March 2021

IMO The Jeannette T. McDowell Trust U/A 5/1/1996, C.A. No. 2019-0515-PWG (March 8, 2021)

        The order to be discussed resulted from the filing of Exceptions to the Master’s recommendations.  The facts of the case are basically these. In failing health, Donald, then 88 years old, petitioned the Court of Chancery either to terminate the Trust or to appoint a substitute trustee. All constituents with an interest, including Mr. McDowell, his son and the living remainder beneficiaries were given notice. Mr. McDowell and his son appeared at the October 31, 2019 hearing on the Petition and contended that the Trust should be terminated. They also both opposed the appointment of a substitute trustee. More specifically, Mr. McDowell maintained the Trust should be terminated and the corpus of the Trust should immediately be distributed 50% to him and 50% to his son.

       After a hearing, the Master recommended that Donald be relieved as trustee and that the Petition to terminate the trust be denied. The Master did recommend that the alternative Petition seeking an order appointing a substitute trustee, namely Supportive Care Solutions, Inc. (“Supportive Care”), be granted.  It is important to mention that the record reflected that “Counsel for Donald spoke with 25 qualified trust institutions. For various reasons, none would agree to serve.”

       Mr. McDowell filed exceptions to the Master’s decision. In essence, Mr. McDowell reiterated his position that the Trust should be terminated and its corpus distributed immediately to him and his son. As for the appointment of Supportive Care as substitute trustee, Mr. McDowell’s principal objection was that he had “never heard of” Supportive Care prior to the filing of Donald’s Petition.

       After a de novo review, the Vice Chancellor ruled that nothing in the Trust “suggests the settlor was comfortable turning over the corpus of the Trust directly to these beneficiaries. Nor is there evidence the settlor intended the corpus of the Trust to be distributed directly to Mr. McDowell and his son without regard for the remainder beneficiaries. Thus, the Trust itself revealed the settlor would not have supported termination of the Trust under the circumstances.”

       The Vice Chancellor also found,

              "[that the Master was correct in concluding] that all reasonable efforts had been made to comply with the settlor’s intent with respect to the appointment of a successor trustee. But no institutional trustee that met the criteria was willing to serve, thus revealing it was impossible to fulfill the letter of the Trust regarding the appointment of a successor trustee. There was no meaningful challenge to that conclusion offered at the hearing, and none has been offered since. Finally, the Master reviewed the qualifications of the proffered substitute trustee, Supportive Care, and concluded that its extensive experience serving as fiduciary in its role as guardian of the property of adult wards made it a worthy candidate to serve as trustee of the Trust under the circumstances."

       In that regard, the Vice Chancellor also added, “failing the agreement of a trust institution meeting the criteria stated in the Trust to serve as trustee, Supportive Care is a qualified substitute trustee given its extensive experience serving in a fiduciary capacity in the protection and administration of property for the benefit of others.”