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Keywords

fiduciarytrustwillfiduciary duty
settlementfiduciarytrustobjectionfiduciary duty

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Boston Safe Deposit and Trust Co. v. Boone, 21 Mass.App.Ct. 637, 489 N.E.2d 209

Facts

E.G. Boone and First National Bank of Venice, Florida, as executors of Bernice A. Pearson's estate, objected to the accounts of Boston Safe Deposit and Trust Company and Clifford H. Byrnes, trustees of a marital deduction trust. The executors argued that the trustees delayed unduly in liquidating the trust assets, which resulted in market losses that affected Mrs. Pearson's estate. The trust was funded with marketable securities and cash, and after Mrs. Pearson's death, the trustees faced claims from Brown University regarding the validity of her will. The trustees decided to hold the assets rather than liquidate them immediately, believing that the market would recover.

The ground of objection was that Boston Safe delayed unduly in liquidating the trust, with the ensuing market losses falling upon Mrs. Pearson's estate.

Issue

Did the trustees of the marital deduction trust breach their fiduciary duty by failing to liquidate the trust assets promptly upon the death of Mrs. Pearson?

Did the trustees of the marital deduction trust breach their fiduciary duty by failing to liquidate the trust assets promptly upon the death of Mrs. Pearson?

Rule

A trustee has a duty to consider liquidation of trust assets upon the falling in of a trust, but there is no absolute duty to liquidate immediately. Prudence may dictate that liquidation be deferred, especially in light of market conditions and pending claims regarding the trust.

There is, however, no iron or absolute duty to do so, and prudence may indeed suggest (or even demand) that liquidation be deferred.

Analysis

The court analyzed the trustees' decision to delay liquidation in the context of the market conditions and the pending claims from Brown University. The trustees had a reasonable basis for their decision, as the market was initially strong, and they believed that holding the assets would be in the best interest of the beneficiaries. The court noted that the trustees were not required to predict market movements and that their actions did not constitute a breach of trust.

The trustee did not foresee the slide from April through July, 1974, or the deep decline in August. It still considered that the best policy was to hang on, and the market did recover to some extent by February, 1975, when, settlement of the university's claim being in sight, the assets were liquidated.

Conclusion

The court affirmed the lower court's ruling, concluding that the trustees did not breach their fiduciary duty and were protected by the exculpatory clause in Mr. Pearson's will.

The judgments dismissing the executors' objections to the accounts and allowing the accounts are affirmed.

Who won?

Boston Safe Deposit and Trust Company and Clifford H. Byrnes prevailed in the case because the court found that they acted prudently and within their rights as trustees, without breaching their fiduciary duties.

Boston Safe recognized, as a general proposition, that upon the falling in of a trust (as upon the death of a life tenant like Mrs. Pearson), a trustee should consider itself-in the words of one of the trust officers-a 'stakeholder' with some obligation to 'back off to a conservative position.'

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