Yes. The person managing the trust had a duty to actively check on Cappy's financial situation. The whole point of the trust was to keep Cappy comfortable, and the manager, Mr. Farr, couldn't do his job if he didn't know Cappy was struggling. By not asking, Mr. Farr made a mistake and breached his duty. However, the will had a special 'protection clause' that said Mr. Farr couldn't be sued for mistakes unless he did something intentionally wrong or truly reckless. Because his mistake was more like negligence than malice, he doesn't have to pay from his own pocket. The right thing to do is to use the money still in the trust to pay back Cappy's estate for the value he lost by having to give away his house.

Yes, Mr. Farr was supposed to check on Cappy's financial situation because Sara's will said Cappy should be taken care of in the way he was used to living. Mr. Farr didn't do his job right by not looking into Cappy's needs and by not giving him enough money to keep the house. But the rule in the will that protects Mr. Farr from getting in trouble is still okay, because there's no proof he did anything wrong when putting that rule in the will. The right thing to do isn't to give the house to Margaret, but to say any money that should have been given to Cappy for his care should now go to the people who get his things after he died. Mr. Farr won't get in big trouble himself because of the rule that protects him, since there's no proof he misused his power as Sara's lawyer when he wrote that rule in her will.

Under Massachusetts law, an exculpatory clause is enforceable unless there is evidence of overreaching or abuse by the trustee in obtaining the insertion of the clause in the instrument.

—validated an exculpatory clause that was drafted by settlor' s attorney, who was also named trustee.

Such consideration must be "viewed in light of [the beneficiaries'] assets and needs, when measured against the assets of the trust" (citation omitted).

When the distribution is subject to the trustee' s discretion, for instance, a beneficiary can bring suit against the trust (and the trustee) seeking a larger distribution to herself.

—case, the trustee had drafted the exculpatory clause into the will that contained provisions creating a testamentary trust.

As a trustee, he knew or should have known that a trustee has the discretionary power, exercised with "[p] rudence and reasonableness,"

That [the beneficiary] assented to the accounts is also no bar to recovery by his estate. The judge found that he was in the dark as to his rights to receive principal

Trust provided “after having considered the various available sources of support for him, "the trustees may invade the principal. Trustees had a duty to inquire into the beneficiary's needs

—finding that "a trustee, holding a discretionary power to pay principal for the'comfortable support and maintenance'of a beneficiary...[violated his] duty to inquire into the financial resources of that beneficiary so as to recognize his needs

Yes. A trustee with discretionary power to make payments for a beneficiary's support has an affirmative duty to inquire into the beneficiary's needs. The trust's language directing payments for 'comfortable support and maintenance' establishes an ascertainable standard based on the beneficiary's normal standard of living, and the trustee's discretion is not absolute. To exercise this power with the required prudence and reasonableness, the trustee must be informed about the beneficiary's financial circumstances; failing to inquire is a breach of trust. Farr breached his duty by not investigating Cappy’s needs, which led to Cappy's conveyance of his home. However, the exculpatory clause in the will, which protected the trustee from liability except for 'willful neglect or default,' is effective because there was no evidence it was inserted through an abuse of Farr's fiduciary relationship with Sara Marsman. Therefore, while Farr breached his duty, he is not personally liable. The proper remedy is to pay Cappy's estate from the remaining trust principal an amount equal to what should have been distributed to allow him to keep his home.

Yes, the trustee had a duty to inquire into Cappy's financial resources because the will's language required maintaining the life beneficiary according to his accustomed standard of living. The trustee's failure to fulfill this duty of inquiry and to distribute sufficient principal to enable Cappy to retain the marital home constituted a breach of trust. However, the exculpatory clause in the will, drafted by the trustee who was also the settlor's attorney, is enforceable as there was no evidence of overreaching or abuse in its insertion. The appropriate remedy is not to order the property conveyed to Margaret, but rather to impress a constructive trust on the amounts that should have been expended for Cappy's benefit, payable to his estate from the remainder of his trust. The trustee's personal liability is limited by the exculpatory clause, which is effective in the absence of evidence that it was obtained through an abuse of fiduciary relationship at the time the will was created.

Marsman v. Nasca

Case Podcast

Rule of Law:

The Legal Principle

Facts:

Procedural Posture:

How It Got Here

Issue:

Legal Question at Stake

Opinions:

Majority, Concurrences & Dissents

Analysis:

Why This Case Matters

Gunnerbot