USA – MASSACHUSETTS Law and Practice Contributed by: Patricia M. Annino, Rimon, P.C.
4.2 Succession Planning There are no succession planning techniques unique to Massachusetts. Typical strategies and structures include stock recapitalisations, operating agreements for LLCs, partnership agreements and buy-sell agree - ments. 4.3 Transfer of Partial Interest Massachusetts follows federal law and allows dis - counts for lack of marketability and lack of control when a partial interest in an entity is transferred. The increasing complexity of modern family struc - tures means there is often a larger pool of claimants for every estate, which increases the risk that some potential beneficiaries will feel left out or slighted. Intestacy laws do not reflect modern living arrange - ments (cohabitation, single-parent households, non- traditional relationships) and divorce at an older age is more common. There have been several high-profile litigation cases on the control of family-owned enterprises. There is an increase in family claims for caregiving and quantum meruit (unjust enrichment). 5. Wealth Disputes 5.1 Trends Driving Disputes There has been an increasing number of “back door” attacks on estate plans, even those with “no contest” clauses. These attacks include challenges to account - ings. Massachusetts allows in terrorem or “no contest” clauses. The purpose is to discourage beneficiaries from challenging the estate planning documents. 5.2 Mechanism for Compensation For estate disputes a court may order removal of the personal representative (PR) and the appointment of a new (neutral) PR, compel an accounting, order a fee rollback (surcharge) and sanctions. For trust disputes, MGL c 203E, Section 1001 lists remedies a court may order, including compelling the
trustee to perform their duties as a trustee; enjoining the trustee from committing a breach of trust; compel - ling the trustee to redress a breach of trust by paying money, restoring property or other means; ordering a trustee to account; appointing a special fiduciary to take possession of the trust property and adminis - ter the trust, suspend or remove the trustee, reduce or deny compensation to the trustee, or order other appropriate relief. 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries Professional trustees, lawyers and corporate fiduciar - ies are common in Massachusetts. Professional trus - tees are held to a higher standard of duty. Trustees who have special skills or expertise are held to higher standards. 6.2 Fiduciary Liabilities Fiduciaries can be held personally responsible when they breach a fiduciary duty. A trustee can be held personally liable, but only if the trustee was personally at fault. Indemnification and exculpatory clauses are important to limit the liability for breach. An exculpa - tory clause is unenforceable if it relieves the trustee of liability for a breach committed in bad faith or with reckless indifference to the trust or beneficiaries, or if the clause was placed in the trust due to abuse by the fiduciary in relationship with the settlor, unless it is proved the settlor knew of the clause and under - stood it. 6.3 Fiduciary Regulation The Massachusetts Prudent Investor Act (MGL c 203C) governs a fiduciary’s investment of assets and mandates that a trustee must invest the trust as a prudent investor (it also notes that a higher standard of care applies to professional or corporate trustees). The trustee must exercise reasonable skill and care in administering the trust. The standard of reasona - bleness is in light of the facts and circumstances. In addition to the duty of prudent administration, the trustee has other fiduciary duties including the duty (i) to inform and report; (ii) to collect, control and protect
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