Master Concludes That Section 3546 Doesn’t Bar Claim

Delaware Fiduciary Litigation Blog

Posted April 9, 2021

Amy Knapp Rumford v. Leslie Gay Knapp Marini, et al., C.A. No. 2018-0563-PWG (April 5, 2021)

            In this case, Master in Chancery Griffin ruled on the applicability of 12 Del. C. §3546 and the doctrine of laches to co-grantor trusts. Here, Plaintiff challenged the validity of a Joint Trust and Deed, arguing that one of the co-grantors lacked capacity at the time of execution. Plaintiff filed a complaint on July 30, 2018 and an amended complaint on October 31, 2019. Defendants filed a motion in limine, which the Court treated as a motion for partial summary judgment, stating that Plaintiff’s claims were time-barred by 12 Del. C. §3546 and laches.

            12 Del. C. §3546 provides, in pertinent part, that a judicial proceeding to contest whether a revocable trust was validly created must be initiated no later than “[t]wo years after the trustor’s death.” The first grantor, whose capacity is the subject of the complaint, died on March 3, 2015, and the other grantor died on December 20, 2017. Defendants argued that the two year time limit placed on plaintiff to initiate a claim must begin to run at the death of the co-grantor whose validity is being challenged, and since plaintiff filed more than three years after the death of the grantor, the claim should be time-barred by §3546. Plaintiff argued that her claims were not time-barred because the Trust did not become irrevocable until the death of the other grantor, and her claims were filed within two years of that date.

            The Master found that while §3546 does not specifically address the issue of joint trusts, nor does it provide for separate consideration or deadlines for claims associated with particular trustors. As such, the primary purpose of the statute, to grant “complete peace,” needed to be fulfilled. The Master determined that complete peace required complying with the grantor’s intent. Because the Trust was revocable until the death of the surviving co-grantor, the Master found that it was the co-grantor’s intent that both had rights to direct trust property and to amend or revoke the Trust during each of their lifetimes. As such, the two year limitation should not begin running until the death of the survivor grantor. However, the claim could still be time barred if, in extraordinary circumstances, equity would have required the Plaintiff to act with greater haste in filing, and failure to act with greater speed would prejudice the defendant.

            The Master found that while the Defendants could be prejudiced by the Plaintiff’s failure to act quicker, there remained a genuine issue of material fact of how much prejudice the Defendants would face. As such the Master recommended the Defendants’ motion be denied.

Author(s)

David T. White – Law Clerk