The grieving Harry Berkowitz could hardly have imagined what would follow when he had three hats to wear under the law after his wife died in 2011. Her death triggered the creation of a marital trust that contained a General Power of Appointment, or GPOA. It empowered Harry to change her beneficiaries “to one or more persons… including the surviving spouse… outright.” This made him Harry the GPOA Powerholder. He was also Harry the Surviving Spouse and Harry the Trustee.
The couple’s daughter, Janice Tubbs, was to inherit whatever was left of the matriarch’s assets upon the death of Harry the Surviving Spouse. Janice objected in court to the work of Harry the Trustee. Harry the GPOA Powerholder responded by making himself the sole trust beneficiary instead of Janice.
Janice filed suit, claiming that in so doing, Harry the Trustee had breached his fiduciary duty.
A court dismissed her claim, stating that the GPOA gave Harry the Powerholder the “unfettered right” to direct Harry the Trustee to distribute trust assets to Harry the Surviving Spouse.
Janice appealed. The Court of Appeal echoed the reasoning of the lower court in dispensing with her arguments: First, Harry the Powerholder was acting in a nonfiduciary capacity when he designated himself the sole beneficiary. Second, Harry the Trustee did not breach his fiduciary duty by doing what the trust document expressly authorized.
In a sad afternote, the stress of the patricidal litigation with her father may have killed Janice. She died in 2019 without a will, leaving her daughters to carry on with her appeal in their capacities as co-personal representatives of her probate estate in what ended up being a losing case against their grandfather. The appeals court also ordered them to pay Harry’s legal costs.
Sit down with a reputable estate lawyer to spell out what roles you want your surviving loved ones to have when they’re carrying out your last wishes. Prepare the Harry and others in your estate plan for the inevitable by communicating your decisions while you can hear their objections. Tubbs v. Berkowitz, 47 Cal.App.5th 548 (2020).
About the Author:
John O’Grady leads a full-service estate and trust law firm in San Francisco. His practice includes Estate Planning & Administration, Probate and Trust Litigation.