303 Ga. 211
Ga.2018Background
- Decedent Charles H. Peterson’s 1994 will created a marital trust (Item 5) and a bypass trust (Item 6); Mary (wife) and sons Alex, David, and Calhoun were named co‑executors and co‑trustees. David later resigned as executor (disputed as to trustee status).
- Bypass trust gave Mary lifetime income and trustee discretion to encroach on principal to support Mary and to provide "proper support and education" of descendants, with a stated dual primary desire: support of wife and support of children in reasonable comfort. Mary also had a power of appointment to direct trust property to descendants (by written instrument).
- Estate assets included closely held company stock and failing family businesses; Alex and David alleged trustees had mismanaged estate and trust assets (improper funding of bypass trust, conversions, waste, continued operation/financing of failing companies, improper encroachments for Mary).
- Alex’s and David’s suits sought accounting, support from the bypass trust, removal of Mary and Calhoun as executors/trustees, receiver appointment, and related relief; Mary moved for summary judgment and the superior court granted it.
- The Supreme Court of Georgia reviewed de novo whether summary judgment to Mary was appropriate and reversed, finding genuine issues as to trustees’ duties and whether those duties were honored in exercising powers granted by the will.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trustees properly considered settlor’s instruction to consider other means of support before paying descendants from bypass trust | Alex/David: trustees failed to investigate beneficiaries’ means and trust property to determine discretionary support | Mary: will grants broad powers and majority (including Mary) controls; no requirement to pay beneficiaries | Reversed: trustees must follow trust terms and investigate whether discretionary payments are appropriate; Mary’s majority status does not excuse duty to consider payments in good faith |
| Whether Mary’s power to appoint trust property to descendants or to turn over marital trust property eliminates waste claims | Alex/David: Mary’s potential appointment power doesn’t authorize waste while assets remain in trust/estate | Mary: because will permits Mary to direct turnover/appointment, nothing in will prevents her or Calhoun from taking/control and using assets | Reversed: mere potential power of appointment (requiring written instrument) does not relieve executors/trustees of fiduciary duties or permit waste absent exercise of that power |
| Whether continued operation/collateralization of failing family businesses by executors/trustees constituted waste | Alex/David: continued operation and use of estate assets to fund failing companies may be waste or breach of fiduciary duty | Mary: Item 12 gave executors/trustees power to retain and carry on businesses, so summary judgment appropriate | Reversed: grant of operational power does not excuse fiduciary duties; question remains whether their conduct met prudent‑person and no‑waste standards |
| Whether summary judgment on other related claims was proper given court’s reasoning on above issues | Alex/David: remaining claims raise similar fact questions about fiduciary breaches and waste | Mary: superior court granted summary judgment on remaining claims based on its rulings | Reversed: other claims raise genuine issues of material fact tied to fiduciary obligations and must be litigated |
Key Cases Cited
- Rollins v. Rollins, 294 Ga. 711 (2014) (trust settlor’s intent controls and trustees must follow trust terms)
- Hasty v. Castleberry, 293 Ga. 727 (2013) (trustee duty to administer trust diligently and in good faith)
- Myers v. Myers, 297 Ga. 490 (2015) (executor/trustee solemn fiduciary duty to manage estate for beneficiaries’ advantage)
- Cowart v. Widener, 287 Ga. 622 (2010) (summary judgment standard and defendant’s burden to negate plaintiff’s claim)
- Hardin v. Hardin, 301 Ga. 532 (2017) (summary judgment standard under OCGA § 9-11-56)
- Bratton v. Trust Co. of Ga., 191 Ga. 49 (1940) (interpretation of will provisions may grant broad powers to fiduciaries)
- Citizens & Southern Nat. Bank v. Haskins, 254 Ga. 131 (1985) (trustees must exercise care and judgment of a prudent person administering a trust)