McPherson v. McPherson
307 Ga. App. 548
| Ga. Ct. App. | 2011Background
- Howard E. McPherson established an irrevocable trust in 1990 for his four adult children.
- The trust gives the trustees discretion to pay income or principal to the children for support, education, maintenance, and medical needs, with resources of beneficiaries to be considered as provided by the instrument and applicable law.
- In 1992 Scott consented to adding the other three children as co-trustees; Howard later removed Eric as co-trustee in 2005, replacing him with the lawyer Frank Hendrick.
- Between 2005 and 2008 the trustees made distributions to the children; in 2005 Eric’s share was reduced by 157,000 to cover defense costs of an earlier suit.
- Eric sued in 2006 (amended 2009) alleging breach of fiduciary duty and breach of trust, challenging the 2005–2008 distributions and the 2005 withholding of defense costs; the trial court granted summary judgment to all five defendants.
- The appellate court applied the Revised Georgia Trust Code and common law, affirming that the trustees acted within their discretion and that removal for reasonable cause supported Howard’s actions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the trustees abuse discretion in 2005–2008 distributions? | Eric argues the trustees failed to consider beneficiaries’ means. | McPhersons contend distributions were equal per stirpes and within discretionary power. | No abuse; distributions complied with trust terms and good-faith discretion. |
| Was withholding 157,000 of Eric’s 2005 distribution an abuse of discretion? | Eric asserts it improperly burdened him to fund defense costs. | Trustees used a principled, equal-treatment rationale; costs were allocated to preserve trust assets. | Not an abuse; preservation of assets and equal treatment justifies the deduction. |
| Was removal of Eric as co-trustee for reasonable cause proper? | Eric disputes sufficient cause for removal. | Eric refused to sign documents, placed girlfriend on payroll, and threatened suit; reasonable cause shown. | Yes; removal for reasonable cause supported. |
Key Cases Cited
- C. & S. Nat. Bank v. Haskins, 254 Ga. 131, 327 S.E.2d 192 (1985) (Ga. 1985) (trustee discretion subject to good faith and non-abuse of power)
- Griffith v. First Nat. Bank & Trust Co., 249 Ga. 143, 287 S.E.2d 526 (1982) (Ga. 1982) (trustor’s intent; discretion must follow trust terms and good faith)
- Rubin v. Cello Corp., 235 Ga.App. 250, 510 S.E.2d 541 (1998) (Ga. App. 1998) (de novo review of summary-judgment issues on appeal)