Finding no clear and convincing evidence that the deceased beneficiary of a pooled special needs trust intended funds remaining in her account to go to her children, and that the doctrine of laches also applies, a U.S. district court denies a claim to reform the trust. National Foundation for Special Needs Integrity, Inc. v. Reese (S.D. Ind., No. 1:15-cv-00545-TWP-DKL, March 21, 2017).
Theresa Givens established a pooled SNT with settlement proceeds she received for injuries from a medical procedure. Upon her death, her adult children sought the funds left in her account for themselves. National Foundation, trustee of the pooled special needs trusts, refused their requests and retained the funds in the pooled trust’s remainder share account. Ms. Givens had named only herself as contingent beneficiary in the Joinder Agreement she signed when she set up the trust.
More than three years after his mother’s death, Ms. Givens’ son Devon Reese pursued legal action to recover the money for her children. Mr. Reese claimed that their mother intended them to receive the funds and had mistakenly named herself as beneficiary. When National Foundation sought a declaration from the court that it had properly transferred the funds into its remainder share account, Mr. Reese counterclaimed seeking reformation of the trust agreement to reflect what he contended were his mother’s wishes.
The court previously held on summary judgment that National Foundation had properly retained the funds in accordance with the unambiguous terms of the trust agreement. (For earlier coverage of the case, click here and here.) Before the court were the remaining questions of Ms. Givens’ intent at the time of signing the Joinder Agreement and National Foundation’s affirmative defense of laches.
“The U.S. District Court for the Southern District of Indiana denies Mr. Reese’s claim for reformation and grants National Foundation’s affirmative defense of laches. The court finds that a few statements Ms. Givens made about wanting to help her children before and after executing the Joinder Agreement were contradicted by other statements she had made to counsel and by the language of the trust documents. Therefore, the court concludes there is no clear and convincing evidence that she intended to transfer the remainder funds to her children when she executed the agreement. The court further finds that Mr. Reese’s delay in asserting the reformation claim was inexcusable because he knew for years about National Foundation’s intent to retain the funds and failed to act. Reformation of the Joinder Agreement now is time barred because it would prejudice National Foundation and its current pooled trust members, the court concludes.”
For a full text of this decision, click here.
Reprinted from the Academy of Special Needs Planners: https://attorney.elderlawanswers.com/court-denies-claim-to-reform-pooled-snt-agreement-in-favor-of-deceased-beneficiarys-children-16020?utm_source=ASNP%2BMonthly%2BApril%2B2017&utm_medium=email&utm_campaign=Article%2B2