In re Estate of Janes case brief summary
681 N.E.2d 332 (1997)
CASE FACTS
Testator died leaving several trusts, including a marital deduction trust for the benefit of testator's wife. Petitioner executor failed to diversify the trust, which consisted of a large amount of one type of stock. Testator's wife, who was found to be very inexperienced when it came to financial decisions, sought to surcharge petitioner for losses incurred by the estate, during which time the value of the stock had dropped about one-third of its date-of-death value. Objectant personal representatives subsequently took over the cause of action against petitioner upon testator's wife's death.
DISCUSSION
CONCLUSION
Appeal court's decision affirming surcharge imposed on petitioner executor for failure to diversify testator's estate was affirmed because the court found that maintaining a concentration of one stock under the circumstances presented violated certain critical obligations of a fiduciary in making investment decisions under the prudent person rule. The court also affirmed the calculation of the surcharge as the amount of lost capital.
Suggested Study Aids For Wills, Trusts & Estate Law
681 N.E.2d 332 (1997)
CASE SYNOPSIS
Petitioner executor sought
review of an order by the New York Supreme Court, Appellate Division,
which affirmed a judgment imposing a surcharge against petitioner for
failure to diversify and inattentiveness to testator's estate.
Objectant personal representatives sought review of an order by the
lower court, which rejected a certain determination for the amount of
petitioner's surcharge.CASE FACTS
Testator died leaving several trusts, including a marital deduction trust for the benefit of testator's wife. Petitioner executor failed to diversify the trust, which consisted of a large amount of one type of stock. Testator's wife, who was found to be very inexperienced when it came to financial decisions, sought to surcharge petitioner for losses incurred by the estate, during which time the value of the stock had dropped about one-third of its date-of-death value. Objectant personal representatives subsequently took over the cause of action against petitioner upon testator's wife's death.
DISCUSSION
- The court affirmed the order of the appeals court which affirmed a surcharge awarded against petitioner because maintaining a concentration of one stock under the circumstances presented violated certain critical obligations of a fiduciary in making investment decisions under the prudent person rule.
- Petitioner failed to consider the investment in one stock in relation to the entire portfolio.
- The court affirmed the award established by the appeals court because the correct determination of damages was the amount of the capital lost and not lost profits or market index measure of damages.
CONCLUSION
Appeal court's decision affirming surcharge imposed on petitioner executor for failure to diversify testator's estate was affirmed because the court found that maintaining a concentration of one stock under the circumstances presented violated certain critical obligations of a fiduciary in making investment decisions under the prudent person rule. The court also affirmed the calculation of the surcharge as the amount of lost capital.
Suggested Study Aids For Wills, Trusts & Estate Law
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