CTC has a rich heritage of management with the foresight to adapt the trust business to changing economic times. In its infancy, the Company was owned by an individual with an eye for real estate investments, oil and gas investments, and securities of closely held businesses. In short, the trust company consisted of investors who pooled their resources through trust vehicles much like a partnership. These trusts were the early versions of personal trusts, administered by the Company which kept the books and records of each trust, made appropriate distributions and performed tax work. In the late 1980s the owner of CTC, concerned with the continuity of the enterprise, as well as, the on-going fiduciary responsibilities owed to the various trusts and beneficiaries, sold a significant minority interest to the present day owners of CTC. These new owners were businessmen, with a background in forensic accounting and estate planning, who had seen many entrepreneurs attempt to transition businesses from one generation to the next. They understood the unique mind-set of the entrepreneur, as they were entrepreneurs themselves. They had a new vision for the Company. In 1994, the current owners purchased an additional interest in the Company, now owning a controlling interest. At that same time, the Delaware Legislature passed the “Directed Trustee Statute”, which is now known as 12 Del. C. §3313. This section of the Delaware Code allowed a trustee to completely bifurcate the investment function and focus on trust administration, without fear of liability caused by the decisions made by the separate adviser charged with authority over investments. The purchase and the coinciding legislation made it perfect timing for the new owners of CTC to remain focused on what CTC and its owners knew best—trust administration, accounting and taxation, while leaving the investment piece to those with expertise in investments. Acting as a directed trustee, and the independence that it is able to maintain, has given CTC a huge advantage in the market. We are not competition to those in the investment field; in fact we are a complement to their services. We are able to focus our energies on administration and hire highly qualified professionals in the areas of trust law, taxation and accounting.
Commonwealth Trust Company established
Delaware enacted legislation
Delaware enacted legislation providing that a new perpetuities period would begin on the exercise of a power of appointment, pre-cursor to the repeal of the Rule Against Perpetuities.
Commonwealth Trust Company and Hamilton Trust Company merged
Commonwealth Trust Company and Hamilton Trust Company merged, with Commonwealth Trust Company as the surviving corporation
Lewis v. Hanson
Lewis v. Hanson, 128 A.2d. 819 (Del. 1957), aff’d sub nom. Hanson v. Denckla, 357 US 235, reh’g denied, 358 U.S. 858 (1958) – established that Delaware law would be applied to the administration of all matters involving a Delaware trust and trustee.
Tax Reform Act
Tax Reform Act of 1986 passed by Congress establishing the generation-skipping transfer (GST) tax regime.
Purchased a partial interest in CTC
Peter and Jim Horty purchased a partial interest in CTC from Benjamin (Bud) Vinton.
CTC moves to Bancroft Mills Road.
As textile producers left the northeastern United States for the southern states, Bancroft Mills closed in 1961. In 1991 CTC moved its offices to 29 Bancroft Mills, the former Bancroft Mills, and the site of our current office. Today the complex stands as a reminder of the significant milling history of the Brandywine Valley.
Peter and Jim Horty purchased the balance of shares of CTC stock
Directed Trust statute passed allowing bifurcation of trustee duties (12 Del. C. §3313)
Rule Against Perpetuities
Delaware abolished the Rule Against Perpetuities allowing the establishment of dynasty trusts (25 Del. C. §503).
Qualified Disposition in Trust Act
Qualified Disposition in Trust Act established in Delaware making it one of the first two states to enact asset protection legislation in the United States (12 Del. C. §§3570-76).
Codification of the common law doctrine
Codification of the common law doctrine of virtual representation in Delaware for both judicial and non-judicial proceedings (12 Del. C. §3547).
Total Return Trust statute enacted
Total Return Trust statute enacted as the first in the nation, allowing trustees to convert income trusts into total return unitrusts without court approval (73 Del. C. §48). First Private Letter Ruling issued recognizing the effectiveness of DING trusts [PLR 200148028 (Aug. 27, 2001). Others to follow include: PLR 200247013 (Aug. 14, 2002); PLR 20050214 (Sept. 17, 2004); PLR 200612002 (Nov. 23, 2005); and PLR 200637025 (June 5, 2006)].
McNeil v. McNeil
McNeil v. McNeil, 798 A.2d 503 (Del. 2002) aff’d in part, rev’d in part sub nom. McNeil v. Bennett, 792 A. 2d 190 (Del. Ch. 2001). This case is the foundation for the duty under Delaware law to inform individuals of the existence of trusts under which they have a beneficial interest.
Provision added to the Delaware Statute
Provision added to the Delaware Statute to address beneficiary notification issues involved in the McNeil ruling of 2002 (12 Del. C. §3303(a)). Grantors may now restrict the interests of beneficiaries, including the right to be informed of their interest in a trust for a period of time by incorporating appropriate language in the trust document. Trustee’s authority to invade principal in trust (or decanting) statute enacted (12 Del. C. §3528).
Duemler v. Wilmington Trust Co.
Duemler v. Wilmington Trust Co., C.A. No. 20033 N.C. (Del. Ch. 2004) upheld the liability protection afforded a directed trustee when acting at the direction of a third party investment adviser.
Section 548(e) of the U.S. Bankruptcy Code amended
Section 548(e) of the U.S. Bankruptcy Code amended to address asset protection trusts, expressly permits the use of domestic asset protection trusts in non-abusive circumstances (i.e. non-fraudulent transfers).
Creation of purpose trusts is authorized
The creation of purpose trusts is authorized by the enactment of Section 3555 (12 Del. C. §3555).
Uniform Principal and Income Act codified (12 Del. C. §§61-301, et seq.)
Merrill Lynch Trust Company, FSB v. Campbell, et al., 1803-VCN, V.C. Noble (Del. Ch. Sept 2, 2009) (Mem. Op.) reaffirmed the Chancery Court’s dedication to holding trustees to the standards established in the trust instrument; it also served as a reminder to trustees of the importance of exercising and documenting their independent discretion; and finally, it highlighted the importance of express language in the governing instrument regarding fiduciary releases and accountings and the payment of related expenses.
Tenancy by the Entireties Property
Tenancy by the Entireties Property contributed to Delaware trusts retains its character as tenancy by the entireties property (12 Del. C. §§3334, 3574(f)). Duty to Co-fiduciaries statute passed to confirm that each fiduciary has a duty to keep the others reasonably informed regarding matters involving the trust administration (12 Del. C. §3317).
Investment decisions are now expanded
Investment decisions are now expanded to include the determination of value as to non-traditional assets (12 Del. C. §3313(d)).
Otto v. Gore, — A.3d —, 2012 WL 1852075, C.A. Nos. 559, 582, and 589, 2012 (consolidated appeal), Steele, C.J., (Del. May 22, 2012).
Supreme Court (the “Court”), has proven its consistent intention to “give maximum effect to the principle of freedom of disposition and the enforceability of governing instruments” as found in 12 Del. C. §3303(a). In reviewing two dueling trust instruments signed by the grantors, both purporting to have identical corpus, the Court reviewed extrinsic evidence of the grantors’ intent to create each trust. The Court held that while none of the facts were persuasive alone, taken as a whole, the cumulative effect of the extrinsic evidence was sufficient to establish the ineffectiveness of the first trust instrument and allow for the acceptance of the second trust as the official governing instrument and owner of the corpus.
On October 2, 2013, the Delaware Supreme Court issued three landmark opinions referred to as the Peierls cases. IMO: Peierls Family Inter Vivos Trusts, No. 16812 (Del. Oct. 4, 2013); IMO: Ethel F. Peierls Charitable Lead Trust, No. 16811 (Del. Oct. 4, 2013); and IMO: Peierls Family Testamentary Trusts, No. 16810 (Del. Oct. 4, 2013). These cases clarify that Delaware law will be deemed to govern the administration of a trust which has migrated to Delaware so long as (1) the provision relating to the appointment of a successor trustee is without geographic limitation (2) a Delaware trustee is appointed and administering the trust and (2) the choice of law provision in the trust document does not expressly provide that another jurisdiction’s laws shall always govern regardless of the actual location of the trust’s administration.
Non-Judicial Settlement Agreement Statute
Non-Judicial Settlement Agreement Statute added to Title 12 of the Delaware Code as Section 3338. This provision allows interested persons to enter into a binding non-judicial settlement agreement with respect to any matter involving a trust, so long as it does not violate a material purpose of the trust. On July 22, 2014, an Act to Amend Titles 12 and 25 of The Delaware Code was signed into law (“Trust Act 2014”). The Trust Act 2014 legislation became effective on August 1, 2014. Of particular note were provisions affecting the springing of the Delaware tax trap which allow powerholders, having a nongeneral power of appointment over property of a trust exempt from GST tax, the option of exercising the power in a manner designed to trigger estate tax inclusion under Section 2041(a)(3) of the Internal Revenue Code.
Hardy v. Hardy, et. al., C.A. No. 7531-VCP, n. 119 (Del.Ch. July 29, 2014).
The Delaware Chancery Court decided a case involving a claim against two individual trustees for breach of their fiduciary duties. The Vice Chancellor found the trustees’ actions to be “grossly inconsistent with ordinary prudence” and in violation of their fiduciary duty of loyalty. The beneficiary was awarded damages in the amount of the funds expended as well as his reasonable attorneys’ fees. Also of significance in the opinion was the Vice Chancellor’s definition of the term “gross negligence,” a previously undefined term in the context of trustee liability. “Gross negligence… is defined as a higher level of negligence representing an extreme departure from the ordinary standard of care. In other words, a finding of gross negligence requires more than ordinary inadvertence or inattention.”
Fiduciary Access to Digital Assets
One of the first of its kind in the country, Delaware passed the Fiduciary Access to Digital Assets statute as Section 5001 through 5007 of Title 12 of the Delaware Code. The statute allows individuals to obtain the same property rights in digital assets and accounts as are regularly applied to more traditional assets, thus affording them freedom of disposition.
Silent Trust Statute
Silent Trust Statute enhanced within Title 12 of the Delaware Code by expanding the language of Section 3303 and adding a new Section 3339. The legislation codified existing law regarding the permissibility of the terms of a governing instrument to vary the right of a beneficiary to be informed of his or her interest in a trust for a period of time. The new legislation provides a non-exclusive list of circumstances that would be deemed to constitute a “period of time” under Section 3303(c) of Title 12. In addition, a new Section 3303(d) provides that a “designated representative” (as subsequently defined in Section 3339) can bind a beneficiary during a period of confidentiality as to both judicial proceedings and nonjudicial matters.
The new statute also adds a new section to Title 12 of the Delaware Code, Section 3339, which (i) includes a definition of a “designated representative,” (ii) clarifies the fact that the terms of a trust instrument may authorize certain persons to designate or appoint one or more designated representatives, (iii) provides that a person who is appointed as a designated representative will serve only upon his or her acceptance of the position, and (iv) provides a presumption that a designated representative will act in a fiduciary capacity.
Trust Modification Statute
Trust Modification Statute added to Title 12 of the Delaware Code as Section 3342. This provision allows for the modification of an irrevocable trust during the lifetime of the trust settlor by written consent and without the involvement of the courts, even if the modification violates a material purpose of the trust. The statute requires the written consent of all then-serving fiduciaries and all trust beneficiaries as well as the consent or non-objection of the settlor. This statute is available only to trusts administered in Delaware.
Delaware’s Premium Tax for Trust-Owned Private Placement Life Insurance is Reduced.