In re Peierls Family Inter Vivos Trusts
59 A.3d 471
| Del. Ch. | 2012Background
- Five inter vivos trusts are the subject of petitions by current beneficiaries seeking (i) resignations of individual trustees and (ii) appointment of Northern Trust as sole successor trustee, (iii) a declaration that Delaware law governs administration, (iv) Delaware as situs, (v) reform to add Investment Direction Adviser and Trust Protector, and (vi) court acceptance of jurisdiction.
- The trusts include two substantially identical pairs benefiting Brian and Jeffrey, and a fifth trust benefiting Brian, Jeffrey, Stefan, and Derek; the 1953 and 1958 trusts are New York-governed, the 1957 trust is New Jersey-governed, and the 1975 trusts are New York-governed.
- Current trustees are Jeffrey and Moore (individuals) and Bank of America N.A. as corporate trustee; petitions complain about Bank of America’s communication and responsiveness and seek to convert to a Delaware-domiciled structure.
- Jeffrey and Moore already resigned conditionally, and Northern Trust has conditioned its acceptance on court approval; the court concludes reforms would alter the trustee structure in ways that undermine governing-law designations.
- Section 5 of the 1957 Trust and Article X of the 1953 Trust require three trustees (two individuals and one bank); the court cannot grant resignation/appointment orders without reform, and reform is inappropriate given the governing-law designations.
- The court distinguishes between consent petitions and live disputes and finds no actual controversy for some petitions; even where a controversy exists, Delaware does not yet govern administration for all trusts, given existing governing-law provisions and lack of a substantial Delaware administration.
- The court declines to address change of situs or reform in the absence of a clear, aggregate basis for applying Delaware law to administration across all trusts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Delaware law govern administration of the trusts? | Plaintiffs: Delaware law should govern due to Delaware trustees/assets. | Defendants: trusts' governing-law provisions control; Delaware law not mandated. | No; governing-law provisions control, so Delaware law does not govern. |
| Can the resignations and appointment of a sole successor trustee be declared and effected? | Resignations/appointment should be approved to streamline administration. | Resignations/appointment require reform or are premature absent proper structure. | Denied; resignations/appointment conditioned on reform cannot be granted. |
| Should Delaware be declared the situs of administration? | Delaware situs would support Delaware law and reform. | Situs depends on governing law and administration; not established. | Denied; situs cannot be set without governing-law determination. |
| Whether the trusts should be reformed to implement new administrative provisions | Reform needed to implement Delaware-directed structure. | Reformation should be guided by New York/New Jersey law per trust provisions. | Not addressed here; court declines reform given lack of applicable law governing reform. |
| Should the court accept jurisdiction over the trusts? | Jurisdiction is needed for declaratory relief on administration. | Unclear ongoing obligations and risk of forum shopping; jurisdiction not retained. | Denied; court declines continuing jurisdiction. |
Key Cases Cited
- Wilmington Trust Co. v. Wilmington Trust Co., 24 A.2d 309 (Del.1942) (choice of law based on settlor intent; material connection required)
- Wilmington Trust Co. v. Pennsylvania Co., 172 A.2d 63 (Del.1961) (broad choice of law language can govern administration)
- Lewis v. Hanson, 128 A.2d 819 (Del.1957) (settlor intent to have trust administered under a particular law may be inferred)
- Annan v. Wilmington Trust Co., 559 A.2d 1289 (Del.1989) (explicit choice of law provision upheld for administration)
- Sloane, 54 A.2d 550 (Del.Ch.1947) (creation of a new trust with a Delaware trustee changes governing law)
- Wilmington Trust Co. v. Sloane, 54 A.2d 550 (Del.Ch.1947) (new trust creation can alter law governing administration)
- Dutra de Amorim v. Norment, 460 A.2d 511 (Del.1983) (intent and instrument read as whole to determine governing law)
- Weil v. Morgan Stanley DW Inc., 877 A.2d 1024 (Del.Ch.2005) (broad choice-of-law provisions should be respected)
- Abry P’rs V, L.P. v. F & W Acq., LLC, 891 A.2d 1082 (Del.Ch.2008) (certainty and breadth of choice-of-law provisions)