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PEROSI v. LiGRECI
98 A.D.3d 230 (2012)
Appellate Division of the Supreme Court of New York, Second Department.
Decided July 11, 2012.
On June 3, 2010, 15 days after the execution of the amendment, the creator died. The creator did not sign the amendment.
At the time of the creator's death, the corpus of the Trust consisted of a $1,000,000 life insurance policy insuring the lives of the creator and his wife, who had predeceased him. On July 28, 2010, the attorney-in-fact and Nicholas Perosi, in his capacity as the new trustee under the amendment (hereinafter together the petitioners), filed the instant petition, inter alia, for an accounting from the trustee. The petitioners also sought to remove both the trustee and the successor trustee and to require them to turn over all Trust assets, property, and records. On September 27, 2010, the trustee moved to "set aside" the amendment, to restore him, as trustee, and to direct him, as trustee, to render an accounting. The trustee asserted that the Trust amendment was void because the Trust was irrevocable. In addition, the trustee contended that he had served faithfully from the date the Trust was created in 1991 until May 2010, when the amendment was executed. In opposition, the petitioners argued that EPTL 7-1.9 permitted the creator to amend the Trust during his lifetime upon the consent of all beneficiaries. The petitioners acknowledged that if the Trust language set forth requirements for an amendment, those requirements must be followed. The petitioners argued that since the Trust contains no such limiting language, the creator, acting through his attorney-in-fact, had the power to amend the Trust during the creator's lifetime, and thus, the amendment was valid. In reply, the trustee asserted that the petitioners' purported removal of him exceeded the petitioners' authority because they did not seek judicial intervention pursuant to EPTL 7-2.6.1 The trustee further contended that the petitioners engaged in self-dealing in order to deprive him of his commissions and to increase the size of the beneficiaries' shares. The Order Appealed From In an order dated February 14, 2011, the Supreme Court denied the petition, inter alia, for an accounting, and granted the trustee's motion, among other things, to set aside the amendment and for an accounting. The Supreme Court held that the creator intended for the Trust to be irrevocable and
that the Trust's language did not permit the creator, or his agent, to amend the Trust. Acknowledging that the creator could have amended the Trust pursuant to EPTL 7-1.9, the Supreme Court determined that the power of attorney granted the attorney-in-fact no power to amend estate planning devices that were created prior to the execution of a power of attorney. The Supreme Court reasoned that the power of attorney language grants "forward looking" powers, and it is silent as to the restructuring of past estate planning devices (Perosi v LiGreci, 31 Misc.3d 594, 599 [2011]). The Supreme Court also concluded that the statutory right to amend or revoke an irrevocable trust is a personal right, which, unless the trust or power of attorney states otherwise, may only be exercised by the creator.
1. Notably, pursuant to EPTL 7-2.6, any person interested in a trust can move to remove or suspend a trustee on the ground, inter alia, that the trustee violated his or her trust or threatened to violate it. In this matter, there is no claim that the trustee violated his fiduciary responsibilities.
2. Pursuant to EPTL 7-1.16, a creator of a revocable lifetime trust can amend such a trust by way of a specific reference in his or her will. Additionally, EPTL 7-1.17 permits a trust creator (or someone designated by a creator) to amend or revoke a revocable trust.
3. "Because `[t]he relationship of an attorney-in-fact to his principal is that of agent and principal ..., the attorney-in-fact must act in the utmost good faith and undivided loyalty toward the principal, and must act in accordance with the highest principles of morality, fidelity, loyalty and fair dealing'" (Matter of Ferrara, 7 N.Y.3d 244, 254 [2006], quoting Semmler v Naples, 166 A.D.2d 751, 752 [1990]). In addition, EPTL 2-1.11 (d) (6) permits an attorney-in-fact to renounce a disposition on behalf of a principal, with court approval.
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