Lawsuits and disputes over trust administration can persist years after its creation and the settlor’s death. Trust litigation is not limited to Minnesota, but can occur across the country.
Two duPont heirs are engaged in a legal battle over alleged mismanagement of a family trust created to provide retirement benefits to family household employees. The trust was created by Mary Chester duPont Clark 70 years ago, with DuPont corporate stock and its beneficiaries including butlers, maids, gardeners and landscapers who worked for the household at that time along with workers employed by her children and grandchildren. The stock became worth over $6 million.
DuPont Clark’s grandchildren and two of their employees allege mismanagement by the pension trust’s administrators and that the operators of the trust paid individuals who were ineligible to receive benefits. This allegedly reduced the pension trust’s assets which is leading to its insolvency. The plaintiffs also claim that qualified individuals were denied benefits, and that the fund does not comply with the Employee Retirement Income Security Act of 1974, a federal law which regulates pension plan funding and participation.
Defendants include a Greenville-based corporation which operated the pension trust between 1989 and 2015, the fund’s current manager, a Delaware attorney who oversees the Chichester duPont Foundation’s grant distributions and the current sole trustee of the trust.
The defendants sought dismissal and claimed that ERISA is inapplicable because the fund is not a pension but a Delaware statutory trust. ERISA applies to trusts created by a private-sector employer with minimum funding, according to their defense.
A Maryland resident filed the lawsuit there because many of the employees receiving benefits from the trust live in that state. The defendants also argued that they have no standing to pursue the lawsuit, and that Maryland was an inappropriate jurisdiction for the suit because the trust was created in Delaware.
A Maryland federal court judge ruled that the case should be transferred to a Delaware federal court because the trust was always administered in that state, duPont Clark was a Delaware resident when it was established, shares of stock in a Delaware company funded it and some of the beneficiaries live there. Also, a court familiar with Delaware trust law should rule on legal matters.
Creation and oversight of a trust may be complicated. An attorney can help assure that their creation and administration can help avoid trust disputes.
Source: The News Journal, “DuPont heirs’ pension suit transferred to Delaware,” Jeff Mordock, March 21, 2017