In re the Peierls Family Testamentary Trusts

58 A.3d 985, 2012 WL 6147104, 2012 Del. Ch. LEXIS 282
CourtCourt of Chancery of Delaware
DecidedDecember 11, 2012
DocketNo. 16810-N-VCL
StatusPublished
Cited by4 cases

This text of 58 A.3d 985 (In re the Peierls Family Testamentary Trusts) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Peierls Family Testamentary Trusts, 58 A.3d 985, 2012 WL 6147104, 2012 Del. Ch. LEXIS 282 (Del. Ct. App. 2012).

Opinion

OPINION

LASTER, Vice Chancellor.

Current beneficiaries of seven testamentary trusts have petitioned for orders (i) [987]*987approving the resignations of the individual trustees, (ii) confirming the appointment of Northern Trust Company of Delaware as the successor corporate trustee for each trust, (iii) determining that Delaware law governs the administration of each trust, (iv) confirming Delaware as the situs of each trust, (v) reforming the trusts to modify their administrative provisions and create the positions of Investment Direction Adviser and Trust Protector, and (vi) accepting jurisdiction over the trusts. The petitions are dismissed in deference to the courts which have asserted jurisdiction over and have an ongoing supervisory role with respect to the testamentary trusts. The petitions should be directed to those courts.

I. FACTUAL BACKGROUND

Petitioners Brian E. Peierls and E. Jeffrey Peierls are brothers. Brian and Jeffrey’s father, Edgar S. Peierls, established a pair of trusts in his Last Will and Testament dated June 30, 1960, as modified by First and Second Codicils, each also dated June 30, 1960. Article SIXTH, subdivision (e) creates one trust for Brian’s benefit and a second trust for Jeffrey’s benefit. This decision will refer to this pair of trusts as the “I960 Trusts.”

Brian and Jeffrey’s grandmother, Jennie Newgass Peierls, established a second pair of trusts in her Last Will and Testament dated November 18,1969, as modified by a Codicil dated November 22, 1972. Article FOURTH creates one trust for Brian’s benefit and another trust for Jeffrey’s benefit. This decision will refer to this pair of trusts as the “1969 Trusts.”

Brian’s wife, Elizabeth B. Peierls, established three trusts in her Last Will and Testament dated April 4, 2005. Part One, Article Three, Paragraph 3.5 of her will creates a trust known as the By-Pass Trust. Part One, Article Four, Paragraph 4.1 creates two trusts known as Marital Trust No. 1 and Marital Trust No. 2 (together, the “Marital Trusts”). This decision will refer to the three trusts as the “2005 Trusts.”

Edgar, Jennie, and Elizabeth are deceased. Brian has two adult sons, Stefan Peierls and Derek Peierls. Jeffrey does not have any children.

Edgar’s will appointed as executors and trustees his wife Ethel F. Peierls, his friend Newman Pearsall, and Bankers Trust Company of New York. Article SEVENTH directed that “there shall at all times be one corporate and two individual Executors and Trustees.” The current trustees of the 1960 Trusts are Brian, Jeffrey, and Bank of America, N.A., as successor to U.S. Trust Company. Jeffrey is the sole current beneficiary of his 1960 Trust, and Brian is the presumptive remainder beneficiary. Brian, Stefan, and Derek are the current beneficiaries of Brian’s 1960 Trust, and Stefan and Derek are the presumptive remainder beneficiaries.

Jennie’s will as amended appointed as trustees Jeffrey, Philip J. Hirsch, and Bankers Trust Company of New York. The current trustees of the 1969 Trusts are Jeffrey, Malcolm A. Moore, an attorney and trusted family advisor, and Bank of America, N.A., as corporate successor to U.S. Trust Company. Jeffrey is the sole current beneficiary of his 1969 Trust, Brian is the presumptive remainder beneficiary, and Stefan and Derek are remote contingent beneficiaries. Brian, Stefan, and Derek are the current beneficiaries of Brian’s 1969 Trust, Stefan and Derek are the presumptive remainder beneficiaries, and Jeffrey is a remote contingent beneficiary.

Elizabeth’s will appointed Brian as the sole trustee of the 2005 Trusts. Brian, Stefan, and Derek are the current beneficiaries of the By-Pass Trust, and Stefan [988]*988and Derek are the presumptive remainder beneficiaries. Brian is the sole current beneficiary of the Marital Trusts, and Stefan and Derek are the presumptive remainder beneficiaries.

The petitions aver that the parties with interests in the trusts have become generally unhappy with the level of communication and responsiveness provided by Bank of America. The petitions seek to remove Bank of America as the corporate trustee, appoint Northern Trust as the successor corporate trustee, and reform the wills to create directed trusts.

The proposed changes would alter significantly the structure and administrative schemes of the trusts by converting them to directed trusts. Edgar’s and Jennie’s wills contemplate that the 1960 and 1969 Trusts each would have three trustees, one institutional trustee and two individual trustees. Elizabeth’s will contemplates that the 2005 Trusts would have one trustee. Currently, each trustee must exercise fiduciary judgment over the administration of the trust. The proposed changes would revise each trust to have only a single institutional trustee, who would administer the trust as a directed trust without meaningful responsibility for trust oversight.

II. LEGAL ANALYSIS

The trusts are multistate trusts, meaning each is “a trust having significant contacts or relationships with more than one state.” George Gleason Bogert, et al., The Law Of Trusts And Trustees § 291 [hereinafter Bogert]. Multistate trusts raise complex issues of jurisdiction and choice of law. See id. “In determining whether it has jurisdiction to entertain the proceedings and what local law should be applied in resolving the issues, the forum court in which the proceedings are brought must consider the nature and extent of the various contacts which the several states have with the trust.” Id.

Resolution of the underlying substantive issue before the court should not depend upon “forum shopping” by a plaintiff seeking the most favorable result under the local law of a particular state. Conflict of law rules have been developed in order that the resolution of the controversy will likely be the same regardless of the state in which the proceedings are brought.... [UJniformity of results regardless of the forum tends to lead to predictability in estate planning and in the administration of trusts.... However in many instances the laws of the various states relating to the disposition and administration of property differ significantly.

Id. (footnote omitted). The Bogert treatise cites numerous examples of rules regarding the validity, construction, and administration of trusts that differ across various jurisdictions and which could be defeated if courts failed to follow choice of law rules carefully.

To promote comity and respect for other states’ laws, a court presented with issues involving a multistate trust should first decide if it has jurisdiction to resolve the dispute. Id. § 292. “Generally, a court has jurisdiction to adjudicate by reason of its relationship to the trust, the trust parties or the trust property which is sufficient to make its decree reasonable and recognized as valid in other states.” Id. To have the power to adjudicate, a court must have sufficient minimum contacts with the parties or the property that is the subject of their dispute to satisfy the Due Process Clause of the United States Constitution. See Hanson v. Denckla, 357 U.S. 235, 251, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

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58 A.3d 985, 2012 WL 6147104, 2012 Del. Ch. LEXIS 282, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-peierls-family-testamentary-trusts-delch-2012.