Master in Chancery Recommends Removal of Trustee Due to Hostility

Taglialatela v. Galvin, C.A. No. 5841-MA (May 14, 2013)

       In this case, after conducting a trial on the merits, Master Ayvazian has recommended removal of a trustee on the grounds that hostility between the beneficiaries  has interfered with the proper administration of the trust.

       The settlor and his wife had six children.  One of their daughters was named the trustee of the trust at issue.  The Master’s ruling pointed out that the attorney who drafted the trust agreement was at the time of the drafting romantically involved with the daughter that was named trustee by that agreement.  The settlor’s wife died a few years later and, approximately seven years later in 2009, the settlor’s health declined and a professional guardian company became his guardian. The settlor died in 2010. During the last years of the settlor’s  life quite a few heated disputes arose among the settlor’s children that focused on control of the settlor’s person and his property.

       One of the beneficiaries petitioned to remove the trustee on the grounds that the trustee might be self-dealing, that she refused to explain her actions, and because she was allegedly causing unnecessary expense for the beneficiaries. The only property in the trust was real property that had been sold in 2010. The trust now holds only the proceeds of that sale. The beneficiaries have yet to receive any distributions.The Master found that the settlor wanted his children to receive an inheritance after his death. But his probate estate had been exhausted to pay creditors.

       In reaching her ruling, the Court noted that “[i]t is not necessary for a court to establish that a trustee has committed a breach of trust if: ‘the court, having due regard for the expressed intention of the trustor and the best interests of the beneficiaries, determines that . . . there exists . . . hostility between the trustees and the beneficiaries that threatens the efficient administration of the trust. 12 Del. C. 3327(3)(c).’”

       Consequently, the Court found that it was in the best interests of the beneficiaries for the trustee to be removed and for a successor trustee to be appointed to wind up the trust as soon as possible.  The settlor had named a successor trustee (another daughter)  in the instrument, and the Master’s decision provides that that named successor trustee advise the Court within 30 days of the final order whether she is willing to accept appointment.  The Master also required the removed trustee to provide an accounting.