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Koste v. Turski

A-1068-08T2 (N.J. Super. App. Div. 2009) (Unpublished)

POWERS OF ATTORNEY — Where a trust agreement is not ambiguous and is enforceable by its terms, the trustee may transfer property, even to the trustee’s own children, if the trust grants the trustee the absolute discretion to do so.

A woman executed a general Power of Attorney naming her daughter as attorney-in-fact. The woman, through her attorney-in-fact, created an irrevocable trust and named her daughter as the primary beneficiary and sole trustee having absolute discretion to dispose of the income and the corpus of the trust. The daughter had several children who were contingent beneficiaries. Through a series of conveyances, the mother, as grantor, and the daughter, as trustee, conveyed trust property to the daughter, individually, and to the daughter’s only surviving son (but not to her daughter). One of the trustee’s daughters, who was also a trust beneficiary, sued to void the transfer out of the trust.

The Chancery Division dismissed the complaint, determining that the conveyances out of the trust were made pursuant to the trustee’s authority. It realized that the grantor had one child, who had several children. It noted that the grantor, for reasons that did not appear on the record, gave her only child a general power-of-attorney which, by its terms, was broad enough to permit her to create, as attorney-in-fact for her mother, an irrevocable trust into which assets were placed. The Court held that the grantor’s daughter was authorized to act for the trust without limitation. The Court found nothing before it that would suggest any basis to challenge the validity of the trust or the power-of-attorney. The trust permitted the trustee to have sole and unlimited discretion to distribute some, any, or all of the assets of the trust for her care, comfort, and support. Although there was no explanation as to why the trustee transferred the property and excluded her own daughter, the Court held that issue was not before the Court. The Court refused to ascertain the intent of the grantor or the trustee when the terms of the trust were clear. Since the trust was not ambiguous, and was enforceable by its terms, and since the trustee was authorized to do as she did, the Court refused to void the transfer. The trustee’s daughter appealed.

The Appellate Division affirmed for substantially the reasons expressed by the lower court. It rejected the claim of the trustee’s daughter that her own mother, as trustee, revoked the trust by improperly depleting the trusts assets. The Court also rejected the allegations of the trustee’s daughter that the trustee had an obligation not only to herself as a primary beneficiary, but also to the contingent beneficiaries not to act in a self-serving manner.

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