Sunday, December 7, 2014
Spouses Are Not Fiduciaries
Last Friday, the Kentucky Court of Appeals issued an opinion in a suit based upon estate planning and alleged a legal malpractice. More important from my perspective is the determination that spouses are not, ab initio, fiduciaries of one another. Kloiber v. Kloiber Dynasty Trust, Case No. 2013-CA-000436-MR (Ky. App. December 5, 2014). This opinion has been designated “Not to be Published.”
This decision arose out of certain efforts by Beth Ann Kloiber to challenge the terms of the Daniel Kloiber Dynasty Trust, PNC Delaware trust Co., Trustee, all with respect to the substantive terms thereof and related assertions that certain legal counsel either aided and abetted or conspired to deprive her of certain marital rights therein. Those interested in those topics should review the opinion itself.
Much of the allegations with respect to breach of fiduciary duty, as well as the related aiding and abetting claims, were premised on the fact that spouses stand in a fiduciary relationship to one another. The trial court, in dismissing those claims, determined that spouses, as spouses, do not stand in a fiduciary relationship with one another. The Court of Appeals upheld that determination noting in footnote 9 to the opinion:
The parties argue over whether this Court should be persuaded by our sister states to adopt a fiduciary duty upon a spouse simply due to marriage. We decline to do so.
As has been oft referenced here and elsewhere, fiduciary duties are atypical. While the marriage relationship may may and certainly does impose significant limitations upon the spouses vis-a-vis one another, this decision makes clear that, upon the breakdown of the marriage relationship, without more it may not be asserted that one spouse violated a fiduciary duty to the other.