Whenever someone dies and leaves a Trust, the Trustee must comply with the instructions set forth in that Trust, no matter who the Trustee is. Sometimes corporations will try to side-step the instructions and do things their own way, either for convenience, or at times, in order to charge the Trust higher fees. The lower court in Gilmaker found for Bank of America and the appellate court reversed the decision.
In the case of Gilmaker V. Bank of America National Trust and Savings Association, BOA agreed to the terms of the Trust when the Settlor, Joseph Gilmaker created the Trust and appointed it as the Trustee, but once Gilmaker died, BOA took over and did as it pleased regarding the handling of the funds and real property.
For one thing, the Trust clearly instructed BOA that Gilamker’s son, Joseph Louis Gilmaker would be a Consultant to the Trust, meaning that the younger Gilmaker was to be consulted before Bank of America made any investments on behalf of the Trust. Once Gilmaker died, Bank of America pretty much told the younger Gilmaker to get lost. The Trust also stipulated that Bank of America was to keep all of the Trust money in separate accounts (because there is a $10,000 insurance cap on Trust funds as opposed to FDIC insurance on other types of accounts that max out at $100,000 per account). The Trust had $49,000, so only the first $10,000 would have been insured if the money was left in one account. Bank of America disregarded this instruction claiming that it would cause “Extraordinary” bookkeeping and therefore would require an “Extraordinary” fee to perform. Bank of America did not, however, make this assessment while the elder Gilmaker was alive and created the Trust leaving Bank of America as the Trustee.
The Trust also instructed Bank of America to provide the younger Gilmaker with a semi-annual itemized statement of the Trusts activities. At one point, the branch manager actually came right out and told the younger Gilmaker to get lost, that it was none of his concern, and that Bank of America did not have to follow the instructions set forth in the Trust.
Joseph Louis Gilmaker took the case to court, and relying on Estate of Schloss, 56 Cal. 2d 248, 253-256 [14 Cal.Rptr. 643, 363 P. 2d 875], the lower court found for Bank of America on the grounds that the Superior Court has no jurisdiction to remove a Trustee after distribution (PC §1120-1130) and that jurisdiction must be limited to Equity Jurisdiction (CC §2283). Gilmaker appealed. BOA objected on the grounds of jurisdiction.
The Contestant and Appellant is Joseph Louis Gilmaker. The Respondent is Bank of America. Eric A. Rose, and Pray, Price and Williams are the attorneys for the Appellant. Johnson and Johnson, and George A. Johnson are the attorneys for the Respondent. The opinion is delivered by J. Traynor.
Bank of America did not object to the jurisdiction of the Superior Court (as was the case with Schloss) in the lower court, and if you don’t object, it doesn’t count in appeals. So, the court does in fact have jurisdiction under Equity Jurisdiction.
The court finds that Bank of America had agreed to the terms of the Trust by accepting the position of Trustee without any mention of extraordinary fees when the Trust was being created. The little guy wins, the decision of the lower court is REVERSED and Bank of America is removed as Trustee.
In this case we learn two very valuable lessons. First, it is a stark reminder that in order to “Preserve the Record,” a timely objection must be made on any and all issues in order to preserve the right to appeal on that issue. Secondly, and more relevant to the issue at hand, a Trustee must comply with the instructions in the Trust, no matter how big for its breeches the institution thinks it is.
If you are the Successor to a Trust and don’t think the Trustee is complying with the terms set forth in the Trust, talk to an attorney and ask her if she thinks Joseph Louis Gilmaker V. Bank of America National Trust and Savings Association; Estate of Gilmaker, 57 Cal 2d 627, will support your case.