David A. Hodges, Jr. & a. v. Alan Johnson & a.

Summary

The Supreme Court of New Hampshire affirmed the probate court’s order voiding decantings from two irrevocable trusts and removing two co-trustees. The court addressed the trustees’ duties under the New Hampshire Uniform Trust Code, including the duty of impartiality and the limits on discretionary decanting authority. The decantings were held void because the trustees failed to give due regard to the beneficiaries’ respective interests.

Holdings

1. A trustee's authority to make unequal distributions under RSA 564-B:8-814(c) and to decant under RSA 564-B:4-418 does not necessarily violate the statutory duty of impartiality. The trustee violates that duty when the trustee fails to treat beneficiaries equitably in light of the purposes and terms of the trust.
2. The defendants violated the statutory duty of impartiality because they failed to give any consideration to the plaintiffs' future beneficial interests when eliminating those interests through decanting; the decantings were therefore properly declared void ab initio.
3. The probate division sustainably exercised its discretion in removing Johnson and Saturley as cotrustees because their violation of the duty of impartiality could constitute a serious breach of trust and removal served the beneficiaries' interests; bad faith, dishonesty, self-interest, or asset mismanagement were not required.

Questions Presented

1. Whether the trustees' decantings violated the statutory duty of impartiality by eliminating the plaintiffs' nonvested future beneficial interests without treating the beneficiaries equitably in light of the purposes and terms of the trusts.
2. Whether the probate division properly declared the decantings void ab initio.
3. Whether the probate division properly removed Johnson and Saturley as cotrustees for a serious breach of trust and because removal best served the beneficiaries' interests.

Disposition

affirmed