Munford v. MacLellan

373 S.E.2d 368, 258 Ga. 679, 1988 Ga. LEXIS 475

• Court: Supreme Court of Georgia
• Decided: November 10, 1988
• Docket: 46059
• Status: Published

Opinions

Hunt, Justice.

The main question presented by this appeal is whether a nonresident of Georgia may serve as trustee of a trust created in and to be administered in this state and where the trust property is located in this state. This particular trust was established for the benefit of the minor child of Anne Maclellan Munford and Dillard Munford, Jr. Aubrey Munford, guardian of the child, appeals from the grant of partial summary judgment in favor of the trustees, Kathrina Maclellan (the mother of Anne Maclellan Munford) and Trust Company Bank.

Anne Munford died in 1978. Under the terms of her will, a trust was established for the exclusive benefit of her only child. Her husband, Dillard Munford, Jr., and her mother, Kitty Maclellan, were named as trustees. Dillard Munford, Jr. died in 1987. His will named his sister, Aubrey Munford, guardian of the child. Ms. Munford thereafter brought this action to remove Ms. Maclellan as trustee and, the following day, purported to appoint herself as successor trustee to take her brother’s place. Thereafter, Kitty Maclellan attempted to appoint the bank as an additional trustee.

1. Ms. Munford challenges the trial court’s rejection of her argument that Ms. Maclellan, a nonresident of Georgia, is ineligible from serving as a trustee of the trust, the entire corpus of which is located in Georgia. OCGA § 53-13-8, relied on by Ms. Munford, provides in pertinent part:

When the sole or surviving trustee of any trust has died, removed beyond the jurisdiction of the courts of this state, resigns, or otherwise becomes disqualified, the superior courts of the several counties shall have full power and authority, in a summary manner, upon the petition of two or more of the parties interested in the trust or upon the petition of the sole party at interest and on such notice as the court shall direct, to appoint a new trustee or trustees in the place of the deceased, nonresident, resigned, or disqualified trustee or trustees.

Contrary to Ms. Munford’s argument, this section does not bar Ms. Maclellan from serving as the trustee. “[This section] applies where a trustee has died or removed beyond the jurisdiction of this State. The trustee is in life, and resided in Tennessee when made a trustee. So this section does not apply.” Caldwell v. Hill, 179 Ga. 417, 426 (2) (176 SE 381) (1934). (Compare King v. King, 228 Ga. 818, 819 (2) (188 SE2d 502) (1972) where the trustee, following her appointment, moved from Georgia to New York.)¹

We find no authority for disqualifying Ms. Maclellan from serving as the trustee merely because she is a nonresident.² The legislative protections for beneficiaries cited by the dissent severely limiting nonresident fiduciaries apply to executors and administrators of estates. There is good reason to distinguish the functions of executors and administrators from those of trustees. The duties of the former can be characterized as “closing-out” an estate, assuring the distribution of assets, etc., in an expeditious fashion. The duties of a trustee, however, may be, and often are, long-lasting. In many cases, a trustee is named because he has a personal concern for the beneficiary and a motivation to diligently carry out the management of a trust over the time required. In many cases, a nonresident is the only individual with such an interest and motivation. In general, a testator will name as trustee an individual or institution he desires to so serve, and in whom he has confidence, regardless of the residency of that individual or institution. The legislature has not restricted a trustee’s ability to make that choice in the instance of a nonresident, and we find no compelling reason to do so.

2. We find no merit to Ms. Munford’s contentions that the trial court abused its discretion by appointing a guardian ad litem for the child in this litigation, OCGA § 29-4-7, or by vacating the default by the bank. OCGA § 9-11-55 (b).

Judgment affirmed.

All the Justices concur, except Weltner, J., who dissents.

1 We note that under common law, it is not necessary that a trustee be a resident of the jurisdiction in which the trust is created and that the Restatement of the Law 2d, Trusts, § 94, specifically provides: “A natural person who does not reside in the State in which a trust is created and is to be administered and in which the trust property is situated can be a trustee.” See also Comment to Restatement of the Law 2d, Trusts, § 94.

The status of a trustee, nonresident at the time of appointment, is distinguishable from that of a trustee who is a resident at the time of appointment but who subsequently moves out of state. The fact that a trustee is close at hand may be a factor in naming a resident as trustee. Thus, the trustee’s later removal from the state may be sufficient reason for disqualification. On the other hand, residency is not a consideration if one names as trustee a person who is a nonresident at the time of appointment.

2 Indeed, some state statutes prohibiting nonresidents from serving as trustees have been ruled unconstitutional under the privileges and immunities clause. See generally Bogert, The Law of Trusts and Trustees, 2nd ed. revised (1977), § 132, p. 422, n.5; Scott, The Law of Trusts, 3rd ed. (1967), § 559, p. 3794.