroneous factual findings do not overturn judgment when other supporting findings are competent)