On October 4, 2013, the Delaware Supreme Court (the “Court”) issued three landmark opinions which have a significant impact on Delaware trust law, particularly in the area of trust migration. In the three related en banc opinions1, known as the Peierls opinions, the Court clarified the question of when Delaware law will be deemed to govern the administration of a trust which is migrated to Delaware as well as when a Delaware Court would have the authority to accept jurisdiction with respect to a transfer trust. The most significant finding of the opinions is that the Court specifically provided that, absent clear evidence of a settlor’s contrary intent at the trust’s inception, a settlor’s choice of governing law will not be read to be absolute or unchangeable. More specifically, the Court stated that Delaware law will be presumed to govern the administration of a trust which (1) is actually being administered by a trustee in the state of Delaware and (2) allows for the appointment of a successor trustee without a geographic limitation.
As a practical matter, going forward, these holdings provide that in order to have the Court of Chancery act on a modification, a decanting, or other matter under Delaware law – usually the primary goal of a trust’s relocation to Delaware – it is critical that the Delaware Trustee be administering the trust prior to the filing of the petition. Further the common practice of having the Court of Chancery bless all stages of a proposed modification or transaction, including conditional resignations and acceptances of trustees and successor trustees, will cease to be the norm. Moreover, the Court’s rulings in the Peierls cases have made clear that portability, re-situsing and/or modification of trusts to incorporate the directed trust concept, or otherwise take advantage of the myriad of favorable provisions of Delaware law, are fully available and obtainable under typical choice of law and successor trustee provisions.
To read the Delaware Supreme Court Opinions, please click the following link https://www.comtrst.com/trust-our-expertise/delaware-law
To read our Trust Counsel’s, Jonathan Becker’s, full article please click the following link Final – Peierls Article by Becker