October 2013

Peierls Family Trusts Case Nos. 16810, 16811 & 16812 (October 4, 2013)

In a trilogy of opinions issued on October 4, 2013 (all of which addressed issues arising out of several consent petitions filed by a single family requesting that the Court of Chancery accept jurisdiction over, and then modify, thirteen trusts), the Delaware Supreme Court ruled that the power to appoint a trustee without geographic limitation includes the implicit power to change the law governing trust administration.

Primarily because the prospective Delaware trustees were not yet in place, the Supreme Court largely affirmed the Vice Chancellor’s finding that Delaware had no jurisdiction over the petitions. But in so doing, the Supreme Court notably ruled that a boilerplate governing law provision in the trust does not prevent a change in law governing administration.  Further, the Court instructed parties to play “pitch and catch” in situations where a foreign court has jurisdiction. In other words, parties are advised to ask permission from the court to which the trust is accountable for the trust to leave the state and to ask the court which will assume jurisdiction to accept it.

The two principal takeaways from these rulings in our opinion are: (1) appoint the Delaware trustee before asking Delaware to take jurisdiction, and (2) consider the Supreme Court’s language suggesting that parties more often utilize out-of-court options to achieve desired results.

The Supreme Court’s three opinions are attached in full to this page as a PDF.