August 14, 2009
DENISE A. KOSTE, PLAINTIFF-APPELLANT,
ROBERT C. TURSKI, TURSKI & TURSKI, LLC, AND THE ESTATE OF ELEANOR L. TURSKI, DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS,
FIRST AMERICAN TITLE INSURANCE CO., THIRD-PARTY DEFENDANT, AND MERRILL LYNCH CREDIT CORPORATION, DEFENDANT-INTERVENOR.
On appeal from the Superior Court of New Jersey, Chancery Division, General Equity, Cape May County, Docket No. C-114-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted July 7, 2009
Before Judges Fisher and Gilroy.
Plaintiff Denise A. Koste appeals from the September 9, 2008 order that dismissed her complaint seeking to void the transfer of real property out of the Eleanor H. Leberfinger 1999 Irrevocable Trust (the Trust). We affirm.
The facts are not in dispute. Eleanor L. Turski (Turski) is the daughter of Eleanor H. Leberfinger (Leberfinger). Turski and Leberfinger are now both deceased, Turski having died on June 9, 2006, and Leberfinger, having died on October 31, 2006.
Plaintiff is one of Turski's three surviving children. The other two surviving children are defendant Robert C. Turski and Diane Turski, a non-party to the action.
On December 10, 1998, Leberfinger executed a general Power of Attorney, designating Turski as her attorney-in-fact. Paragraph 1 of the Power of Attorney provided:
1. GENERAL GRANT OF POWER
To exercise or perform any act, power, duty, right or obligation whatsoever that I now have or may hereafter acquire, relating to any person, matter, transaction or property, real or personal, tangible or intangible, now owned or hereafter acquired by me, including, without limitation, the following specifically enumerated powers. I grant to my Agent full power and authority to do everything necessary in exercising any of the powers herein granted as fully as I might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that my Agent shall lawfully do or cause to be done by virtue of this power of attorney and the powers herein granted[.]
On September 24, 1999, Leberfinger, through her attorney-in- fact, created the Trust and named Turski as sole trustee. Paragraph 2 of the Trust vested Turski as trustee with absolute discretion to dispose of the income and the corpus of the Trust.
2. DISPOSITION PROVISIONS
The trustees shall hold, manage, invest, and reinvest the [T]rust property, collect the income therefrom, and administer and dispose of the net income and principal of the [T]rust on the following terms:
(A) During the lifetime of the grantor, the trustees may pay to or apply for the benefit of ELEANOR L. TURSKI, primary beneficiary(ies), all, some or none of the net income of the [T]rust, together with so much, all, or none of the principal of the
[T]rust as trustees from time to time may determine in their sole and absolute discretion. However, any distribution made by the trustees shall be made in equal amounts to each beneficiary, should there be more than one. [Notwithstanding] any of the foregoing, the primary beneficiary(ies) may waive the right to any specific lifetime distribution by expressly so stating in a signed writing delivered to the trustee, whereupon the trustee shall make distribution only to the non-waiving beneficiary. The beneficiary waiving such distribution shall have no further rights with respect thereto, and the [T]rust shall continue to be maintained and managed as if the distribution had been made.
In no event shall the trustees make any distribution to the grantor, nor to any creditor of the grantor for his or her benefit.
(B) Upon the death of the grantor, and both of them if there is more than a single grantor named herein, and subject to the amounts required to be paid pursuant to Article 5 of this [T]rust agreement, the trustees shall distribute the entire remaining balance of the [T]rust fund to ELEANOR L. TURSKI.
If ELEANOR L. TURSKI shall predecease the grantor, then the share of such [precedent] beneficiary shall be distributed equally among each of his/her children, then living, per stirpes. If said primary beneficiary shall predecease the grantor and have no children surviving the grantor, then such beneficiary's share of the [T]rust shall be distributed to the remaining
[T]rust beneficiaries, should there be any, in accordance with this [T]rust agreement.
On September 24, 1999, Leberfinger, through Turski, executed a deed, conveying title to property known as 7114 Pleasure Avenue, Sea Isle City (the property), into the Trust.
On March 25, 2004, Leberfinger and Turski as trustee executed a deed conveying the property to Turski as trustee. However, Leberfinger reserved unto herself a life estate in the property.
On May 28, 2004, Leberfinger and Turski as trustee, as tenants-in-common, conveyed title to the property to Turski, individually. The deed relinquished Leberfinger's life estate in the property. By deed dated the same day, Turski executed a deed conveying the property to Turski and Turski Enterprises, LLC (the LLC). The LLC is a limited liability company created on or about May 28, 2004, with Turski and her son Robert as sole members.
On January 25, 2005, the LLC executed a deed transferring ownership of the property to Turski and Robert Turski as tenants-in-common. On August 9, 2005, Turski and Robert Turski executed a mortgage in favor of Merrill Lynch Credit Corporation in the amount of $250,000.
On December 7, 2007, plaintiff filed a complaint in Chancery, seeking to void the transfer of the property out of the Trust. The trial court granted Merrill Lynch leave to intervene as a party defendant. Defendants Robert Turski, the LLC, and the Estate of Eleanor Turski filed a third-party complaint against First American Title Insurance Company. On August 22, 2008, with consent of the parties, the court tried the matter based on a stipulation of the above facts. The court dismissed plaintiff's complaint, determining that all conveyances into and out of the Trust were made pursuant to the trustee's authority. The court's decision mooted the claims against Merrill Lynch and First American. In so ruling, the court reasoned:
We have a grandmother with one child, the mother, who has several children. The grandmother, for reasons that do not appear in this record, gives to her only child, the mother, a general power-of-attorney which, by its terms, was broad enough to permit the holder, the daughter, to create, acting for her mother and as attorney-in-fact, an irrevocable trust into which trust assets were placed pursuant to the terms of that trust. The plaintiff argues that the daughter, Eleanor Turski, was settlor. She was not. She was authorized to act for the settlor without limitation . . . .
I have nothing before me that would suggest any basis to challenge the efficacy or the legal validity of that power-of-attorney or the trust that was created pursuant to its authority. The trust itself is an interesting document. It says, . . . that the trustee who in this instance happened to also be the beneficiary, . . . was free in her sole and unlimited discretion to distribute some, any or all of the assets of the trust as the trustee saw fit for the care and maintenance eventually of the beneficiary . . . .
The trust was valid, it was irrevocable, it said what it said, it meant what it said, it said what it meant and meant what it said. So now I've got through an inexplicable, at least on this record, course of transaction[s] involving the daughter and her son, for this purpose, the grandson, a series over the course of a period of time, and including as indicated in one instance within a couple of days or on the same day, a series of deeds by which the legal title to the property was transferred from the trust to a tenancy-in-common to an interest in an LLC, et cetera. Any rational explanation on this record for that? No. Are there questions raised? Absolutely. Questions that are properly before me for determination? Absolutely not. Do I know anything about the nature of their relationship between the daughter and the grandson that would explain why the daughter managed eventually, as I'm now advised through the will, to leave the entire property to her son before she died and certainly thereafter to the exclusion of her other children? Do I know that? No. Is there any planning in this record for it? No. Is the issue before me for decision? No.
The sole issue before me is whether, under the terms of that trust, the trustee had the legal authority to do with that property, the assets of that trust, as she saw fit for her own in her own sole and unlimited discretion for her care, comfort and support. That trust could have been drawn in any number of ways to have limited the trustee's discretion in that regard. It could have defined an annual limit on distributions of principal which most trusts of that nature do. It could have established specific criteria for defining under what circumstances, medical needs, educational needs, other needs, principal could be distributed for the benefit of the comfort, care and support of the beneficiary. Any of those things could have been done; none of them was.
What is suggested to me is that here, under these circumstances, it is not only my authority, it is my responsibility to define for this purpose in the context of that trust those standards. I have no such authority. There's no case law anywhere that would give it to me. It would be [presumptuous] of me to sit here at this point under these circumstances and to decide what the probable intent of the original settlor acting through a power-of-attorney she had given away was or would have been under these circumstances. It eventually boils down to what the grandmother, again acting through an agent she appointed, what the grandmother might have intended with respect to how her daughter should have administered the affairs of that trust, an exercise in which I have no ability and no inclination to engage.
The long and short of it is as regrettable as I find for family cohesiveness purposes, all of these events and circumstances to be the narrow question before me is whether I am vested with any power to determine how the proceeds or the assets of that trust should have been distributed or held or for what -- under what circumstances they could be distributed for the benefit of the beneficiary. I have no such power. The trust doesn't give it to me. The trust is clear. The trust is enforceable according to its terms. According to its terms, the trustee was authorized to do as she did as, depending on what your perspective is, as happily or sadly as those actions were taken.
[(Additional paragraph breaks added).]
On appeal, plaintiff argues that Turski was both the Trust's settlor and trustee, and that contrary to law, Turski improperly depleted the Trust's assets by a series of deeds, thereby effectively revoking the Trust. Plaintiff contends that as settlor and trustee, Turski had an obligation not only to herself as a primary beneficiary, but also to the contingent beneficiaries not to act in a self-serving manner. Plaintiff asserts that through a series of transactions, Turski acted contrary to the legitimate interest of the Trust.
We have considered plaintiff's arguments in light of the record and applicable law. We are satisfied that neither argument is of sufficient merit to warrant discussion in a written opinion. We affirm substantially for the reasons expressed by Judge Perskie in his oral opinion of August 22, 2008. R. 2:11-3(e)(1)(A) and (E).
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