In a current opinion, the Court of Appeals of Tennessee reviewed an estate case involving the distribution of assets in a testamentary trust. In the matter of In re Estate of Culp (Tenn. Ct. App. May 12, 2016), the decedent’s will provided for her real property to be left in a trust established for the benefit of her children and grandchildren. After the will was admitted to probate, the trustee filed a petition seeking authorization to sell the decedent’s real and personal property, over the objection of the beneficiaries. The trustee argued that the sale was necessary to avoid reoccurring expenditure and expenses, prevent waste, and ensure sufficient funds existed to pay debts and protect the value of the estate.
The trial court found that the will expressly provide the trustee with the unrestricted power to sell all or part of the estate’s property without judicial authorization. As a result, the trial court held that the trustee was not required to seek judicial authorization prior to selling the property. The court went on to find that it was consistent with her duties as a fiduciary, due to her inability to get insurance coverage on the property and the reoccurring expenses associated with maintaining it. The beneficiaries subsequently sought review from the appeals court.
On appeal, the court found that the language of the will was unambiguous and clearly reflected the decedent’s intent to leave all of her property in trust for the benefit of the named beneficiaries until they reached the age of 30. The court explained that although the beneficiaries turned 30 prior to the time the trust took effect, thus accomplishing its purpose and terminating the trust, the trustee’s powers continued to complete her duties in winding up the administration of the trust and distributing its assets in a manner consistent with the terms of the trust and the interests of the beneficiaries.
Under Tennessee law, the trustee may distribute the property by transferring it to the beneficiaries as tenants in common, dividing the property into several parts and transferring them in kind to each of the several beneficiaries, or selling the property and dividing the proceeds among the beneficiaries. Unless limited by the trust, the trustee has broad discretion in choosing a method of distribution that is fair and reasonable under the circumstances.
In In re Estate of Culp, the appeals court agreed that the trustee was authorized to sell the trust property without seeking judicial approval, pursuant to the terms of the trust. Furthermore, the court agreed that converting the estate’s property into cash was necessary to prevent waste and protect the value of the estate. Therefore, the court affirmed the judgment of the trial court.
A knowledgeable estate planning attorney can assist you in creating a will or testamentary trust, as well as anticipate any issues that may arise during the administration of your estate. At the Nashville firm of Martin Heller Potempa & Sheppard, our experienced attorneys can represent clients involved in probate litigation and many other legal matters, including personal injury claims and family law cases. To discuss your estate planning goals with the legal professionals at Martin Heller Potempa & Sheppard, call (615) 800-7096 or contact us online.