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Jun 1, 2006 12:00 PM
Dumont Stands
New York's highest court let the decision in Matter of Dumont stand, creating a bit of a mess in New York and adding to the cacophony of recent state court decisions on large stock concentrations. Despite the noise, the decisions are adding up to some important lessons for fiduciaries:
Stock concentrations are risky, regardless of governing instrument provisions. Surcharge actions based on diversification will remain popular with plaintiff's lawyers as they're relatively easy to plead and prove, and damages are readily measured.
Real or perceived conflicts of interest will shape courts' views of trustee actions.
Process matters. Trustees are not guarantors of investment results; they are guarantors of process. Prudent process includes meaningful investment review of stock concentrations, obtaining legal or judicial interpretation of governing instruments, maintaining proper records, and staying aware of beneficiary circumstances.
Not all stock retention clauses are created equal. Careless drafting or unique trust terms create fiduciary risks.
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| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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