Our Trust & Estate Litigation Group guided a client through a high-stakes trust dispute—intertwined with a marital dissolution action—involving two SLATs worth roughly $60 and 80 million. Our work aimed to remove a conflict-driven fiduciary, enforce IRS compliance, and secure a fair financial outcome.
Understanding Our Client’s Journey
Our client and her spouse were each a grantor and beneficiary of two spousal lifetime access trusts (SLATs) established during their marriage. As the couple prepared to dissolve their marriage, our client sought support in navigating substantial trust-related conflicts to ensure her long-term financial stability and fair treatment under both trust and family law.
Two SLATs—respectively valued at approximately $60 million and $80 million—became a central point of contention in the divorce. The opposing spouse, serving as trustee of one SLAT, engaged in conduct that created significant conflict between the parties, attempted to pressure our client into making additional “gifts,” and failed to meet IRS reporting obligations for trust assets, including the valuation of closely held stock. These disputes had sweeping implications for both the trust administration and the overall dissolution.
Designing a Clear and Coordinated Strategy
To protect our client’s interests, we filed a TEDRA action seeking multiple forms of relief:
- Removal of the opposing spouse as trustee of one of the SLATs and appointment of a neutral professional fiduciary for both SLATs.
- A declaration invalidating the opposing spouse’s attempt to secure additional transfers from our client to the trust for his primary benefit.
- Enforcement of proper IRS reporting, including the requirement of an accurate and defensible appraisal.
In representing our client in the consolidated trust and dissolution action, we collaborated and co-counseled with dissolution counsel to evaluate the financial imbalance created by the SLATs’ structure—liberal toward the opposing spouse yet restrictive toward our client. We developed a valuation demonstrating a significant disparity between the SLAT for the primary benefit of the opposing party and the SLAT for our client’s benefit, and submitted it in support of an equitable adjustment in our client’s favor.
A Strong Future Secured
Our coordinated strategy provided the court with a clear and defensible picture of both the trust‑based misconduct and the financial inequities created by the SLATs. The valuation work and TEDRA claims positioned our client to secure meaningful corrective relief in the trust action and to pursue a multi-million dollar equalization payment in the dissolution. Together, these efforts resulted in the removal of the conflict-prone trustee, ensured regulatory compliance, and safeguarded the integrity of the trusts for our client’s future and the future of her descendants.
