Law School Case Brief
Michaud v. Forcier - 78 Mass. App. Ct. 11, 934 N.E.2d 860 (2010)
The law recognizes the existence of fiduciary responsibilities arising out of relationships of trust and confidence and provides a remedy against one who abuses the confidence reposed in him by another, turning it to his own advantage. Whether a relationship of trust and confidence exists is a question of fact, and may be found on evidence indicating that one person is in fact dependent on another's judgment in business affairs or property matters. One is not a fiduciary by virtue of being a family member, but a family member can become a fiduciary if a decedent is dependent on her in financial affairs.
A trust instrument may be reformed to conform to the settlor's intent. Most of the time, that rule is invoked to correct errors that occurred when the trust was created and produced a divergence between the settlor's intent and the terms of the trust. But a trust beneficiary can rescind or seek reformation of a transfer of a beneficial interest on the same grounds that would entitle the settlor to rescind or seek reformation of the trust itself, i.e., fraud, duress, undue influence, or mistake. A trust may be rescinded or reformed upon the same grounds as those upon which a transfer of property not in trust may be rescinded or reformed. Where no consideration is involved in the creation of a trust, it can be rescinded or reformed upon the same grounds, such as fraud, duress, undue influence, or mistake, as those upon which a gratuitous transfer of property not in trust can be rescinded or reformed. Under the parol evidence rule, if the manifestation of intention of the settlor is integrated in a writing, that is, if a written instrument is adopted by the settlor as the complete expression of his intention, extrinsic evidence, in the absence of fraud, duress, mistake or other ground for reformation or rescission, is not admissible to contradict or vary the written trust instrument.
As her years were advancing, Marianna Forcier (Marianna) placed her real estate in a nominee trust (trust), under the terms of which she retained a life estate in the property and her daughter, granddaughter, and grandson were remainder beneficiaries in equal shares. Later, however, Marianna made an inter vivos conveyance of some of the real estate to her granddaughter. After Marianna passed away, the granddaughter filed suit seeking termination of a trust, an accounting of rents, and declaratory relief. Defendants, the daughter and the grandson, on the other hand, counterclaimed for reformation of the trust's schedule of beneficiaries and conversion of a joint bank account. The Plymouth Division of the Probate and Family Court Department (Massachusetts) dismissed the granddaughter's claims, and removed her from the schedule of beneficiaries finding that Marianna intended that conveyance to be in lieu of her granddaughter's inheritance and ordered the granddaughter's removal from the schedule of trust beneficiaries. The judge also ordered the granddaughter to repay funds she withdrew from Marianna's bank account when Marianna died. The granddaughter appealed.
Did the court properly grant an order of reformation?
The appellate court held that the granddaughter owed the deceased a duty as a fiduciary personally interested in the execution of the land transfer to disclose fully all adverse legal effects of the deed or to cause her to obtain independent legal advice before execution. The granddaughter was aware of the trust and the terms of the trust. Despite this knowledge, the granddaughter did not inform the deceased about the need for all the beneficiaries' consent, did not inform the deceased about the way in which the land transfer would affect her estate plan, did not advise or assist the deceased in procuring her own attorney, and in fact, actually diverted the deceased from hiring the attorney who had previously prepared the deceased's estate plan. Because the deceased's intent was not carried out due to the granddaughter's breach of a fiduciary duty, the order for reformation of the trust was proper. The granddaughter was also properly ordered to repay the amount she withdrew from the joint account.
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