04 Mar Tony Bennett’s Daughters Sue Their Brother Over Trust Mismanagement
Antonia and Johanna Bennett have sued their brother, Danny, who has served as trustee of the Tony Bennett Family Trust, for mismanagement. Tony’s daughters claim Danny made “multiple gifts to himself totaling over $200,000 from the trust, $2.6 million in commissions for acting as Tony’s business manager in addition to monthly advances of $50,000.” They have requested an accounting. They allege “Danny acted in multiple, conflicting fiduciary capacities for an extended period prior to Tony’s death and took (for himself and his children) significant funds from the family trust.” The daughters also complain that Danny had no oversight after their dad had diminished capacity as Tony and Danny were acting as co-trustees of the trust until Tony could no longer serve due to his dementia leaving Danny as sole trustee.
Danny’s response was he worked with their dad for over 40 years and his record of a successful partnership speaks for itself. He claims he always worked in their dad’s best interest and has followed his father’s plans.
In 2022 (Tony died in July 2023) Danny arranged a sale of Tony’s assets to Iconoclast because Tony was “in financial trouble.” Danny’s company, RPM, received $2.6 million in commissions while Tony’s daughters only received $245,000 each from the trust. The daughters also allege that if Tony was running out of money, then why did Danny keep making gifts to himself? The daughters have said they cannot see if Danny was getting more than what was contractually agreed without more information about his income.
Under Texas law, fiduciaries (trustees, executors and administrators) owe a fiduciary duty to disclose all material facts known to them that might affect the beneficiaries’ rights. However, it is unclear as to how far this duty extends – is a summary sufficient? What is “material?” There is a duty to account.
Surprisingly, there is no duty to give a copy of a trust to the beneficiaries under Texas law (although it is probably recommended).
Sometimes the attorney has a conflict between attorney-client privilege and the duty to disclose. If the attorney advised the trustee to take a certain action (i.e., selling Bennett’s assets), this might expose the fiduciary to a claim for self-dealing ($2.6 million commission in the Bennett case). However, the fiduciary should disclose the substantive details of the transaction.
If the Bennett case was in Texas, there would be a duty to account. However, to what degree would be in question.
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