Lawsuit against Both John and Sue - Case Study Example

A-R Order # 263753 This is a fascinating case which raises many issues. This type of situation is does occur on occasion in e matters, soclarifying and resolving those issues is important. There have obviously been breaches of trust and responsibility which I will first address, and then I will use that analysis as the basis for my advice to Ron, at his fiancee's request. The first issue is the mishandling of the 'Fido Trust' by solicitor John as well as by Sue, both of whom were trustees under Mike's validly-executed Will. John and Sue had the responsibility for handling the Fido Trust for the express purpose of providing care for Mike's dog and cat. Instead, they immediately took the dog and cat to the local animal charity, a gross breach of trust and of responsibility on their part. Further, this breach of trust and responsibility was all the worse because it was done for monetary reasons. If John and Sue became unable to care for the animals, perhaps that would have made their breach of trust and responsibility more understandable, although not more justifiable, as John should then have informed Mike of their inability to provide or arrange for care. Depending on when that inability happened, Mike should have been informed of it so that he could have made other arrangements. That did not happen. But there is no evidence that John and Sue were unable to care for the animals or to arrange for suitable care, as it appears they never tried to do either. Rather, upon taking Mike's dog and cat to the local animal charity, they then proceeded to misuse the funds specifically set aside in Mike's Will for the care of the animals. There is no evidence that the half of the Fido Trust invested in the stock market was to benefit the animals. 2 Had that been the case, the local animal charity should have either received the funds, or there should have been an agreement drawn up with that charity as to how the funds in the Fido Trust would be administered for their benefit. Instead, it appears clear that John and Sue intended to secure personal gain from their investment in the stock market. Further evidence of that purpose is shown by the use of the other half of the Fido Trust, which was invested in an interest-free loan to a motor showroom business run by Sue's nephew. This was a clear conflict of interest, not only on Sue's part because a relative was involved, but also on the part of John, who consented to such an unprofitable loan. The weight of the evidence is that placing the other half of the Fido Trust into the stock market was also intended to benefit John and Sue, rather than to benefit Mike's dog and cat, as otherwise some arrangement would have been made with either the local animal charity or some other animal care service via using the interest earned on the Fido Trust solely for the proper care of the animals, as Mike intended. Using the funds otherwise would be a serious fraud, perhaps more serious for John as a solicitor who would know the requirements of serving as a Trustee more than for Sue, a policewoman; but it still appears that Sue should have known that the purpose of the Fido Trust was violated. Compounding John's abuse of the trust placed in him by Mike, we are told that John exercised his power of appointment over the residue of Mike's estate in favor of himself, and then persuaded Mike's son Ron, at 18 years of age, to surrender his life interest in the residual estate to John, a proposal which Ron should have strongly rejected. 3 Now, as to advising Ron, I would tell him the following: Ron, your interests have been grossly violated by John's handling of your father's estate. It is unfortunate that Mike trusted John, but now it is too late to correct that situation. We must decide what our options are at this point, and choose the best option for you. It appears impossible to collect the Fido Trust funds, which should have been invested in a safe and secure manner so that only the interest on those funds would have been used for the benefit of your father's dog and cat; the principal of the Fido Trust should have been kept intact, but now that principal is only ten percent of its 2006 value. We should still take steps now to secure that remainder for your benefit by a legal action. As to the residual of your father Mike's estate, which was left to you for your life in his Will, it is clear that John fraudulently used his power as your father's solicitor to get you to surrender your life interest in that residual to him. We can hope that those funds are not yet depleted the way the Fido Trust is, as then we can take legal action to recover them for your benefit, as your father intended. Still, you did sign away your control over that residual to John, and you were of majority age at the time of doing so. Thus, it would be preferable to induce John to voluntarily return that residual estate to you. I therefore recommend, as your solicitor, that you authorize me to approach John on a confidential basis and ask him to voluntarily return the residual estate to you at once. The inducement for his doing so would be the alternative of a criminal prosecution against him for breach of trust and fraud. He would also be likely to be forbidden from serving as a solicitor in the future because of his misconduct in this matter. 4 My approach, as your counsel, would avoid raising the matter of the Fido Trust until the residue of the estate is hopefully turned over to you for life, since you are now of age. I believe the likelihood of criminal prosecution of John, and his removal from the future practice of law, will be sufficient to induce him to cooperate, but I do not intend to make any other commitments to John, regarding either the Fido Trust or anything else. Nor do I intend to have any contact with Sue at this time, as she is not involved in the matter of Mike's estate residue, to which you are entitled for life. Upon a successful resolution of the matter of your father's estate residue, we will be free to look into what can be done about the improper use and wasting of his Fido Trust. This will take some research, as, for example, we need to know the involvement, if any, of the local animal charity, and what happened to Mike's dog and cat. If homes were found for those animals, we can be thankful that your father's wishes for them were carried out, even if not in the manner he intended. I think it unlikely that the animal charity was involved in the fraud perpetrated by John and Sue, but we do need to determine that. The next step would likely be a lawsuit against both John and Sue to try to recover the initial value of the Fido Trust with accrued interest. Since John never repaid a "loan" made to him by your father some years ago, and since John and Sue lost ninety percent of the principal of the Fido Trust, the chances of significant recovery may be small, but it is possible that they do have other assets which could be claimed as compensation here. Finally, you should consider filing justified criminal charges against both John and Sue. Read More