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In re Trust of Newman

Supreme Court of Vermont

February 27, 2015

In re Trust of Virginia B. Newman

On Appeal from Superior Court, Windsor Unit, Civil Division Harold E. Eaton, Jr., J.

Shannon A. Bertrand and John C. Newman of Kenlan, Schwiebert, Facey & Goss, P.C., Rutland, for Appellant.

W. E. Whittington of Whittington Law Associates, PLLC, Hanover, New Hampshire, and Daphne Moritz of Melendy Moritz PLLC, Woodstock, for Appellee.

PRESENT: Dooley, Skoglund and Robinson, JJ., and Griffin, Supr. J., and Morse, J. (Ret.), Specially Assigned


¶1. Roger W. Lamson, Jr., former co-trustee of a revocable trust established by his mother Virginia B. Newman, appeals an order of the superior court, civil division, granting Roger’s brother, Frank B. Lamson, summary judgment with regard to Roger’s de novo appeal from an order of the probate division concluding that Roger lacked standing to bring his breach-of-trust action against Frank. For the reasons explained below, we dismiss the appeal as moot.

¶ 2. Virginia, who died on February 13, 2014 at the age of ninety-eight, created a trust in the mid-1980s after the death of her third husband. [1] Initially, she was the sole trustee, but in 1989 she resigned, and Roger was appointed sole trustee. From 1992 until 2001, Roger served as co-trustee, along with Virginia and Bank of Boston. In 2001, Roger was removed as co-trustee. In 2003, the trust was amended again, with Virginia, Roger, Frank, and Bank of America serving as co-trustees.

¶ 3. In January 2012, Roger filed a petition for accounting with the probate division based on his ongoing concerns about unexplained disbursements from the trust principal. He was suspicious that Frank had been using trust funds for his own benefit. In July 2012, Roger filed a complaint for breach of trust against Frank with the probate division.

¶ 4. In February 2013, Frank petitioned the probate division to remove Roger as co-trustee of the trust. On March 12, 2013, the probate division issued an order that: (1) removed Roger as co-trustee; (2) accepted Frank’s resignation as co-trustee; (3) removed Virginia as co-trustee based on its contemporaneous order appointing a guardian for her; (4) accepted Bank of America’s resignation as trustee; and (5) appointed Trust Company of Vermont (TCV) as sole trustee in accordance with TCV’s conditions that Roger and Frank be removed as co-trustees, that neither of them have a power of attorney over Virginia’s financial affairs, that TCV not be responsible for any acts or omissions of any predecessor trustee, and that TCV not have any duty to inquire into the administration or accounting of any predecessor trustee.

¶ 5. The probate division explained that appointing TCV as sole trustee would “remove the funds and their management from the ever escalating conflict between Roger and Frank, ” which had impacted their mother personally. It noted that neither Bank of America nor TCV was willing to work with Roger, whose “own waffling” on financial decisions had “helped to prolong the chaos that seems to surround administration of the trust.” The probate division concluded that appointing a neutral financial institution as sole trustee was in the best interests of all of the trust beneficiaries, given the ongoing conflict between Roger and Frank, Frank’s willingness to resign as long as Roger was removed, and the absence of evidence that any institutional trustee would be willing to work with either of them as co-trustees under the circumstances.

¶ 6. Roger appealed the probate division’s order to the civil division. [2] On April 16, 2013, the probate division lifted the automatic stay of its decision removing Roger as co-trustee, thereby making his removal effective immediately. The following day, Roger appealed the decision to lift the stay. On April 30, 2013, the civil division ordered the completion of discovery in the trust case by August 1, 2013. In two separate orders issued in May 2013, the civil division ruled that Roger’s appeal of the probate division’s order lifting the stay did not serve to create a new stay but provided Roger the opportunity to request a hearing on whether the automatic stay should be reinstated. Roger did not take advantage of that opportunity.

¶ 7. Meanwhile, in the breach-of-trust case that remained with the probate division, Roger obtained access to the last of the trust accounts and had an accountant prepare a forensic accounting report. In August 2013, Frank filed a motion with the probate division to either substitute Virginia’s guardian as the petitioner or dismiss the case based on Roger’s lack of standing. In a November 19, 2013 decision, the probate division ruled that: (1) the issue of Roger’s standing with respect to his petition for an accounting was moot because he had obtained all of the information necessary for an accounting; (2) Roger, as a former co-trustee and a remainder beneficiary to a revocable trust, had no standing to pursue his breach-of-trust action; (3) Virginia’s guardian, Beth Barrett, was authorized to pursue the pending breach-of-trust action; and (4) that action would be dismissed if the guardian did not substitute herself as the petitioner in the action within the next thirty days.

¶ 8. In so ruling, the probate division noted that Roger had “essentially conceded” during an April 3, 2013 status conference that he did not have standing as a former trustee to pursue the breach-of-trust action. Regarding Roger’s status as a remainder beneficiary, the probate division ruled that, under Florida law, as long as the trust was revocable, the trustee owed a duty only to the settlor and not to any remainder beneficiaries. It rejected on two grounds Roger’s argument that he gained standing when Virginia lost testamentary capacity: (1) although the probate division found that Virginia was in need of a guardian, no court had determined that she had lost testamentary capacity; and (2) in any event, neither Florida nor Vermont had adopted language from the Uniform Trust Code allowing remainder beneficiaries to assert their rights when a settlor of a revocable trust was deemed to have lost her testamentary capacity. Hence, the probate division concluded that no duty was owed to Roger, as a remainder beneficiary, as long as Virginia was alive.

¶ 9. Moreover, the probate division ruled that Virginia’s guardian could maintain an action for breach of trust, and that dismissing Roger as an interested party would not prevent Virginia, through her guardian, from asserting her trust interests. In short, while agreeing with Roger that there must be a remedy for a breach of trust, the probate division concluded that Virginia’s guardian could pursue such a remedy, but that, as a remainder beneficiary, Roger had no standing to do so prior to ...

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