#TRUST BENEFICIARY & #CO-TRUSTEE SUES BROKER #CO-TRUSTEE: WHY DID YOU SELL THE TRUST’S MUNI’S AND BUY ANNUITIES — ON MARGIN ?
Q: Is this case a no-brainer ?
A: No —– read on.
In a Tennessee #stockbroker lawsuit, which is also a #charitable remainder trust case whose legal opinion was released just days ago, a #trustee sued a #stock broker, or #registered representative, for #negligence and #breach of fiduciary duty.
This #trust litigation involved #prudent investing and alleged mismanagement by a co-trustee of #charitable remainder trusts for the benefit for individual #lifetime beneficiaries and the University of Tennessee as the #remainder beneficiary (#charitable remainder beneficiary).
#PRUDENT INVESTING BY #CO-TRUSTEE ?
The #trustee, in this #trust lawsuit, had a number of complaints with her #co-trustee who was also a #stockbroker, about how the #co-trustee invested the #trust assets:
- the broker #mismanaged trusts’ money and #trust assets
- purchased two $1 million #annuities
- on margin debt
- which caused losses, and
- caused the trust to pay substantial #margin debt, which
- led to #margin calls, and
- forced selling of the trusts’ municipal bonds
At least on its face, at a first reading, this sounds terrible: totally imprudent for a trust, right? So, why didn’t the trustee know about this? She did !
#TRUSTEE OF #CHARITABLE TRUST AND #EXECUTOR OF #ESTATE
- The person bringing this lawsuit is the #trustee of three #testamentary trusts
- She is also the #executor of the estate
- She is also the #beneficiary of #charitable remainder trusts
- The trusts were testamentary trusts, created under a will
- The first trust was a charitable remainder trust for the trustee’s benefit
- The second trust was created for two beneficiaries
- The third trust was created for five beneficiaries
- The trusts “go” to the #University of Tennessee after the lives of the #trust beneficiaries
#TRUSTS INHERIT ANNUITIES
The creator of the trust, also called the trust #settlor, had an investment account with the broker. There were two $1 million Annuities.
After the #trust settlor’s death in March 2000, her investment accounts were transferred to an #Estate Account.
The Plaintiff, the Co-Trustee, knew about and authorized the purchase of two new $1 Million annuities !!
For a Trust !
And then she sued the Co-Trustee broker who sold her the annuities !!
TRUST ANNUITIES LOSE 50% OF THEIR VALUE
You can guess what happened, right? There would be no #trust lawsuit about #investment losses if the annuities made money, right?
The #trust annuities lost over 50% of their value by the end of 2002 !
The #trustee plaintiff sues the broker in ……………….March of 2011 !
Are you surprised that the #stockbroker former co-trustee won a summary judgment motion based on the #statute of limitations?
Oh yes, the plaintiff, the co-trustee, admitted receiving monthly statements. You know what she did for a living? A bookkeeper !
FOR REFERRAL SOURCES, LAWYERS AND LITIGATORS ONLY
We help you with Florida estate and trust administration and trials, and #probate appeals.
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Who are we? Our firm is comprised of
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We have been involved in high profile, nine figure, multi-million-dollar #Florida estates, including Madoff matters, old # Palm Beach money and complex trusts and multi-party #Florida probates. We also handle “small” or “simple” matters. All we do is litigate and help you with #Florida estate and trust administration. #Tortious interference with an inheritance and allegations of #undue influence, and #will challenges and trust challenges are a unique subspecialty of the law. Does your client know which ones to file, when to do that, and why? Do you know the different ways to prove each case? How about quantifying or assessing damages? It would be our pleasure to work with you and to serve your clients. For a complete copy of this very recent legal opinion please email michelle@pankauskilawfirm.com.
John Pankauski, www.johnpankauski.com, is the author of The Trustee’s Book – An Individual’s Guide To Money, Misfits, Marriages, and Mismanagement, and the upcoming The $41 Trillion Inheritance War. He is an estate and trust litigator in West Palm Beach, Florida, www.pankauskilawfirm.com and has been featured on the CBS Evening News, in The Wall Street Journal, MarketWatch, NBC, ABC and Fox networks.