On June 7, 2018, Buzz Aldrin, Presidential Medal of Freedom recipient and the second man to walk on the moon, filed a lawsuit against two of his children, Andrew and Janice Aldrin, and his former business manager, Christina Korp. The lawsuit responds to a May 2018 Florida Court filing in which Andrew Aldrin, Janice Aldrin, and Christina Korp requested appointment as Buzz Aldrin’s legal guardians due to Buzz’s “cognitive decline” and his recent episodes of paranoia and confusion. Buzz Aldrin’s lawsuit claims Andrew Aldrin and Christina Korp took control of his “personal credit cards, bank accounts, trust money, space memorabilia, space artifacts, social media accounts, and all elements of the…
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Guardianship and the Richest Woman in the World
On September 20th, Liliane Bettencourt, the richest woman in the world died at age 94. Scandals of several types plagued the last years of her life and the lives of those around her going as far as alleged campaign contributions in great excess of the legal limit to former president of France, Nicolas Sarkozy. Aside from the political scandals, Bettencourt was involved in intense family drama to put it mildly. The heiress to the L’Oreal fortune amassed an incredible amount of wealth and at her death was worth approximately $44 billion. Her father, and known Nazi sympathizer, started the company that owns brands such as Garnier and Lancome and…
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Breach of Trustees’ Fiduciary Duty – Part 3: Duty to Administer Trusts Prudently and Duty to Inform, Report, and Maintain Adequate Records
In Part 2 of this series, we examined trustees’ duties of loyalty and impartiality. This post will examine the duty to administer trusts prudently and Part 4 will discuss the duty to delegate – or not delegate – in more depth. The duty to administer trusts involves the basic values of good faith, while the duty to inform, report, and maintain adequate records involves the reasonableness of a trustee’s actions. While these principals seem straight forward, they are a bit nuanced in practice. Duty to Administer Trusts Prudently The duty to administer trusts prudently mandates trustees carry…
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Breach of Trustees’ Fiduciary Duty – Part 2: Duty of Loyalty & Duty of Impartiality
As we’ve mentioned in part 1 of this series, trustees are fiduciaries and, as such, trustees owe a variety of fiduciary duties to multiple parties. These obligations include both the duty of loyalty and duty of impartiality, which we will discuss this week. To prove a trustee breached of one of these duties, one must show three things: (1) the existence of a fiduciary relationship; (2) the breach of a fiduciary duty; and (3) damages proximately caused by the breach of the duty.[1] It is important to keep in mind that the express terms of the trust can modify…
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Breach of Trustees’ Fiduciary Duty – Part 1: General Considerations
This is the first of a four-part series examining trustee’s fiduciary duties and the circumstances that could result in litigation. To begin, we will discuss basic principles that will lay a groundwork to inform our larger discussion. What is a Trust and a Trustee?[1] A trust is a financial instrument or tool through which people can transfer their assets to others over time. People who create trusts are called “settlors,” because they “settle” or initially put assets into the trust. Those who stand to benefit from the assets in the trust are known as “beneficiaries.” The person…
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Seven Rules for Being an Attorney-In-Fact
Your aging parents just appointed you as their attorney-in-fact– now what? It is important to keep in mind a few simple rules to stay within the bounds of the law. Rule #1: Act in the principal’s best interests. The principal is the person that appoints the attorney-in-fact and specifies the financial authority they possess. Acting in the principal’s best interest is the golden rule of being an attorney-in-fact. For every situation in which you may exercise your rights in that capacity, ask yourself these three (3) questions: Is taking this action in the best interest of the…
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Mental Incompetency in Guardianship and Divorce
It is not uncommon for courts to name one’s spouse as their guardian, but what happens when the incompetent party wants to get divorced from his wife and guardian? Can one be incompetent, yet understand the consequences of and express a desire to get divorced? Carolyn, the wife of an eighty-eight year old Kentucky man, Elmer Riehle, petitioned the court to appoint a guardian for her husband for financial reasons – to protect both herself and Elmer.[1] Carolyn decided to file the petition after Elmer sent thousands of dollars of the couple’s money to an e-mail scammer claiming to…
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Eight Questions and Answers about Fiduciary Litigation
What is fiduciary litigation? Fiduciary litigation encompasses a wide range of legal actions including, without limitation, trust and estate litigation, will contests (also referred to as caveat proceedings), breach of individual and corporate fiduciary duty claims, and guardianship proceedings. Fiduciary litigation is becoming increasingly relevant as the baby boomer generation continues to age. What is a fiduciary? A fiduciary is an individual or corporation in whom another places trust and confidence to act in their best interest. Generally speaking, a fiduciary is tasked with prudently caring for the financial assets of another. What are the types of fiduciary relationships? Relationships created by statute, such as in…
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North Carolina Business Court Weights in on Attorneys’ Fees in Class Action Settlements
Recent decisions by the North Carolina Court of Appeals and North Carolina Business Court (NCBC) shed light on a previously unsettled question of law: when can a North Carolina trial court award attorney’s fees as part of a class-action settlement in the absence of additional statutory authority? Long-standing precedent is that a court can award attorneys’ fees to a prevailing party when statutorily authorized to do so.[1] This practice is known as the “American Rule.” The intended purpose of the American Rule is to encourage the conservation of judicial resources by promoting settlement and discouraging unnecessarily prolonged litigation.[2] Regarding…
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North Carolina Business Court Suggests a Willingness to Impose a Fiduciary Duty on Minority Shareholders
The North Carolina Business Court recently issued an opinion in which it suggested a willingness to adopt a position that “controlling” minority shareholders owe a fiduciary duty to their fellow minority shareholders.[1] The case arose out of a transaction between Reynolds American, Inc. (“Reynolds American”) and Lorillard, Inc. (“Lorillard”), funded in part by shares purchased by Reynolds American’s largest shareholder, British American Tobacco, p.l.c. (“British American”). Reynolds American was formed in 2004 when R.J. Reynolds Tobacco Company acquired British American’s United States subsidiary. British American obtained a forty-two percent (42%) stake in the newly formed Reynolds American. At that…
