In the Lawyers Weekly (11/25/19) under Verdicts & Settlements:
Mimi Greenberg died in 1974 and was survived by her spouse, defendant Nathan Greenberg and their two adult children, plaintiffs Ruthanne Miller and Henry Greenberg.
Mimi had executed a trust agreement with defendant Nathan as one of three initial co-trustees. Years later, following the death of one of the initial trustees, defendant Agnes Kull was appointed as a co-trustee.
The trust provided that there would always be three trustees in office and that, in the event a co-trustee was unable, unwilling or ceased to serve in that capacity, the remaining co-trustees would appoint a replacement.
In addition to being appointed an initial trustee, Nathan was named beneficiary of the trust, as were plaintiffs Ruthanne and Henry. Nathan, as a beneficiary, was entitled to distributions only as the other trustees deemed necessary or advisable for health, comfort, support and reasonable enjoyment in life, taking into consideration any other income or assets available to him, to live in the same manner and enjoy the same comforts to which he was accustomed during Mimi's lifetime. Further, Nathan was prohibited from participating as a trustee in any decision to make such a distribution to himself.
The beneficiaries' claims against Nathan and Agnes principally arose out of:
(1) the distribution of trust assets to Nathan as beneficiary of the trust in violation of the terms of the trust. Specifically, the judge ruled that Nathan enjoyed a much more affluent lifestyle following Mimi's death and therefore, did not require the distributions to maintain the lifestyle to which he had become previously accustomed. Further, the distributions were made in violation of language in the trust instrument forbidding Nathan from making any decisions as trustee concerning distributions to himself as a beneficiary;
(2) the investment of trust assets in different Ponzi schemes. The judge ruled that the trustees' investments were made negligently and in breach of the trustees' fiduciary duties and the Massachusetts Prudent Investor Act. Specifically, the court found that Nathan breached his fiduciary duty to the trust when he failed to investigate adequately the investment strategies and allowed his decision to participate in the risky investments to be motivated by greed. Agnes violated her fiduciary duties by disregarding her obligations to exercise reasonable care, skill and caution to preserve the asets of the trust in that her passive disregard of the risks that Nathan's actions posed to the assets of the trust jeopardized the trusts' interest and led to losses;
(3) the failure of both Nathan and Agnes to consult with the third co-trustee as to the administration of the trust and, when that trustee resigned, to appoint a successor trustee; and
(4) the trustees' failure and refusal to account to the beneficiaries.
The action was originally brought by Nathan and Agnes seeking a declaration that their actions had been in compliance with the terms of the trust, which was ultimately dismissed. The plaintiffs asserted counterclaims, which formed the basis of the judgment. Further, since the commencement of the action, both Nathan and Agnes died and the representatives of their respective estates have been substituted as parties.
