Mildred Quick Muller created a revocable trust that was amended and restated in December 1998 (“1998 Trust”). Muller signed a Power of Attorney in 2010 naming James A. Neiman, her great nephew, as agent. Plaintiff - JP Morgan - as the Trustee of the 1998 Trust, filed an Order to Show Cause seeking advice and direction from the court as to whether the grantor's Agent under the Power of Attorney may direct the re-titling of the 1998 Trust assets into the name of a new 2010 Trust.
Although the 1998 Trust lacks a specific provision giving the Agent the power to revoke the trust and he is not specifically granted this power in the Power of Attorney, Neiman was nonetheless granted broad powers to take any action that Muller may take and to exercise “full and complete power and discretion” in the same manner as Muller.
In addition, the Power of Attorney provides Neiman with the power to transfer funds into any trusts of which Muller is the beneficiary. Neiman, under the terms of the 1998 Trust and the Power of Attorney, has the power to make Trust distributions such that its corpus is completely exhausted. If the court determined that Neiman could not revoke the 1998 Trust, he would nonetheless have the power to deplete its assets but would simply be barred from closing the account. The court found that this is not a logical result. The court held that Neiman, as Agent under the grantor's Power of Attorney, has the right to revoke the 1998 Trust and transfer its assets as requested.
Read more at: Tax Times blog
