Wallace v. Comprehensive Personal Care

Milton Wallace (defendant) and his wife, Patricia, created an irrevocable trust using their assets. Milton was the trustee and a major beneficiary under the trust during his lifetime. Milton’s sons, Mark Wallace (plaintiff) and Hardy Wallace, were also beneficiaries. After Patricia died, Milton allegedly made large and improper gifts with trust funds. Mark sued Milton to remove him as trustee, alleging that Milton’s mental condition rendered him incapable of fulfilling the role of trustee. The terms of the trust specified a method for removing a trustee due to a mental or physical disability. The method involved hiring a committee of medical doctors, who had to conclude that the person serving as trustee was mentally or physically impaired and unable to manage his personal affairs or assets. Mark did not attempt to remove Milton using the trust provisions, but rather asserted statutory grounds for removal. The trial court dismissed Mark’s claim, finding that he had not followed the trust provisions and had failed to state a cause of action. Mark appealed. On appeal, Milton acknowledged that there were independent statutory grounds for removing a trustee but argued that those grounds should not be applied to him because he was the settlor who had funded the trust and was still a major beneficiary. Milton posited that his removal based on mental incapacity would deprive him of control over his personal property and should not be done unless the statutory standard for imposing a guardianship could be met.