{"id":109,"date":"2016-05-10T12:32:55","date_gmt":"2016-05-10T12:32:55","guid":{"rendered":"https:\/\/www.apslaw.com\/its-your-business\/?p=109"},"modified":"2025-08-01T13:50:48","modified_gmt":"2025-08-01T17:50:48","slug":"supreme-court-decision-establishes-new-law-concerning-the-rights-of-trustees-in-rhode-island","status":"publish","type":"post","link":"https:\/\/www.apslaw.com\/its-your-business\/2016\/05\/10\/supreme-court-decision-establishes-new-law-concerning-the-rights-of-trustees-in-rhode-island\/","title":{"rendered":"Supreme Court Decision Establishes New Law Concerning The Rights Of Trustees In Rhode Island"},"content":{"rendered":"

In a case of first impression, the Rhode Island Supreme Court recognized a statutory right for trustees to recover their attorneys\u2019 fees when a trust beneficiary refuses, without any basis, to release the trustee of his or her fiduciary duty.\u00a0 See In re: The Janet S. Bagdis Living Trust<\/em>, No. 2015-40-Appeal (\u201cIn re Bagdis<\/em>\u201d).\u00a0 Thus, the Supreme Court\u2019s decision provides fiduciaries with considerable recourse when a beneficiary, for no legitimate reason, obstructs or otherwise fails to cooperate with a trustee\u2019s administration of a trust.<\/p>\n

In In re Bagdis<\/em>, the trustee commenced suit in Rhode Island Superior Court after having spent years attempting to distribute the assets of the trust.\u00a0 While three of the four trust beneficiaries had accepted their respective shares of the trust, one trust beneficiary repeatedly refused to respond to communications from the trustee and refused to release the trustee from personal liability in exchange for a distribution of the trust assets.<\/p>\n

In the Superior Court, the trustee sought (1) permission to deposit the beneficiary\u2019s trust share into the Superior Court registry, (2) approval of the proposed distribution of the trust, and (3) an award of the trustee\u2019s attorneys\u2019 fees.\u00a0 The Superior Court granted all of the trustee\u2019s requested relief; the beneficiary appealed.<\/p>\n

Before the Supreme Court, the trustee argued that R.I. Gen. Laws \u00a7 18-6-2 authorizes a trustee to deposit a beneficiary\u2019s share of an estate or trust and to have the trustee\u2019s accounting approved by the court when a beneficiary cannot \u201cfor any reason\u201d discharge a trustee of his or her fiduciary duty.\u00a0 The trustee further argued that R.I. Gen. Laws \u00a7 18-6-2 authorizes a trustee to charge its attorneys\u2019 fees against the beneficiary\u2019s trust share when the circumstances warrant such fee shifting.<\/p>\n

The Supreme Court agreed.\u00a0 In addressing an issue of first impression, the Court held that if a trust beneficiary refuses to release the trustee of personal liability in exchange for a distribution of trust assets, the trustee may deposit the beneficiary\u2019s share into the court registry and seek an order permitting the trustee to charge its attorneys\u2019 fees against the beneficiary\u2019s share.\u00a0 In doing so, the Supreme Court observed that R.I. Gen. Laws \u00a7 18-6-2 \u201cstrikes an appropriate balance between incentivizing an individual to serve as trustee, by ensuring that a trustee does not face the specter of future personal liability, while also providing a beneficiary with the opportunity to demonstrate the trustee\u2019s liability for any potential breach that may have occurred before the assets were deposited in the court\u2019s registry.\u201d\u00a0 In re: The Janet S. Bagdis Living Trust<\/em>, No. 2015-40-Appeal at 12.<\/p>\n

While the Court recognized that R.I. Gen. Laws \u00a7 18-6-2 authorizes a trustee to seek an order permitting the trustee to charge its attorneys\u2019 fees against the beneficiary\u2019s share, it was careful to note that such an order should only issue \u201cin light of reason as applied to all the facts and with a view to the rights of all the parties to the action while having regard for what is right and equitable under the circumstances and the law.\u201d\u00a0 Id<\/em>. at 13.<\/p>\n

Applying that standard to the facts of In re Bagdis<\/em> case, the Court concluded that the trustee could charge her attorneys\u2019 fees against the beneficiary\u2019s trust share.\u00a0 In so concluding, the Supreme Court recognized that any delay in the distribution of the beneficiary\u2019s share was \u201cthe result of her own recalcitrance, her refusal to respond to notices, her requests for continuances, and her refusal to sign the release after [the Trustee\u2019s] continued efforts to make contact with her in an attempt to distribute the funds.\u201d\u00a0 Id<\/em>. at 13.\u00a0 The Court was also persuaded by the fact that the beneficiary offered no legitimate reason for her refusal to sign the release and that if the beneficiary had signed the release, the litigation would not have been necessary.\u00a0 Id<\/em>.<\/p>\n

The Supreme Court\u2019s decision in In re Bagdis<\/em> case represents a new benchmark for trustees in Rhode Island and establishes standards that a trustee and a trustee\u2019s counsel may follow when a beneficiary refuses to release a fiduciary of any liability.<\/p>\n

In In re Bagdis<\/em>, the trustee was represented by Adler Pollock & Sheehan attorney Joseph R. Marion III in the Rhode Island Superior Court and attorneys Nicole J. Benjamin and Marion on appeal before the Supreme Court.<\/p>\n","protected":false},"excerpt":{"rendered":"

In a case of first impression, the Rhode Island Supreme Court recognized a statutory right for trustees to recover their attorneys\u2019 fees when a trust beneficiary refuses, without any basis, to release the trustee of his or her fiduciary duty.\u00a0 See In…<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":true,"footnotes":""},"categories":[54],"tags":[56,57,55],"class_list":["post-109","post","type-post","status-publish","format-standard","hentry","category-trusts-and-estates","tag-fiduciary-duties","tag-release","tag-trusts-and-estates"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/posts\/109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/comments?post=109"}],"version-history":[{"count":0,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/posts\/109\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/media?parent=109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/categories?post=109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.apslaw.com\/its-your-business\/wp-json\/wp\/v2\/tags?post=109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}