response to trustee response

mistrusting us bank -- july 24, 2003
in response to july 14, 2003 us bank trustee response

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FILED ON JULY 24, 2003

 

RESPONSE TO RESPONSE FROM U.S. BANK

IN THE MATTER OF THE
IRREVOCABLE TRUST
IN THE ESTATE OF
XXXXXXXXXXX

 

COMES NOW, XXXXX and XXXXX, residual beneficiaries of the XXXXXXX Trust, to respond to the response to objections by XXXXXXX, Trustee for U.S. Bank and Trustee Agent on their behalf for the XXXXXXX Trust, filed with the Court on July 14, 2003. XXXXXXX and XXXXXXX state to the Court as follows:

1. Said trustee, U.S. Bank, did not seek to correct the Letter of Appointment from XXXXXXX to U.S. Bank until July 9, 2003, over 16 months after the original letter and said error by the Clerk of Court. XXXXXXX and XXXXXXX question why U.S. Bank did not seek to correct the error much earlier.

2. Said trustee agent of U.S. Bank, XXXXXXX, has stated to the Court that U.S. Bank provided to all beneficiaries a copy of the annual accounting on February 5, 2003. This statement to the Court is false. No copy of the annual accounting was provided on February 5, 2003. XXXXXXX and XXXXXXX did not receive the annual accounting until May 17, 2003. The annual accounting, received for the first time on May 17, 2003, was postmarked May 16, 2003 and sent from the XXXXXXXX Law Offices. XXXXXXX and XXXXXXX question why preparation of the annual accounting took over three months after the February meeting about farm management issues. The date May 17, 2003 for the annual accounting was three months after the annual report should have been due. The February 5, 2003 meeting did not pertain to the accounting. The annual accounting was not discussed nor issued by said trustee agent, XXXXXXX, or by said trustee, U.S. Bank, on February 5, 2003. Per Iowa Probate Code 633.4213, it was the trustee’s obligation to do so by the end of February 2003.

3. Said trustee agent of U.S. Bank has stated to the Court that three accounts, a savings account at U.S. Bank, a checking account at XXXXX Bank, and an XXXXXXX Brokerage Account, were not moved to the U.S. Bank Trust Department until after September 2002. This statement by said trustee agent is incorrect. Moreover, the statement by said trustee agent regarding the “savings account” at U.S. Bank is false. The account at U.S. Bank was a checking account, with the account number CKG XXXXX, which stood for a checking account. There was no savings account at U.S. Bank. Said trustee agent for U.S. Bank issued checks from the checking account prior to September 2002. Said trustee agent was in control of this checking account at U.S. Bank prior to September 2002. It is both incorrect and false to state that the accounts were not moved to U.S. Bank Trust Department until after September 2002. It is also false to state that there was no activity expressed in the accounts.

4. Said trustee agent of U.S. Bank should have reported all checks and all activity on the U.S. Bank checking account prior to September 2002 in the original accounting of May 17, 2003. There was no reason to not include all disbursements made by the said trustee agent from the checking account at U.S. Bank in the accounting. XXXXXXX and XXXXXXX view this omittance as negligence.

5. Said trustee agent of U.S. Bank has stated to the Court, in his response to Objection No. 4, that no activity occurred on the accounting for the Trust because said trustee was in the process of marshalling assets and accordingly, no activity occurred. To the contrary, activity did occur in the U.S. Bank checking account, which had already been marshalled prior to September 19, 2002. Furthermore, XXXXXXX and XXXXXXX believe there is no reason that it should have taken said trustee seven months to locate and marshall the other assets. The XXXXX Brokerage account regularly made electronic deposits to the U.S. Bank checking deposit, and those electronic deposits appear on the checking account statements marked as Exhibit ‘C.’ It should not have taken seven months to locate and marshall an asset that was regularly appearing on U.S. Bank checking account statements for every month as early as December 2001. Furthermore, XXXXXXX and XXXXXXX question why it took seven months for said trustee agent to locate and marshall these assets of which beneficiaries were fully aware. This indicates lack of communication between said trustee agent for U.S. Bank and beneficiaries.

6. Said trustee agent of U.S. Bank has stated to the Court, in his response to Objection No. 5, that real estate taxes were in fact paid, but were paid after the due date. The Court should note that U.S. Bank did not pay the real estate taxes even after the due date; rather, the delinquent real estate taxes were paid by residual beneficiary XXXXXXX after they became delinquent. Said trustee agent of U.S. Bank did not pay the real estate taxes. XXXXXXX and XXXXXXX view this as negligence on the part of said trustee agent and trustee U.S. Bank.

7. Said trustee agent of U.S. Bank has stated to the Court, in his response to Objection No. 5, that real estate taxes were not paid as due on March 31, 2003 because U.S. Bank was in the process of conveying the property to surviving spouse. This rationale does not make sense. The Court Hearing on the conveyance of the property did not occur until April 24, 2003. U.S. Bank could not have been in the process of conveying the property until after the hearing of April 24, 2003. This is not a valid reason for not paying the real estate taxes due in March.

8. Said trustee agent of U.S. Bank, XXXXXXX, has stated to the Court, in response to Objection No. 8, that he did not prepare a written farm lease agreement because the former trustees did not provide for the service of Notice of Farm Tenancy to the existing farm tenant and accordingly, that individual was entitled to operate the farm real estate under the provisions of his earlier lease. XXXXXXX and XXXXXXX request that the Court note that there was no lease for crop year 2002 nor for crop year 200l, hence there were no prior written provisions for a lease. Preparing a written farm lease agreement for 2003 and a service of Notice of Tenancy in September 2002 was the responsibility of U.S. Bank in its obligation as trustee to protect the immediate assets of the trust. In regards to a service of Notice of Tenancy in September 2001, former trustees were not being allowed to confer with one another regarding farm tenancy matters because of obstructions of access toXXXX, co-trustee, by the farm tenant and residual beneficiary, XXXXXXX. The absence of a Notice of Tenancy service in September 2001 does not excuse nor explain the lack of a service of Notice of Tenancy by XXXXXXX in September 2002. Nor does it explain the failure to draw-up a farm lease agreement for 2003 so as to protect one of the major assets of the Trust.

9. Said trustee agent of U.S. Bank stated to XXXXXXX and XXXXXXX on May 16, 2002 that he would be preparing a written farm lease agreement with XXXXXXX, residual beneficiary and farm tenant. XXXXXXX and XXXXXXX had scheduled an appointment with XXXXXXX on May 16, 2002 to request a farm lease agreement, and XXXXXXX stated at that same meeting on May 16, 2002 that he would be preparing a farm lease agreement. It has been their understanding that a written lease is a requirement for a trust, so as to protect the farm land asset in the trust. XXXXXXX and XXXXXXX scheduled another appointment on August 12, 2002 to, once again, request the preparation of a farm lease agreement and to request a notice of farm tenancy letter by the end of September 2002. XXXXXXX, trustee for U.S. Bank, has stated several times to XXXXXXX and XXXXXXX that he would be preparing a farm lease agreement, and yet he never produced said lease agreement nor notice of farm tenancy letter as he had promised. It is the understanding of XXXXXXX and XXXXXXX that these were his obligations as trustee of U.S. Bank in protecting the assets of the XXXXXXX Trust. Moreover, a written farm lease agreement is a necessity when the farm tenant is also a residual beneficiary and stands to profit individually from the absence of a farm lease agreement.

10. Said trustee agent of U.S. Bank has repeatedly demonstrated partial and unfair preference, in his administering of the Trust, for the interests of XXXXXXX, a residual beneficiary and the farm tenant, over the interests of all other beneficiaries. When conferring with XXXXXXX, a residual beneficiary as well as farm tenant, said trustee, U.S. Bank, is also obligated to confer with the other beneficiaries, especially when the farm land is part of the trust and decisions pertaining to the farm land impact the Trust. By conferring only with XXXXXXX, the trustee, U.S. Bank, is allowing XXXXXXX to have unfair influence on those decisions. Per Iowa Probate Code 633.4306, a trustee must, as part of his obligations, demonstrate impartiality to all beneficiaries. XXXXXXX and XXXXXXX continue to adamantly state to the Court that said trustee agent for U.S. Bank, XXXXXXX, has privileged the interests of residual beneficiary XXXXXXX and neglected the interests of all other beneficiaries as a consequence. In his response to Objection No. 8, said trustee agent of U.S. bank declares to the Court that XXXXXXX was entitled to operate the farm real estate under the provisions of his earlier lease. By defending XXXXXXX’s “entitlement” to operate without a lease, the trustee is demonstrating his partiality for XXXXXXX’s interests over safeguarding the interests of the Trust. Instead of declaring XXXXXXX’s entitlement, said trustee agent should be concerned about how the lack of a farm lease agreement impacted the management of and the income from the farm land asset. Furthermore, by advocating for the removal of the farm land from the trust, said trustee, U.S. Bank, has also shown partiality towards XXXXXXX, since he is currently guardian of the beneficiary, XXXX, to whom the land would be transferred and through which he would be in control of the farm land. Since the farm land is the Trust’s most aggressive asset, the fact that U.S. Bank would advocate for its removal demonstrates a preference for XXXXXXX’s interests. Said trustee’s performance in this regard has not been in adherance with the Iowa Probate Code and has relevance in relationship to said trustee’s request for compensation.

11. Said trustee agent of U.S. Bank has stated to the Court that U.S. Bank does not regularly confer with beneficiaries on normal occurring administrative decisions. Said trustee has also stated that U.S. Bank cannot be expected to confer daily with beneficiaries concerning all administrative aspects of the Trust. These statements are a hyperbolic misrepresentation of our concerns in our earlier response to the Court. XXXXXXX and XXXXXXX have not been consulted regarding significant decisions on a regular or even quarterly basis. Said trustee did not confer with XXXXXXX and XXXXXXX before taking action to attempt to remove the farm land from the trust. We have repeatedly had to request information from said trustee regarding major decisions. Said trustee has made no effort nor shown initiative to communicate with residual beneficiaries, XXXXXXX and XXXXXXX, on even a monthly or quarterly basis. Iowa Probate Code 633.4213 specifies that the Trustee is obligated to keep the beneficiaries of a trust reasonably informed of the administration of the trust.

12. Said trustee agent of U.S. Bank has stated to the Court that Objection No. 10 posed by Ms. XXXXXXX and Ms. XXXXXXX is not subject to the requirements of the Initial Report or the Annual Report. XXXXXXX and XXXXXXX respectfully disagree with this contention. Per Iowa Probate Code 633.4202 (3), a trustee is responsible for administering a trust in an impartial, loyal manner. XXXXXXX and XXXXXXX continue to state that U.S. Bank has put its own financial interests ahead of the interests of the Trust by advocating for the removal of the farm land from the trust and then offering farm management services to the surviving spouse, XXXXXX, who happens to be a dependent adult and whose guardian is XXXXXXX. That this matter continues to be litigated does not mean that it does not reflect upon the Trustee’s performance. According to Iowa Probate Code 433.4303, the trustee shall diversify the investments, and the removal of the farm land leaves a lack of diversification in the Trust and removes the most aggressive asset.

13. Said trustee agent of U.S. Bank has stated to the Court, in response to Objection No. 3, that he issued a cashier’s check for 6,799.00 for payment of real estate taxes due March 31, 2002. This amount is too high. This amount apparently includes XXXXXX’s half of the real estate taxes. XXXXXXX and XXXXXXX request an explanation for why the trustee agent for XXXXXXX’s Trust, has taken it upon himself to pay XXXXX’s half of the real estate taxes out of the Trust. Although she is income beneficiary, for proper accounting purposes, those disbursements should be separated and should be reflected as part of her income benefits. Her income benefits should be separated from expenses. The trustee should only be administering the funds of the Trust. This issue also pertains to the check for real estate taxes in the amount of 7,371.00.

14. Said trustee agent of U.S. bank has stated to the Court, in response to Objection No. 3, that he issued Check No. 2023 for the purchase of two cashier’s checks. XXXXXXX and XXXXXXX question the accounting practice of combining checks for two different disbursements into one check. XXXXXXX and XXXXXXX also note to the Court that there are no full dates on the invoices submitted as Exhibits. This issue also pertains to the issuance of Check No. 2042 to cover two different disbursements as well.

15. Said trustee agent for U.S. bank has submitted accounting that does not exhibit the Net Income for the Trust. XXXXXXX and XXXXXXX request the Net Income amount for the XXXXXXX Trust.

16. XXXXXXX and XXXXXXX, beneficiaries of the XXXXXXX Trust, continue to question why the first accounting report was incomplete and neglected to include an accounting of significant check disbursements and for all property of the Trust. They also question why the annual accounting was not submitted in a timely fashion, by the end of February 2003. They continue to question why real estate taxes due March 31, 2003 went delinquent and were never paid by the trustee U.S. Bank. XXXXXXX and XXXXXXX, beneficiaries, have lost total confidence in U.S. Bank’s ability to perform as Trustee for the XXXXXXX Trust. They do not believe that the Trustee’s performance justifies the compensation requested in the Initial Report.

17. XXXXXXX and XXXXXXX question whether XXXXX, income beneficiary of the XXXXXXX Trust, has come to the Court to request approval of the Initial Report by her own initiative and in her own individual, independent capacity. The family recently discovered in late June that XXXXXXX had obtained guardianship of XXXXX in XXXXX County, without informing any family members, in February of 2003. Since XXXXXXX is now guardian of XXXXX, we question whether XXXXXXX has sought the court’s approval through her own individual capacity and whether XXXXXXX understands the financial details in the Initial Report submitted by U.S. Bank.

18. The original Trust Attorney was XXXXX. Attorney XXXXX was not the Trust Attorney in 2002 and thus was not aware of the original Trust.

WHEREFORE, the undersigned, XXXXXXX and XXXXXXX, continue to not approve of the initial report by said trustee, U.S. Bank, and trustee’s agent, XXXXXXX, and do hereby request that the Court remove and replace U.S. Bank and/or XXXXXXX with a different trustee, preferably one from XXXXXXX in Des Moines.

 

 

 

 

 

 

 

 

 

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