Martin v. Ohio State University Foundation -- Follow-Up

Martin v. Ohio State University Foundation -- Follow-Up

News story posted in State Courts on 27 March 2001| comments
audience: National Publication | last updated: 18 May 2011


PGDC reported on Martin v. Ohio State University Foundation earlier this year, which stated in part that the Foundation settled with the plaintiffs. Subsequently, PGDC requested a copy of the confidential settlement agreement under Ohio law and is now providing the relevant details of the settlement.

PGDC Summary:

Earlier this year, PGDC reported on the pending appeal of the settlors of a charitable remainder unitrust who sued their financial planner/life insurance agent, the agent's life insurance company and the trustee, the Ohio State University Foundation and its Treasurer for varying counts of fraud, negligent misrepresentation, breach of contract and breach of fiduciary duty in the establishment and administration of their trust. Prior to the trial, the Foundation settled with the plaintiffs for $675,000. The trial court directed a verdict in favor of the remaining defendants; however, the Ohio Appellate Court reversed the lower court and remanded the case for a new trial.

The details of the Foundation's settlement are confidential and were unknown to PGDC at the time of our initial report. Subsequently, PGDC filed a request under the Ohio Public Records Act to obtain a copy of the confidential settlement. PGDC's request was honored and we learned from the Settlement Agreement that the Foundation was the sole remainder beneficiary of the Martins' CRUT. Without admitting or denying liability, the Foundation compromised and settled any and all claims the plaintiffs made or could have made during the litigation by agreeing to purchase the plaintiffs' non-charitable "income" interests in the CRUT for the $675,000 reported in the Appellate Court's decision.

By virtue of this purchase, the Foundation came to own all outstanding income interests in the CRUT, as well as 100% of the remainder interest in which it was vested. Ohio, like many states, recognizes the common law doctrine of "merger of interests" with respect to split-interest trusts like CRUTs. According to this principle, if the remainder beneficiary of a split interest trust acquires all of the outstanding, intervening interests in the trust, all trust interests become united or "merged" in one person and the trust terminates by operation of law. This is exactly what happened when the Foundation purchased all of the outstanding income interests in the Martins' CRUT.

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