The Supreme Judicial Court of Massachusetts reverses in part the Superior Court’s grant of summary judgment to children who sued their uncle, the creator of a trust in their family matriarch’s name that they claimed was invalid. The Supreme Judicial Court holds that summary judgment was proper for all counts of the complaint except for count eight, which alleged constructive trust. In Barbetti v. Stempniewicz (Mass. No. SJC-13149, June 28, 2022).
In 2013, Ms. Stempniewicz executed a power of attorney that appointed her brother, Mr. Edward Stempniewicz, as attorney-in-fact over her financial affairs. In 2017, Mr. Stempniewicz created a trust (“Lubov Trust”) to manage Ms. Stempniewicz’ assets. After she died in 2018, her children sought a declaratory judgment that the Lubov Trust was void.
There were 14 counts in their complaint. The Superior Court granted partial summary judgment in the children’s favor. Mr. Stempniewicz appealed.
The Supreme Judicial Court limits its review to count eight of the children’s complaint, wherein they alleged that Mr. Stempniewicz held property in trust that rightfully belonged to the Lubov Stempniewicz estate. The judge had granted summary judgment in favor of the children on this issue, determining that the Lubov Trust property should be held in a constructive trust for the estate's benefit.
The high court disagrees, finding that Mr. Stempniewicz did not have the authority to create the Lubov Trust, and so the trust is void ab initio. In acting as if the trust never existed, it concludes that any transfers to the trust are also void ab initio. Therefore, any assets held in trust that never existed should transfer back to whatever source initially provided the assets.
The Supreme Judicial Court finds that the only relevant question in the appeal is who owned the assets that the children alleged belonged to the estate before Mr. Stempniewicz transferred the property to the Lubov Trust. According to the court, he must have an opportunity to prove ownership at trial. His assets shall be returned to him if he proves that he owned them before they were transferred to Lubov Trust. If he was not the rightful owner of the assets, the rightful owner will regain ownership of the assets as if the trust had never existed.
The Supreme Judicial Court reverses the court’s ruling on count eight of the children’s complaint and remands the case for further proceedings. It affirms all other judgments from the Superior Court.