Fees properly paid from trust

A trust beneficiary’s arguments that the costs and fees for terminating the trust should be paid from the decedent’s estate, rather than from the trust, are not well taken.

Overview

“Keith Alan Bradshaw (‘Bradshaw’) appeals from an … order entered in the Nottoway County Circuit Court (‘circuit court’) terminating a trust for which Bradshaw was a beneficiary.

“The order awarded attorney fees and costs to the trustee and guardian ad litem fees to the attorney appointed to represent Bradshaw. These awards were to be paid from the proceeds resulting from terminating the trust.

“Bradshaw, pro se, contends that the circuit court erred by awarding attorney fees and costs to the trustee and guardian ad litem from the proceeds resulting from terminating the trust. We disagree[.]”

Arguments

“Bradshaw contends that the circuit court abused its discretion by including in its final order an award of attorney fees and costs to be paid from the corpus of trust funds.

“Bradshaw makes three arguments in support of this position:

“(1) that the circuit court’s oral pronouncement upon the conclusion of the hearing did not include this award, and therefore its inclusion in the written order was error;

“(2) the terms of the will which created the trust forbade payment of costs and fees from the trust corpus; and

“(3) that the fees awarded were unreasonable. We disagree.

Oral vs. written order

“Bradshaw presents several cases, many from federal courts, supporting his basic proposition that because a defendant has a right to be present when he is sentenced, ‘if a conflict arises between the orally pronounced sentence and the written judgment, then the oral sentence controls.’ …

“He argues that the circuit court failed to award any attorney fees, GAL fees, or costs by pronouncement from the bench during the hearing and therefore any award of attorney fees, GAL fees, or costs in the final order was in error.

“However, the cases cited by Bradshaw specifically apply only to criminal sentencing and have no bearing upon this strictly civil matter.”

Payment of fees

“Bradshaw also contends that the terms of the will required that the payment of the subject fees and costs were to be paid from Watson’s residuary estate not from the trust corpus. We disagree.

“Bradshaw relies upon three provisions in Watson’s will. First, Bradshaw relies on Article I’s provision: ‘I direct that all of my lawful unsecured debts, funeral expenses, expenses of my last illness, expenses of administration and taxes owed by my estate whether as a consequence of my death or otherwise, be paid out of my residuary estate without apportionment among the beneficiaries of my estate.’

“Bradshaw contends that the attorney fees, GAL fees, and costs awarded by the circuit court in the final order are ‘expenses of administration’ within the contemplation of Article I and therefore are to be paid out of the residuary of Watson’s estate rather than the trust corpus.

“However, Bradshaw cites no authority for this interpretation of the will.

“Since Article III created the trust, we find that the plain meaning of Article I applies to the expenses of administering the decedent’s estate, not the expenses in administering the trust created for Bradshaw’s benefit.

“Bradshaw next cites to Article III of the will: ‘[t]o the extent permitted by law, neither the principal nor income shall be liable for the debts of any beneficiary.’

“Read in conjunction with the aforementioned provision in Article I along with the allocation of $50,000 to a trust for Bradshaw’s benefit, Bradshaw seemingly argues that he was entitled to take the trust assets free and clear of any costs and that the fees and costs awarded by the order were ‘debts of the beneficiary [Bradshaw]’ within the meaning of Article III of the will.

“Once again, Bradshaw cites no authority in support of this assertion.

“Although we acknowledge that this provision in Article III appears to be designating the resulting trust as a spendthrift trust, generally barring Bradshaw’s creditors from being able to reach the assets of the trust in satisfaction of his debts, Article III does not preclude the circuit court from awarding costs and fees from the trust principal as it has done here.

“Article III of the will included a provision stating: ‘In addition to the powers granted by law, I grant to my Trustee those powers set forth in Section 64.1-57 of the Code of Virginia, as in force from time to time, and I incorporate that Code Section in said trust by this reference.’

“Although Code § 64.1-57 has been repealed and replaced by Code § 64.2-105(12), the new provision allows a trustee ‘[t]o employ and compensate, out of the principal or income, or both as to the fiduciary seems proper, agents, accountants, brokers, attorneys-in-fact, attorneys-at-law, tax specialists, licensed real estate brokers, licensed salesmen, and other assistants and advisors deemed by the fiduciary to be needful for the proper administration of the trust or estate …’

“This provision prevents the conclusion that Watson intended to completely insulate the $50,000 trust principal from any costs related to the trust. …

“Therefore, we are unconvinced by Bradshaw’s argument that an award of attorney fees and costs was precluded by Watson’s will.”

Reasonable fees

“[T]he issue of whether to award GAL fees is squarely within the discretion of the trial court. …

“The trial court had the GAL’s invoice before it when it decided to enter the proposed final order, and by implication the circuit court credited the invoice and found the award of fees reasonable when it entered the proposed final order.

“Since we cannot conclude that no reasonable jurist could have credited the invoice, and found the award of fees reasonable, we find no error.”

Affirmed.

Bradshaw v. Estate of Thomas Owens Watson, Record No. 1782-22-2, Feb. 27, 2024. CAV (unpublished opinion) (Athey Jr.; Causey dissenting) From the Nottoway County Circuit Court (Cella). Keith Alan Bradshaw, pro se. (Clay L. Macon; Konstantine Kastens; Glasser & Macon, P.C., on brief), for appellee. Appellee submitting on brief. (Linda M. H. Tomlin; The Law Office of Linda M. H. Tomlin, PLLC), Guardian ad litem for appellant. VLW 024-7-066, 21 pp.