In Millstein v. Millstein, 110 N.E.3d 674 (eighth Dis. App. 2018), Norman Millstein sought to compel the trustee of two irrevocable grantor trusts to reimburse him for earnings taxes he paid on behalf of the trusts.
Norman created the irrevocable trusts for the good thing about his youngsters, and every of the trusts had been grantor trusts as to Norman for earnings tax functions. Norman argued it was inequitable for the trustee to not reimburse him for these taxes and that he was entitled to a “fiduciary accounting” as a result of he “has been saddled with tens of millions of of earnings tax legal responsibility” over a 20-year interval as a result of administration and actions of the trusts. He didn’t connect copies of the belief agreements to his criticism.
The Courtroom of Appeals of Ohio affirmed the trial courtroom’s dismissal of Norman’s claims for reimburse and for a full accounting of the trusts’ property. The courtroom agreed with the trial courtroom’s evaluation that there’s no cognizable declare in Ohio for equitable reimbursement to a grantor for tax legal responsibility incurred beneath the phrases of a belief that the grantor created. Additionally, as per the clear phrases of the trusts, Norman was entitled to an annual monetary report of the trusts’ property (not a full fiduciary accounting). The courtroom famous that Norman “voluntarily created the state of affairs that he now claims is inequitable.”
This resolution could function a reminder for practitioners to construct in an “escape hatch” for purchasers to show off grantor belief standing if the fee of earnings taxes turns into too onerous.