Presta v. Tepper (California Courts of Appeal, November 24, 2009)
Presta and Tepper entered into two partnership agreements as trustees of their respective trusts. The partnership agreements included a clause stating that upon the death of a partner the partnership shall purchase the entire partnership interest of the deceased partner in the partnership. Tepper died. The issue was whether Tepper or his trust was the partner for the purpose of the partnership agreement. The court held that although some trusts can legally be partners, with respect to the trusts in question (typical estate planning trusts) the trustees, and not the trusts, are the partners. Therefore, although Tepper’s trust was ongoing, Tepper’s death triggered the buyout clause. By law, the trusts in question are not entities separate from their trustees and cannot independently do anything—the trusts cannot sue or be sued, cannot enter into agreements, and cannot fulfill the fiduciary duties of a partner.
Regards,
Dave Tate
http://davidtate.us
http://www.tatecommonsensical.blogspot.com
tateatty@yahoo.com
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Covering news relating to legal developments; directors and officers; audit committees; governance, risk and compliance; accountants; accountability; California trust, estate and elder updates; and assorted related business and social issues. Please tell friends and colleagues.
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