MAY 21, 2001 VOLUME 8, NUMBER 47
Ruth Chandler was 73 when she established her revocable trust in 1997. The New Jersey woman had no family, and so she named Summit Bank as trustee. She transferred about $1.7 million into the name of the trust. Three months later she revoked that trust and established a new one, this time naming her friends Charles Menagh and Earl Tiffany as trustees.
Summit Bank expressed concern about the possibility that Ms. Chandler might no longer be capable of making such a change in her estate plan. The bank filed a court action to determine whether Ms. Chandler could change her trust. After two months of negotiations Ms. Chandler and the bank agreed that Charles Menagh and the bank would serve together as co-trustees.
A year later Ms. Chandler’s mental and physical health began to decline even more seriously. Summit Bank filed a report with New Jersey’s Adult Protective Services office. After investigation that office determined that Ms. Chandler should have a guardian of both the person and property (what in Arizona would be called a guardian and conservator).
At a hearing on appointment of a guardian the bank indicated that it would decline to serve as guardian of the person because “we have had some problems with guardianships of the person.” Although several other interested persons had sought appointment on Ms. Chandler’s behalf, the judged decided to appoint the New Jersey Public Guardian to handle Ms. Chandler’s personal and financial affairs.
The Public Guardian decided that it would not be in Ms. Chandler’s best interests to have a guardian of her estate (conservator) and a trustee both charging fees to administer her assets. Over the bank’s objections the guardian revoked the trust and directed that all Ms. Chandler’s assets be transferred to it for future management.
Although the bank requested a hearing on whether the Public Guardian had authority to revoke Ms. Chandler’s trust, the guardianship judge simply upheld the Public Guardian’s decision. Summit Bank appealed, even as it began to transfer Ms. Chandler’s assets, now totaling over $2.4 million. The bank retained $100,000 of the trust as a “termination fee.”
The New Jersey Superior Court Appellate Division agreed with Summit Bank. The least restrictive involvement in her life would be to accommodate her wishes, said the appeals court, and the way to accomplish that would have been to appoint the Public Guardian as guardian, but to limit the office to controlling her health care, placement, and assets outside the trust. The guardianship order permitting revocation of the trust was reversed, and the Public Guardian instructed to return Ms. Chandler’s assets to the bank’s control. In the Matter of Chandler, March 13, 2001.
If the guardian had been able to show the court that it was in Ms. Chandler’s best interests to revoke her trust the judge could have ordered such a revocation, said the appellate court. Simply giving the guardian blanket authority to revoke trusts was too broad and did not help ensure Ms. Chandler’s guardianship would be the least restrictive possible.
