IN THE MATTER OF THE DONALD EDWIN WILLIAMS REVOCABLE TRUST AND THE INDIVIDUAL BENEFICIARY TRUST OF LINDA L. SLACUM
Court for Wicomico Count Case No. 22-C-15-001419
Deborah S., Leahy, Harrell, Glenn T., Jr. (Senior Judge,
Specially Assigned), JJ.
Deborah S., J.
appeal is taken by the Donnie Williams Foundation, Inc.
("the Foundation") from an order of the Circuit
Court for Wicomico County dismissing its petition for the
court to assume jurisdiction over the Donald Edwin Williams
Revocable Trust ("the Trust") and the Individual
Beneficiary Trust of Linda L. Slacum ("the IBT")
and to remove Linda L. Slacum, Kevin Myers, and William
Smith, Esq., as trustees of those trusts ("the
Trustees") (hereinafter "the Removal Action").
The Removal Action had been consolidated with a second
action, also filed by the Foundation, asserting claims for
constructive fraud, breach of fiduciary duty, negligence, an
accounting, and unjust enrichment against the Trust, the IBT,
and the Trustees, the appellees (hereinafter "the
Damages Action"). The cases remained consolidated at the
time the court dismissed the Removal Action.
Foundation presents six questions for review, which we have
condensed and rephrased as two:
I. Did the circuit court err by ruling that a mutual release
entered into between the parties (and others) concerning
other litigation barred the Foundation from raising claims
arising before April 22, 2014?
II. Did the circuit court err by finding that removing the
Trustees was not warranted by their making principal
distributions to Slacum before funding the IBT; by their
taking more than two years to fund the IBT; by the delays in
distributions to the Foundation; by the delays in disclosures
to the Foundation; or by their taking large commissions?
threshold matter, the Trustees have moved to dismiss the
appeal, arguing that there is not a final, appealable
judgment. The Foundation has opposed that motion. For the
following reasons, we shall grant the motion to dismiss the
E. Williams ("Williams" or "Settlor")
committed suicide on May 17, 2012, when he was 59 years old.
He had been a successful real estate developer in Salisbury
and died with assets valued at nearly $40 million. He was
divorced and had no children. Both his mother, Loretta
Williams ("Loretta"), and his father predeceased
him in the year before his death. He had two brothers. Slacum
was his companion for more than a decade.
eighteen months before his death, Williams engaged the
services of an attorney to design an estate plan. On June 9,
2011, he executed his will ("Will"); established
the Trust; and signed Articles of Incorporation
("Articles") creating the Foundation.
Will named Debra Hall, a longtime employee and friend, as
Williams's personal representative ("PR"); and,
if she could not serve, it named Myers, a certified public
accountant ("CPA") who also had worked for Williams
for many years, as substitute PR. After Williams's debts
and liabilities were paid, the Will was to "pour
over" all of his remaining assets into the Trust.
Trust was an inter vivos revocable trust to be
"managed for Settlor's benefit during [his] lifetime
and distributed to the beneficiaries . . . upon [his]
death." § 1.03. As we shall discuss, the Trust
beneficiaries were the Foundation and Slacum. During
Williams's lifetime, he would serve as the Trustee unless
and until he became incapacitated. He was authorized to pay
himself from the net income or principal of the Trust assets,
"even to the extent of exhausting principal, " for
any expenses he deemed necessary or desirable. § 3.01.
Williams's death, the Trustees were to "follow any
directions of the [PR]" regarding the payment of funeral
expenses and other debts, § 4.02, and were authorized to
pay any tax liabilities and any "other costs incurred in
administering the deceased Settlor's estate." §
4.03. Certain motor vehicles and watercraft were to be
distributed to Loretta, free of trust, but as mentioned, she
predeceased Williams. After the payment of expenses, taxes,
and any other debts, and the distribution of the assets to
Loretta, the Trustees were to "pay the remaining
principal and undistributed income (collectively the
"Residuary Assets") as hereafter provided."
§ 4.06. The Trustees were directed to set aside assets
in "an amount equal to the unified credit applicable to
the Settlor's estate pursuant to Section 2010 of the
Internal Revenue Code of 1986, as amended, and the state
death tax credit (provided use of the state death tax credit
does not require an increase in the state death taxes paid) .
. . ." § 4.07. These assets were denoted the
Trustees were to "divide the remaining [IBT] Assets . .
. into . . . separate trusts" for the benefit of
individual beneficiaries "in accordance" with
certain percentage interests set forth in the Trust. §
4.11. At the time of Williams's death, the individual
beneficiaries were Slacum (80%) and Loretta
(20%). Each individual beneficiary of an IBT was
entitled to be paid the "net income earned" by her
IBT at least quarterly until the IBT terminated upon her
qualifying for Medicaid or dying, whichever occurred first.
§ 4.13. At the termination of the IBT, the principal
balance and any remaining undistributed income was to be
distributed outright and free of trust to the Foundation.
from the IBT Assets, all of the remaining Residuary Assets
were to be distributed to the Foundation outright and free of
trust. § 4.16. If the Foundation was no longer in
existence or otherwise failed to qualify as a section
501(c)(3) organization, the Trustees were to distribute the
remaining assets to other nonprofit organizations serving
similar purposes as the Foundation. § 4.17.
administer the Trust, the Trustees were accorded "all
powers, authorities and discretions granted by common law,
statute, and under any rule of court." § 5.01. They
further were "expressly authorized and empowered"
in their "sole and absolute discretion" without
prior court approval to, inter alia, invest and
reinvest assets; dispose of property owned by the Trust; pay,
compromise, or settle any claims or demands lodged against
the Trust; and make, execute, acknowledge and deliver deeds
or other transfers of property. Id. The Trustees
could not be held liable for "any loss or depreciation
in the value of any trust, created herein, " occasioned
by investments or reinvestments of Trust assets made in good
faith while exercising due care. § 5.02. Decisions
concerning distributions to the individual beneficiaries who
also were Trustees were to be made by the independent
Trustees. § 5.03.
to a "Spendthrift Provisions and Facility of
Payments" section of the Trust, the Trustees were to
"make . . . payments . . . directly to the beneficiary
entitled to them and not to any other person" except as
otherwise specified. § 6.01. The Trustees were granted
the further power to make payments of any income or principal
for a beneficiary (i) directly to the beneficiary; (ii) to
the individual who is, in the judgment of the Trustee, in
proper charge of such person, regardless of whether there is
a court order to that effect; (iii) in the case of a minor,
to a custodian for the minor named by the Trustee, to held
[sic] as a gift under the Maryland Uniform Transfers to
Minors Act, with the custodial arrangement continuing until
the beneficiary reaches twenty-one (21) years of age; or (iv)
by paying or applying any part or all thereof for a
beneficiary's benefit or on a beneficiary's behalf .
. . .
§ 6.02. These powers could be exercised "without
any necessity of obtaining . . . approval of any court, and
such payments made in good faith shall be deemed proper and
shall be a complete release and acquittance of the Trustee
therefor." Id. The Trustees were further
empowered to "make discretionary payments of income or
principal to any person after taking into consideration, or
without taking into consideration, as the Trustee deems
appropriate, any other income or financial resources
reasonably available to said beneficiary." § 6.03.
Hall, and Myers were named as successor co-Trustees. §
7.03. Williams later amended the Trust to name Slacum as a
successor co-Trustee in place of Hall and Loretta. See
July 27, 2011 Amendment. He did not name a third successor
co-Trustee, but also did not delete the provision of the
Trust stating that there "shall always be at least three
(3) individual Trustees . . . ." § 7.03. The
successor Trustees were granted all the powers possessed by
the Settlor as the initial Trustee. § 7.09.
Articles of Incorporation for the Foundation established it
for "educational and charitable purposes."
Specifically, it was to support the schools in Wicomico,
Worcester, and St. Mary's Counties by furnishing tutoring
programs, after school homework assistance, and after school
activities to provide a safe environment and to encourage
physical activity. The Foundation would have as many as seven
directors, but never less than three. The Articles named
Williams, Hall, Myers, and four other individuals-Gregory
Johnson, Mark Granger, Kimberly Granger, and Kirk Kinnamon-
as the directors.
Administration of the Estate and the Trust
time of his death on May 17, 2012, Williams's estate
("the Estate") was valued at approximately $3, 500,
000 in assets and his Trust held $35, 000, 000 in assets. The
Trust assets included five properties leased to CVS stores
with complex "mezzanine financing"; two properties
leased to Dollar General Stores; 130 unimproved lots; several
improved residential lots; stocks; and some cash. Much of the
real property was held by LLCs.
immediately upon Williams's death, Hall as PR, on the one
hand, and Slacum and Myers, as Trustees,  on the other,
became embroiled in a series of battles over the payment of
expenses and debts; the distribution of assets; and the
disclosure of information. One disputed issue concerned the
amount of assets to be set aside to fund the IBT (which due
to Loretta's death was solely for Slacum's benefit).
As noted, section 4.07 of the Trust required that assets with
value equivalent to "the unified credit applicable to
the Settlor's estate pursuant to Section 2010 of the
Internal Revenue Code of 1986" be set aside to fund the
IBT. The referenced regulation did not exist when the Trust
was executed, however. The Estate took the position that the
IBT should be funded with just over $1 million in assets and
the Trustees took the position that it should be funded with
over $5 million in assets. The parties also disagreed as to
whether the value of assets set aside for the IBT should be
reduced by 20% to account for Loretta's share in light of
her death or whether the IBT should be fully funded.
second half of 2013, five lawsuits concerning the Trust and
the Estate were filed. Within the probate case, the Trustees
sought to have Hall removed as PR, see Linda L. Slacum et
al. v. Debra W. Hall, Case No. 22-C-13-001377, and in a
second suit they sued the Estate seeking declaratory relief
construing the Trust provisions pertaining to the IBT funding
amount, the number of Trustees, and other issues. See
Linda L. Slacum, et al. v. Debra W. Hall, et
al., Case No. 22-C-13-001669. The Trustees filed two appeals
from decisions of the Orphans' Court for Wicomico County
in the probate case. See Linda L. Slacum, et al. v. Debra
W. Hall, Case No. 22-C-13-001968; Linda L. Slacum,
et al. v. Debra W. Hall, Case No. 22-C-13-002102. Hall
sued the Trust, also seeking declaratory relief pertaining to
the funding of the IBT. See Debra W. Hall v. Donald Edwin
Williams Revocable Trust, Case. No. 22-C-13-001496.
Hall's suit was voluntarily dismissed that same year. The
Foundation was named as an interested party in the lawsuits
concerning the amount of the funding of the IBT because until
the amount of the IBT set-aside was determined the Foundation
could not receive any distributions of Trust
March 12, 2014, the Trustees, Hall, the Foundation, Slacum,
and Robert Hall participated in mediation with a retired
circuit court judge concerning the pending
litigation. As a result, on April 22, 2014, they
executed a Settlement and Release Agreement and Release
("SAR"). The recitals in the SAR state that
disputes [had] arisen between Ms. Hall, the Trustees and the
Trust, and the Foundation with respect to, among other
things, the disposition of the assets of the Estate, the
disposition of the assets of the Trust, the interpretation of
provisions of the Revocable Trust Agreement . . ., Ms.
Hall's service as [PR], the Commissions claimed by Ms.
Hall as [PR], and the compensation claimed by Ms. Hall's
attorneys [and that those disputes had given rise to the
lawsuits discussed above].
parties wished to "compromise and resolve the claims
raised or which could have been raised in [those lawsuits]
and any claims relating to, pertaining to or arising out of
the subject matter of [those lawsuits] or the administration
of the Estate." They agreed to "finally compromise
and settle all issues that have been raised or which could
have been raised between them in the [lawsuits] or
otherwise" in accordance with the following pertinent
Foundation agreed to sign a non-disclosure agreement
("NDA"). The Trust and the Estate agreed that,
after the NDA was executed, they would furnish the Foundation
with copies of federal and state estate tax returns; all
fiduciary tax returns with all schedules; and "[s]uch
other documents as the Foundation might reasonably require to
perform its responsibilities."
consideration for these promises, the parties entered into a
"Mutual Release" agreeing to "release one
another" and their agents, successors, and assigns,
from and against any and all actions, causes of action,
suits, . . . controversies, . . . counterclaims, claims, and
demands whatsoever, whether known or unknown, that relate to
the subject matter of this Agreement, the Estate and/or [the
lawsuits] and/or that were or could have been asserted in the
Estate and/or [the lawsuits], [excepting claims that could be
brought against the drafters of the Will, the Trust, and the
exhibits were attached to the SAR, including a "Joint
Stipulation as to Interpretation of Trust Agreement." As
pertinent, the parties stipulated that the IBT should be
funded in the "maximum amount that could pass free of
federal estate taxes, " which was determined to be $5,
120, 000, and that Loretta's 20% share of those assets
"was not intended to remain a part of the Residuary
Assets to be distributed to the Foundation."
the SAR was fully executed, the Trustees liquidated numerous
assets held by the Trust, including the five CVS stores and
many unimproved lots. They paid themselves ...