Rafert v. Meyer

The settlor (Settlor) directed her attorney to prepare an irrevocable trust, the corpus of which was three insurance policies, that named the attorney as the trustee (Trustee). The policies were payable on the Settlor’s death to the Trustee for the benefit of the Settlor’s daughters. The Trustee executed all three insurance policy applications. Each application provided the insurer with a false address for the trust. The policies subsequently lapsed for nonpayment of the premiums due. Although the insurers issued notices of nonpayment of the premiums, the Settlor, Trustee, and beneficiaries did not receive notice of the lapse until two years later. The Settlor and her daughters (collectively, Appellants) sued the Trustee, alleging that he breached his fiduciary duties as trustee and, as a result, the policies lapsed, resulting in the loss of the initial premiums. The trial court dismissed the complaint, concluding that the Trustee did not have a duty to pay the premiums or to notify anyone of the nonpayment of the premiums. The Supreme Court reversed, holding that the Trustee had a statutory duty, which arose when the insurers issued the notices of nonpayment of the premiums, to inform Appellants of the material facts necessary for them to protect their interests. View "Rafert v. Meyer" on Justia Law