Opinion
16-P-730
08-03-2017
Gregory K. LARSEN, administrator, v. Jochen J. VON HALLER& others.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff, Gregory K. Larsen, as the administrator of the estate of Annette Larsen (decedent), appeals from a summary judgment in favor of the defendants. Gregory argues that the Superior Court judge erred because (1) Ute DeMarco Von Haller (DeMarco), as the trustee and beneficiary of the Eastern Point Realty Trust (nominee trust), did not have the authority to revoke or to amend the nominee trust without the consent of all of the beneficiaries, one of whom was Annette; (2) Annette had a vested remainder interest in the nominee trust; and (3) DeMarco breached her fiduciary duty in revoking the nominee trust and conveying to herself, for a nominal fee, the only asset held in the nominee trust. We affirm.
Because Gregory and the decedent share the same last name we refer to each by his or her first name for clarity.
Background. DeMarco established the nominee trust on October 13, 1998, and filed it on October 19, 1998, in the Essex County registry of deeds. She named herself as trustee and, "as Trustee and Primary Beneficiary," executed the schedule of beneficiaries (schedule) incorporated by reference in the nominee trust. According to the schedule, DeMarco's interest in the nominee trust was "100% for life with power to use and occupy the property and power to withdraw or consume principal if converted into cash during her lifetime." Enno Brammer, Hilde Brammer Jaffke, Hans Brammer, Ulrike Brammer-Mathes, and Annette, were listed on the schedule, entitling each to an equal share of any asset(s) remaining in the nominee trust upon DeMarco's death, provided they do not predecease her. As trustee, DeMarco had the power to perform certain tasks for the benefit of the beneficiaries, including amending the nominee trust with the consent of all beneficiaries.
On August 26, 1999, DeMarco amended the schedule for the first time, again as "Trustee and Primary Beneficiary." DeMarco was the only signer; the amended schedule is identical to the original schedule, except that Annette was removed from the remainder beneficiaries list. On the same day, DeMarco signed a second certificate of amendment and recorded it with the registry of deeds. This second certificate amended § 7.2 of the nominee trust, removing Annette as a successor trustee.
On December 20, 2002, a quitclaim deed was recorded conveying (for one dollar) the property out of the nominee trust and to DeMarco individually; recorded simultaneously was a trustee's certificate stating, among other things, that the trustee (DeMarco) had been "directed by the Beneficiaries of said Trust to convey the premises ... to Ute Brammer DeMarco, individually for the consideration of One and 00/100 ($1.00) Dollar."
Six years later, on December 19, 2008, in a deed dated October 31, 2008, DeMarco conveyed the property to the Ute DeMarco Von Haller Revocable Trust (revocable trust). On February 19, 2011, Morgan Stanley Credit Corporation granted a mortgage to the revocable trust in the amount of approximately $1.5 million.
Discussion. Gregory first argues that DeMarco did not have the authority to amend or to revoke the nominee trust, eliminating Annette's interest, because permission was not given by all of the named beneficiaries. He claims that the nominee trust reserved for DeMarco only a life estate in the property without any power to revoke or to amend the nominee trust and that, as the trustee, she could act only at the direction of all of the beneficiaries, which would also include the five remainder beneficiaries listed on the schedule. He also claims that, because the trustee's certificate (recorded simultaneously with the 2002 deed) fraudulently stated that permission was given by all beneficiaries to convey the property to DeMarco individually, DeMarco, as trustee, breached her fiduciary duty to the beneficiaries, including the remainder beneficiaries. We disagree.
We review the granting of summary judgment de novo, Pugsley v. Police Dept. of Boston, 472 Mass. 367, 370 (2015), as we are in as good a position as the judge to interpret the provisions of the nominee trust. See Ciampa v. Bank of Am., 88 Mass. App. Ct. 28, 31 (2015). Based on our review of the nominee trust instrument and the accompanying schedule, we agree that DeMarco was the sole beneficiary at the time of the schedule amendment and, thus, she had the authority as the primary beneficiary and trustee to remove from the schedule Annette's name as a contingent beneficiary.
A nominee trust is "an entity created for the purpose of holding legal title to property with the trustees having only perfunctory duties." Bellemare v. Clermont, 69 Mass. App. Ct. 566, 570 (2007), quoting from Morrison v. Lennett, 415 Mass. 857, 860 (1993). DeMarco, as trustee, was merely an agent for the beneficiaries' convenience, holding the principal of the nominee trust (the property) and acting only at the direction of the beneficiaries. Id. at 570-571. It is "the beneficiaries [who] exercise the controlling powers, and the action which the trustees may take on their own is very limited." Worcester v. Sigel, 37 Mass. App. Ct. 764, 768 (1994). See Zoppo v. Zoppo, 453 F. Supp. 2d 232, 234-235 (D. Mass. 2006) ("[A] nominee trust is not a normal trust, rather it is a unique instrument in Massachusetts law that is used to confidentially and conveniently hold title to property.... [N]ominee trusts are defined by total control of the present beneficiary").
The original schedule identifies DeMarco as the primary beneficiary, and provides for her four siblings and Annette to take, in equal shares, the entire trust if there remains property in the nominee trust at the time of DeMarco's death. DeMarco's siblings and Annette, thus, are contingent beneficiaries, and not vested beneficiaries, because the schedule expressly requires survivorship, rendering the remainder contingent. See Gordon v. Feldman, 359 Mass. 25, 28 (1971). Annette, along with DeMarco's siblings, was scheduled to become one of the beneficiaries of the proceeds of the nominee trust only upon DeMarco's death.
"There is no question that the words ["Upon her Death"] are commonly employed to express such a contingency.... This is so even if the remaindermen are specifically named." Id. at 27-28. "Since the language ["Upon her Death"] is clearly and expressly contingent, the rule favoring a construction of interests as vested does not, of course, apply" in this case. Id. at 28. See Springfield Safe Deposit & Trust Co. v. Ireland, 268 Mass. 62, 65 (1929) ( "When it plainly appears that a testator intended to create a contingent estate, the rule favoring so construing the will that estates shall be considered vested must give way, even though the gift is to children, or other descendants, of the testator, and when because of the contingency the limitation is void for remoteness").
Accordingly, we conclude, as did the judge, that DeMarco was the sole beneficiary at the time the schedule was amended, providing the beneficiary with exclusive and total control to direct the trustee to act for her benefit and in accordance with the terms of the trust. See Worcester, 37 Mass. App. Ct. at 768 ; Zoppo, supra. See also Canter v. Commissioner of Pub. Welfare, 423 Mass. 425, 431 (1996), quoting from Commissioner of Corps. & Taxn. v. Ayer, 323 Mass. 579, 582-583 (1949) ("[U]ntil the death of the settlors [of revocable trusts] their respective beneficiaries had acquired nothing certain. Until then their ultimate enjoyment ... was doubtful, and there was no gift").
As the sole trustee and beneficiary, the terms of the nominee trust permitted DeMarco an unrestricted power to amend the nominee trust and, in turn, the schedule, including the power to amend by revoking the gift to Annette. See Bongaards v. Millen, 440 Mass. 10, 16-17 (2003). In addition, here, as in Bongaards, only DeMarco, as the beneficiary, was required to sign the schedule because she was the "settlor, sole trustee, and, at the time, only beneficiary of the trust." Id. at 14. See Tretola v. Tretola, 61 Mass. App. Ct. 518, 524 (2004) ("The designation of contingent beneficiaries to take after [the decedent's] death was authorized by the trust instrument and was signed by [the decedent], who was the settlor, sole trustee, and at the time, only beneficiary of the trust"). These same circumstances likewise applied at the time the first amendment of the schedule was executed (on August 26, 1999), removing Annette as a contingent beneficiary.
Moreover, the notion that DeMarco was the sole beneficiary is supported further by the first paragraph of the nominee trust, incorporating the schedule that "has this day been executed by the Beneficiaries."
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For this reason, Gregory's argument that DeMarco breached her fiduciary duty as trustee also fails. He claims that the December 20, 2002, trustee's certificate filed with the deed conveying the property out of the nominee trust to DeMarco individually was fraudulent, breaching DeMarco's fiduciary duty, as she was not directed by all of the beneficiaries, as the certificate indicates. As we have said, DeMarco was the sole beneficiary, thus eliminating any need for her to seek the consent of the contingent beneficiaries, including Annette, prior to conveying the property to herself individually. See Bongaards, supra. Thus, the conveyance was authorized by the terms of the nominee trust and not performed, as Gregory argues, in violation of the Massachusetts Uniform Trust Code. See G. L. c. 203E, § 802(a ) and (b ).
Judgment affirmed.