groverlegg
New Member
This is a mess I created, however I would like to clean it up and restore the income of the beneficiary who is now 86 years old.
1. I was appointed successor trustee for a trust for my step-grandmother after family member died (my father).
2. I had a limited understanding of the trust, mostly relied upon my father's explanation of the special circumstances of it's creation. He told me my grandfather set this up as a secondary source of income for my step grandmother, and as a resource for my father to conduct the family business.
3. Will provided special privileges for trustee including the right to co-mingle personal business funds with investments, borrow from trust, released from 'prudent man' rule.
4. Income beneficiary received steady payments in excess of required $500 per month for over 30 years, at year 33 there was a lapse in monthly distributions due to depletion of assets in dot-com investment by me.
5. Subsequent offer to resume payments when provision for restoring assets had been made, first payment sent to beneficiary with proviso that no further legal action be pursued (since investors agreed to provide funds for income, but not for legal contest fees).
6. Income damages to beneficiary less than $20,000 at that time. My assets essentially nil, attempting to restore assets of trust by subsequent business activities.
7. Beneficiaries attorney advised 84 year old beneficiary to ignore proposed settlement, and instead file Elder Abuse & fiduciary misconduct suit in inconvenient forum without (we contend) sufficient contacts for personal jurisdiction.
8. I ignored the foreign suit. I was attempting (24x7) to salvage the product development of the enterprise, and barely had enough income for basic food & shelter at the time.
9. Default judgment, $3-million on $300,000 in loans in California court.
10. Accrual to $5-million over the last 2 years.
11. Plaintiff attempting to have foreign judgment affirmed in my local venue, where original trustee appointment was made, and where case on behalf of trust is still open (after over 20 years). My claim is that she selected the venue after asking me to serve, and that all my activities as fiduciary took place here, even though the trust was originally incorporated in the neighboring state (California).
12. I am asking court to dismiss the foreign judgment on grounds of insufficient contacts with foreign venue, forum inconvenient, and failure to notify interested parties (6 residuary beneficiaries of trust, of which I am one)
13. I have stipulated as to the amount of the obligation, that it remains in good standing and am attempting to restore monthly income to beneficiary, plus principle amount of loans.
14. I have discovered that the original trust terms described in the Will were superseded by a compromise trust agreement when plaintiff threatened legal action against my grandfather's estate. I was unaware of this trust document, nor was I aware of her challenge to the original terms of the Will. Plaintiff was married (at age 46) to my grandfather (age 72) shortly after his wife of 40 years died. He died 8 months later after signing a pre-nup, which she sought to supersede.
15. None of these issues were ever challenged, and for over 30 years my father (previous trustee) and I provided her with a house and regular expense income. She also received substantial distributions from my grandfather's estate personally. She was treated as a member of the family. We took care of every need of hers, none of which was required in the trust document.
Summary: I made egregious errors, albeit I believed they were permitted under the terms of the Will, and that the investments were in the best interests of the grandchildren beneficiaries. (Having studied the law a bit since then, I now realize there was no way I had those special privileges, and that the provisions of the Will itself were probably improper, regardless of the second ammended trust.) After a period of two years during which her monthly distributions were interrupted, I was able to arrange for funds to resume the payments, and with good prospects of curing the arrears soon after that. Her attorney's recommendation that she ignore that good faith offer contributed to the complete failure of the venture in which essentially all of the funds of the trust had been placed, and which had a priority note payable back to the trust directly from income of the enterprise.
There are no 'hidden assets', nor was there any attempt to abscond with the funds. It was simply a bonehead move by me. My only real asset at this point is my professional skills, and this legal action is now seriously impacting my ability to do business. Her attorney is threatening to depose any and all of my person friends he can find, and all of my clients (which if he is allowed to proceed, will no longer be clients).
However, her attorney proceeded to run up in excess of $100,000 in legal fees (he claims), and obtained a default judgment which is accruing interest in excess of $500,000 per year. He attempted to have me charged with criminal elder abuse in my local venue, but local authorities declined to take action on his request after investigating the case and interviewing me. The remaining asset of the trust is her house, which I believe is worth roughtly $500,000. I do not know the size of her personal portfolio (based on stocks given her directly by my Grandfather) in 1966, but she told my mother at one time that it had appreciated to over $1,000,000 in value. I question that, but I believe she has substantial assets of her own, and these may be going to pay legal fees to this attorney.
She is now 86 years old (Russian, not familiar with business or legal practices in the US). My concern is that this attorney is following a course of action designed to maximize his fees, and overwhelm me with costly litigation. I acted as my own defense initially, but was able to persuade an attorney friend to help me defend the case.
I have considerable skills and experience in software development for the Internet, and learned some valuable lessons from our ill-considered venture. (BTW, 3 other investors put $750,000 in that venture as well, so it was not a frivilous enterprise, and simply failed to produce the expected returns as did many other dot-coms.) Absent the time-sink this case is creating, there is a reasonable prospect for me to a) restore her monthly distributions almost immediately, cure the distribution arrears probably in no more than a year, and hopefully restore the assets of the trust with interest over a period of a few years after that. This, it would seem to me, would represent her best interests, particularly given her age. Instead, her attorney continues to pursue a course which appears based on the assumption that I have $5-10 million stashed away somewhere. (Meanwhile I am living with and being supported by my 84 year old Mother while I work to re-constitute my consulting practice.)
My conduct was obviously negligent, albeit I contend it was not in any way malicious. I am concerned that my step-grandmother is under undue-influence by this attorney, and that he may have entered into a fee-agreement which guarantees his fees on the basis of the house (owned by the trust, but which she is entitled to live in for her lifetime). His failure to inform the other residuary beneficiaries of the trust of the suit he filed on her behalf in the foreign venue appears to have been improper, given that she herself selected the original venue (where I live) to ask the local court to appoint me as trustee. I believe he did so because had he informed the residuary beneficiaries, they most certainly would have pointed out to the current beneficiary that she already had very competent counsel in the local jurisdiction (a senior member of the largest firm in our city), and could very easily have proceeded here at minimal cost, and would have obviated the need to conduct expensive discovery, since all of my activities as trustee occurred here.
I would like to focus on restoring her monthly income and restoring the assets of the trust. Instead my ability to conduct business is being destroyed, and a foreign judgment is accruing interest at a rate which makes it effectively impossible for me to stay even with the accrual, much less pay down any principle or restore her income.
Any suggestions?
(thanks in advance)
1. I was appointed successor trustee for a trust for my step-grandmother after family member died (my father).
2. I had a limited understanding of the trust, mostly relied upon my father's explanation of the special circumstances of it's creation. He told me my grandfather set this up as a secondary source of income for my step grandmother, and as a resource for my father to conduct the family business.
3. Will provided special privileges for trustee including the right to co-mingle personal business funds with investments, borrow from trust, released from 'prudent man' rule.
4. Income beneficiary received steady payments in excess of required $500 per month for over 30 years, at year 33 there was a lapse in monthly distributions due to depletion of assets in dot-com investment by me.
5. Subsequent offer to resume payments when provision for restoring assets had been made, first payment sent to beneficiary with proviso that no further legal action be pursued (since investors agreed to provide funds for income, but not for legal contest fees).
6. Income damages to beneficiary less than $20,000 at that time. My assets essentially nil, attempting to restore assets of trust by subsequent business activities.
7. Beneficiaries attorney advised 84 year old beneficiary to ignore proposed settlement, and instead file Elder Abuse & fiduciary misconduct suit in inconvenient forum without (we contend) sufficient contacts for personal jurisdiction.
8. I ignored the foreign suit. I was attempting (24x7) to salvage the product development of the enterprise, and barely had enough income for basic food & shelter at the time.
9. Default judgment, $3-million on $300,000 in loans in California court.
10. Accrual to $5-million over the last 2 years.
11. Plaintiff attempting to have foreign judgment affirmed in my local venue, where original trustee appointment was made, and where case on behalf of trust is still open (after over 20 years). My claim is that she selected the venue after asking me to serve, and that all my activities as fiduciary took place here, even though the trust was originally incorporated in the neighboring state (California).
12. I am asking court to dismiss the foreign judgment on grounds of insufficient contacts with foreign venue, forum inconvenient, and failure to notify interested parties (6 residuary beneficiaries of trust, of which I am one)
13. I have stipulated as to the amount of the obligation, that it remains in good standing and am attempting to restore monthly income to beneficiary, plus principle amount of loans.
14. I have discovered that the original trust terms described in the Will were superseded by a compromise trust agreement when plaintiff threatened legal action against my grandfather's estate. I was unaware of this trust document, nor was I aware of her challenge to the original terms of the Will. Plaintiff was married (at age 46) to my grandfather (age 72) shortly after his wife of 40 years died. He died 8 months later after signing a pre-nup, which she sought to supersede.
15. None of these issues were ever challenged, and for over 30 years my father (previous trustee) and I provided her with a house and regular expense income. She also received substantial distributions from my grandfather's estate personally. She was treated as a member of the family. We took care of every need of hers, none of which was required in the trust document.
Summary: I made egregious errors, albeit I believed they were permitted under the terms of the Will, and that the investments were in the best interests of the grandchildren beneficiaries. (Having studied the law a bit since then, I now realize there was no way I had those special privileges, and that the provisions of the Will itself were probably improper, regardless of the second ammended trust.) After a period of two years during which her monthly distributions were interrupted, I was able to arrange for funds to resume the payments, and with good prospects of curing the arrears soon after that. Her attorney's recommendation that she ignore that good faith offer contributed to the complete failure of the venture in which essentially all of the funds of the trust had been placed, and which had a priority note payable back to the trust directly from income of the enterprise.
There are no 'hidden assets', nor was there any attempt to abscond with the funds. It was simply a bonehead move by me. My only real asset at this point is my professional skills, and this legal action is now seriously impacting my ability to do business. Her attorney is threatening to depose any and all of my person friends he can find, and all of my clients (which if he is allowed to proceed, will no longer be clients).
However, her attorney proceeded to run up in excess of $100,000 in legal fees (he claims), and obtained a default judgment which is accruing interest in excess of $500,000 per year. He attempted to have me charged with criminal elder abuse in my local venue, but local authorities declined to take action on his request after investigating the case and interviewing me. The remaining asset of the trust is her house, which I believe is worth roughtly $500,000. I do not know the size of her personal portfolio (based on stocks given her directly by my Grandfather) in 1966, but she told my mother at one time that it had appreciated to over $1,000,000 in value. I question that, but I believe she has substantial assets of her own, and these may be going to pay legal fees to this attorney.
She is now 86 years old (Russian, not familiar with business or legal practices in the US). My concern is that this attorney is following a course of action designed to maximize his fees, and overwhelm me with costly litigation. I acted as my own defense initially, but was able to persuade an attorney friend to help me defend the case.
I have considerable skills and experience in software development for the Internet, and learned some valuable lessons from our ill-considered venture. (BTW, 3 other investors put $750,000 in that venture as well, so it was not a frivilous enterprise, and simply failed to produce the expected returns as did many other dot-coms.) Absent the time-sink this case is creating, there is a reasonable prospect for me to a) restore her monthly distributions almost immediately, cure the distribution arrears probably in no more than a year, and hopefully restore the assets of the trust with interest over a period of a few years after that. This, it would seem to me, would represent her best interests, particularly given her age. Instead, her attorney continues to pursue a course which appears based on the assumption that I have $5-10 million stashed away somewhere. (Meanwhile I am living with and being supported by my 84 year old Mother while I work to re-constitute my consulting practice.)
My conduct was obviously negligent, albeit I contend it was not in any way malicious. I am concerned that my step-grandmother is under undue-influence by this attorney, and that he may have entered into a fee-agreement which guarantees his fees on the basis of the house (owned by the trust, but which she is entitled to live in for her lifetime). His failure to inform the other residuary beneficiaries of the trust of the suit he filed on her behalf in the foreign venue appears to have been improper, given that she herself selected the original venue (where I live) to ask the local court to appoint me as trustee. I believe he did so because had he informed the residuary beneficiaries, they most certainly would have pointed out to the current beneficiary that she already had very competent counsel in the local jurisdiction (a senior member of the largest firm in our city), and could very easily have proceeded here at minimal cost, and would have obviated the need to conduct expensive discovery, since all of my activities as trustee occurred here.
I would like to focus on restoring her monthly income and restoring the assets of the trust. Instead my ability to conduct business is being destroyed, and a foreign judgment is accruing interest at a rate which makes it effectively impossible for me to stay even with the accrual, much less pay down any principle or restore her income.
Any suggestions?
(thanks in advance)
