Retired Firefighter Wins Victory Over Retirement Assets in ERISA Case – Are Your Retirement Assets “Held in Trust” Without a Formal Trust?

Property can be held in trust without a formal charter of trust or other trust documents. Lets say that your grandfather from Boca Raton gave you an heirloom but your parents held on it for you, the court may hold that it was “held in trust” and hold your parents to the duty of a trustee which means they owe you a fiduciary duty. How can you show the Court that your precious property was “held in trust” without the formal trust documents you so desperately want?

• I have blogged in the past about the history of trusts but in short these date back all the way to the crusades where a nobleman may leave his property with a fellow nobleman to tend to while he is off fighting the crusades. What happened when the nobleman returned and his “friend” refused to give the property back? The court gave it back to the nobleman because it was held in trust.
• So, trusts although formal in nature have an informal beggining and Palm Beach Courtsare more than willing to find that something was held “in trust” when the facts or circumstances, so dictate. But what establishes those circumstances?

The 9th Circuit has handed down its decision on April 7th 2015 in Case no. 11-15472 which has made news more than once – Barboza v. California Association of Professional Firefighterswhen it found that the funds of a retirement program were held in trust and as such the money manager was a trustee, with a fiduciary duty. Why does that matter though to a West Palm Beach Probate Litigator?

• trustees are fiduciaries which means they owe the duty that they would extend to their very own property- and by they the court means a reasonable trustee, not that specific trustee.
• The trustee here had engaged in self dealing where they made trades and business that was meant to benefit them not the plaintiff in the case.
• The self dealing in this case was the trustee taking his own fees out of the plan’s assets. Is this self dealing? Was he just trying to get paid, where is he supposed to get the money from? The Court was not to clear here.