Stewart v. Stewart

NEW YORK COUNTY
Trusts and Estates

New York Law Journal

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Surogate Nora Anderson

Barbara Stewart alleged she was a lifetime beneficiary of separate trusts established by her four children for her benefit, and her estranged husband, William, was the trusts' trustee since inception. William and the lawyer who drafted the trusts were named defendants as Barbara alleged William improperly terminated the trusts at some point. She also claimed he misappropriated trust funds, and such misconduct was carried out for him by the lawyer. Barbara argued the misappropriation was for defendants' own use and benefit, contending defendants breached their fiduciary duty and defrauded her by concealing the fact the trusts were converted by and for defendants. Defendants sought dismissal arguing the complaint's allegations did not "add up to any cognizable claim for relief." The court stated the complaint's allegations of self-enriching acts made it relevant that "an attorney for a fiduciary has the same duty of undivided loyalty to the cestui as the fiduciary himself." Thus, it found Barbara did not fail to state a claim for breach of fiduciary duty. The court also noted that in substance the complaint stated a claim for conversion, and Barbara may be deemed to have standing to assert such a claim on the trusts' behalf, as opposed to one in her own individual right.

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