Non-Prevailing Parties Fees to be Paid Out of Trust

IMO Trust for Grandchildren of Wilbert L. and Genevieve W. Gore, C.A. No. 1165-VCN (February 27, 2013).

At the conclusion of this litigation, the court ordered that all parties’ fees be paid by the trust.

In the course of discovery taken by the non-prevailing parties, a possible alternative trust instrument was found. On its face that instrument was labeled as “irrevocable” and it predated the other previously known trust instrument. Had this second instrument controlled the trust, the respondents would have been given the per stirpes share they sought. The court concluded that without the judicial resolution resulting from the discovery of the second instrument proper administration of the trust would have been impossible. By defining the terms of the trust and the controlling instrument, the court found that this action−regardless of its original intent−benefitted the trust.

This case also involved a strategic adoption which was not disclosed until after the death of the co-settlor. The prevailing parties in the underlying litigation had argued that the adoption was in bad faith because it was hidden until after the co-settlor died, depriving the co-settlor of the opportunity to clarify the intention of the trust. But the fact that the adoption was finalized in the final days of the elderly co-settlor’s life lead the court to conclude that the decision not to disclose was appropriate given the stress it would bring and as it is unlikely that disclosure would have prevented litigation.

One additional point of interest was the court’s decision to reimburse out of the trust the co-trustees for tax counsel fees and expenses related to this litigation. The court, while admittedly unfamiliar with the intricacies and scope of the tax work involved as the specific nature was not disclosed, found that the tax analysis provided relevant, beneficial information regarding a potential settlement. And while the tax counsel fees were “large,” the court found that “although not free of some doubt, the fees and expenses were reasonable in amount and will be approved.”


William M. Kelleher, Director
Gordon, Fournaris & Mammarella, P.A.