Joseph Geisler Revocable Trust

The Real Story

By:                         Tom Batterman
Last Update:    January 27, 2019

However it is that you came to read this writing, welcome. Hopefully it is because you are interested in getting additional perspective on what you think you know about this case and this situation from what you may have read or heard about it. I developed this writing to accomplish that objective.

Here is a perspective on the case that you would not remotely get from what was written in the article. The Joe Geisler Trust was administered by a corporate trustee, Vigil Trust, with decades of experience in such matters. The individuals involved in the trustee’s work have had decades of experience in such matters, successfully administering hundreds of trusts and estates in their professional careers. Many individuals and families in Central Wisconsin have benefitted from Vigil Trust’s work over the years. As a corporate trustee, Vigil Trust is regulated, audited and bonded in its work for the protection of clients.

A beneficiary – the American Cancer Society – was frustrated that Vigil Trust would not capitulate to ACS’ overreaching demands for information that Vigil Trust felt would compromise the duty of confidentiality it owed to other beneficiaries. So ACS, contrary to Mr. Geisler’s clear desires to have his affairs administered privately rather than in a public probate proceeding and have Vigil Trust do that work for him, filed a petition in probate court seeking to remove Vigil Trust as trustee. Upon Vigil’s removal, a successor trustee was appointed who by his own admission had never previously served as a professional trustee for a single trust of this type and who accomplished his work under tremendous pressure from the beneficiaries to find some problem to provide justification for the actions they had taken. The case was ultimately adjudicated by a judge who was a public defender in private practice prior to becoming a judge and who has little experience with matters of this nature. And then the problems with the results of that process were compounded by misstatements and mischaracterizations of what occurred in an online article that violated basic journalism tenets of fairness, balanced perspective and factual cross-checking and accuracy. The result is an article that creates impressions that bear no resemblance to what actually happened with the case. We will try to correct that here.

The judge referred to the case as a travesty. I couldn’t agree more. But the judge’s comment implied the trustee’s actions caused that circumstance. My view is that the real travesty is the actions and decisions of the beneficiaries and how they chose to spend a very generous gift they were given. The American Cancer Society, despite the fact that they recovered some of their attorneys’ fees from the trustee, they still ended up spending about $100,000 out of their own pocket on legal fees. Bruce School District spent $30-40,000 out of their pocket.  And the Alzheimer’s Association and the Diocese spent about $20,000 apiece out of their own pockets.  And for this expenditure no beneficiary received one single extra penny as a result of these proceedings. It seems to me that the most important question to ask here is how charitable beneficiaries make the decision to squander generous gifts they receive on legal expenses that recover them not a single extra penny. I am sure that most donors would completely rethink their gift if they knew their money was to be spent in this way.

The Real Story

Here are the actors in the case.

The Original Trustee

The trust was administered by a professional corporate trustee, Vigil Trust. Vigil Trust is a trade name for an out-of-state trust company – at the time Investors Independent Trust Company of Boulder, CO – (more below) under which it administers the Wisconsin trusts for which it is appointed as trustee. IITC was sold to Midwest Trust Company of Kansas in 2016. Since then Midwest Trust is responsible for all trust administrative activities conducted under the Vigil Trust name.

Herb McPherson and Jan Smith of Investors Independent Trust Company were responsible for the actions of Vigil Trust in this matter. I assisted them with some of their local responsibilities, but I had no authority to act independently on behalf of Vigil Trust. Any actions I took on behalf of Vigil Trust were at the direction or with the approval of Vigil Trust.
There has been some confusion around the fact that prior to 2012, I and some of our local staff in Wausau had authority to act on behalf of Vigil Trust. But we formed Financial Fiduciaries in 2010 and effective 1/1/2012, any authority we previously had to act on behalf of Vigil Trust was removed.

The Successor Trustee

Vigil Trust was removed as the trustee of the trust at the request of the beneficiaries in October, 2015. Upon its removal, Terry Byrne, a well-respected Wausau attorney, was appointed as successor trustee. Mr. Byrne has extensive experience as a bankruptcy trustee, but by his own admission had never administered a single personal trust in his professional career.

The Beneficiaries

American Cancer Society

ACS was to receive ¼ of the trust, which was to be paid to it through its Relay for Life events, to be used for such purposes as it saw fit. 

Alzheimer’s Association

AA was to receive ¼ of the trust for research

Superior Diocese of the Catholic Church

The Diocese was to receive ¼ of the trust to be used for educational purposes

Bruce High School college-bound graduates

¼ of the money was to be used as a perpetual scholarship fund to fund scholarships for graduates of Bruce High School who would be attending college

The Judge

Judge Michael Moran was responsible for overseeing the legal proceedings in the matter. I like Judge Moran, I am a supporter of his and I actually helped circulate nomination papers for him when he was running for judge. But his legal background prior to becoming a judge was as a public defender. He has little familiarity with the issues of trust administration and his lack of experience was a key factor in his determinations in the case.

Daily Herald Summer Intern

The judge’s determinations in this matter were written about by Sam Wisneski, a summer intern at the paper. That writing, fairly clearly designed, for whatever reason, to tarnish my reputation for excellence in zealously safeguarding the interests of clients in their financial dealings built over a career of over 30 years, either misstated or grossly mischaracterized already problematic aspects of the judge’s decision. You can draw your own conclusions as to why you think a young, aspiring journalist would write about a case like this after it was basically over and mischaracterize or sensationalize it the way he did.

Here is What Happened in the Case

Like many, Joe Geisler set up a revocable trust as his primary estate planning vehicle to provide for the convenient management of his finances in the event of his incapacity and non-probate disposition of his affairs after his death. He was the initial trustee of that trust and he named Vigil Trust to take over as trustee upon his incapacity or death.

Joe, as trustee of his trust, hired Financial Fiduciaries to manage the investments of the trust. When he became incapacitated at the end of 2013, Vigil Trust took over as the trustee of his trust in January, 2014. Joe passed away in late December, 2014 and Vigil Trust was then responsible for winding up the trust’s affairs and arranging for its distribution.

When Vigil Trust took over as trustee of the Geisler Trust, Financial Fiduciaries was retained to invest the trust’s assets. That was also the period of time during which I and Financial Fiduciaries staff were providing on the ground assistance to Vigil Trust with its trust administrative duties with the express approval or at the direction of Vigil Trust. We did provide some administrative assistance to Vigil Trust on this case, although that structure ended in 2016.

When Joe passed at the end of 2014, Vigil Trust was responsible for resolving Joe’s affairs and distributing to his beneficiaries. Each beneficiary was to receive ¼ of the trust which, valued at about $3 million, meant each beneficiary would receive about $750,000.

Administration

From Joe’s date of death through May, Vigil Trust conducted the normal activities involved in winding up a trust administration and preparing it for distribution. At the end of May the process of dividing up the trust into parts in preparation for distribution was begun. From January 1 until the end of May, the trust gained over $70,000 in value due to investment gains accomplished by Financial Fiduciaries as investment advisor to the trust. During that time the trustee collected about $16,000 in fees. In other words, net of expenses, another $54,000 was added to an already generous gift due to Vigil’s administration with Financial Fiduciaries’ help with investments.

Vigil’s Decisions about Beneficiary Gifts

American Cancer Society

The gift to ACS was, by its terms, to be paid to ACS through their Relay for Life events. In-keeping with Vigil Trust’s policy regarding gifts to national organizations, initial contact about the gift was made at the most local level possible. In this case, my then-fiance, Deb Richards, was the regional manager for Relay for Life events in a 32 county area in Northwestern Wisconsin. The Relay for Life Division of ACS – Ms. Richards and several levels in the chain of command above her – felt a gift of this size should not be received into Relay in one year for a variety of practical reasons surrounding those events. So they asked that their gift be paid out over a period of years. As a result, in June their gift was set up to be paid out over a period of years and an initial gift of $80,000 was paid to Relay events in mid-June, 2015.

The idea of funneling this gift through Relay events as had been specified by Mr. Geisler created internal angst within ACS between the Relay for Life division and the Major Gifts division. Approximately a month after setting the gift up to pay over time as instructed by the Relay for Life group, the Major Gifts group countermanded that directive and said they wanted the gift paid immediately in a lump sum. Vigil Trust immediately changed the structure of the remainder of the gift and prepared it for immediate distribution as newly directed. The period of time over which the gift was set up to be paid out over time was less than one month.

It is particularly noteworthy that to this day it does not appear that one single dollar of Mr. Geisler’s gift was actually credited to ACS through its Relay for Life events despite his clear indication of this intent.  

Bruce High School Graduates pursuing a College Degree

Mr. Geisler wanted ¼ of his gift to go into a scholarship fund that would provide scholarships to students graduating from his former high school who would be pursuing a college education. Based upon its prior experience with gifts of this nature, Vigil Trust felt this type of gift was best administered by establishing a separate scholarship trust fund. Keeping it separate and apart from the school ensured that the funds would only be used for their intended purpose – scholarships for students. 

Using a provision of Wisconsin law designed for this purpose, Vigil Trust set up a separate trust for the perpetual administration of the gift with the school deciding on the appropriate disbursement of the 5% of the trust’s value per year that it would be required to distribute. This trust was set up and fully funded in June, 2015. An appointment was made with Bruce Schools in the Fall to discuss the trust and how it would operate going forward. That process was interrupted by the litigation in this matter.

It is noteworthy that there are schools in Wisconsin that REQUIRE a trust or an estate to establish exactly the kind of trust Vigil Trust set up here to administer this gift to administer gifts for their students.

Bruce Schools felt IT was the beneficiary of the trust and was upset that it was not treated as such by the trustee. The trustee’s perspective was that it wasn’t really the school’s money because the funds would not be available for school purposes. It was only to be used to fund scholarships for future college-bound graduates. The trustee felt those graduates were the actual beneficiary, not the school. You make your own decision as to who is right on that.

Alzheimer’s Association and Diocese of Superior

In conversations on the subject, there was no question that these beneficiaries would be receiving a lump sum distribution of their gifts. So upon division the gifts for these two beneficiaries were set up for near term full distribution.

Ready for Distribution

By August, some funds - $80,000 to ACS Relay for Life and the entire amount for Bruce High School graduates to the separate trust created for them – had already been distributed and the rest were ready for full and final distribution. Having a $3 million trust ready for full distribution within 8 months is actually quite prompt administration instead of the trustee “dragging its feet for its own benefit” as was insinuated in the paper.

ACS, AA and the Diocese had each been provided accountings of their interest in the trust and had been provided with the documentation necessary to receive their gift. If they had signed their documents they would have received their funds in August and the court case would have never occurred.

But ACS was not happy with the accountings it had been provided. Vigil originally provided ACS a full accounting of its interest in the trust as required and as it requested. ACS felt this was inadequate and asked to be provided with accounting for the entire trust, including accountings involving the interests of other beneficiaries. Vigil originally declined to provide this information due to privacy issues regarding the other beneficiaries. Ultimately Vigil provided the full accounting of the entire trust. But then ACS asked to receive an accounting for the period prior to Mr. Geisler’s death from the time Vigil Trust took over as trustee upon Mr. Geisler’s incapacity. Vigil declined to provide that information based upon legal advice it had received previously in similar matters on the grounds that ACS’ interest in the trust did not “vest” until Mr. Geisler died and his personal information during his incapacity would be protected by HIPAA.  ACS was determined to get what it wanted irrespective of its right to do so, so they devised a plan to try to get Vigil Trust removed as trustee so they could get access to the information they wanted through a successor trustee.

Litigation

ACS Petition

In order to gain access to the information they desired irrespective of their right to do so, ACS filed a petition to remove Vigil Trust as trustee and get the information they desired through a successor trustee.i Removing a trustee is easier under the law if it is joined by all beneficiaries of the trust. So in order to gain the cooperation of the other beneficiaries in their removal efforts, ACS filed a petition that contained outrageous and irresponsible allegations of potential criminal and other conduct by me and Vigil Trust.ii This petition was verified to be accurate by Mr. Michael Saenz, a senior ACS employee, despite the fact that he had information in his possession which allowed him to know that what he was verifying in the petition was untrue.

Of course, with the nature of the allegations ACS made – and the credibility attached to them by virtue of who was making them – the other beneficiaries felt the allegations needed to be investigated. So they joined in the petition to remove Vigil Trust as trustee, which left the judge with little option under the law but to grant their request.  

Successor Trustee Review and Report

Mr. Byrne conducted an extensive review of the activities of Vigil Trust as trustee. In so doing he was badgered by the beneficiaries, and particularly ACS, to find SOME problems with Vigil Trust’s administration because the main allegations in ACS’ petition were determined to be provably false. At the end of the day, he reported that allegations of fraud, theft and false records were not true. But he did feel there were 3 errors committed by Vigil Trust in administering the trust:

  • Delayed notification to the beneficiaries of their gift.iii  
  • Vigil Trust setting up a plan to distribute the ACS portion of the gift over a period of time rather than paying it out fully in cash.iv  
  • Setting up the Scholarship Trust for future graduates of Bruce High School. He felt that this should not have been done without consultation with and the consent of the school.v  

Recognize that these issues are all administrative in nature. The article characterized the issues in the case as involving “mishandling of funds”. That characterization connotes problems with the integrity or security of the funds. But that was not the case. At the end of the day, the only issues pertained to certain administrative decisions the trustee made.

“Final” hearing –August, 2016

With the successor trustee’s report of his review in hand and all trust assets accounted for as of April, 2016, the matter was ready to be concluded. Vigil Trust filed a motion seeking recoupment of its expenses in defending its actions in the case. The beneficiaries filed motions opposing Vigil Trust’s request and seeking payment of their own legal fees. A court hearing was scheduled in August, 2016, to conclude the matter by deciding on these motions. On that date, Herb McPherson flew to Wausau from Colorado to participate in the hearing on behalf of Vigil Trust.  

But the hearing never occurred. Judge Moran, in perhaps one sign of his inexperience in these matters, determined that he’d need evidence on a trustee’s duty in administering a trust. So the August, 2016, hearing was adjourned. A significant escalation in legal costs and expenses followed, which resulted in two full days of court testimony in April and May, 2017, a liability ruling in September, 2017, and a damages ruling in March, 2018, with scores of legal motions, briefs and filings in the interim.

What the Judge Ultimately Decided

Liability

The judge determined that the 3 administrative issues noted by Mr. Byrne and discussed above constituted a “breach of trust” by Vigil Trust. See more on the propriety of this determination below.

Damages

The judge denied the trustee reimbursement of its expenses in defending the matter even though such reimbursement was allowed by the trust and by Wisconsin law.vi He determined that Midwest Trust, as the successor to IITC, was liable for the actions of Vigil Trust and he gave the beneficiaries and the successor trustee a judgment against Midwest Trust for a combined total of $300,000 as reimbursement for their attorneys’ fees. He also ordered that I personally would be jointly and severally liable for those judgments because I was the “Trust Protector” of the trust. The problem is I was not the Trust Protector of the trust.  So this determination was incorrect.

Post Judgment Matters

Midwest Trust believed there were a number of errors in Judge Moran’s determinations and were prepared to appeal those mistakes. I was planning to join that appeal due to the assessment of personal liability against me, which was clearly erroneous under the facts of the case. But to alleviate further litigation, Midwest Trust entered into negotiations with the beneficiaries to resolve their claims in lieu of appealing Judge Moran’s decisions. At the end of the day settlements were reached with all beneficiaries and the successor trustee at pennies on the dollar relative to their judgment amounts. I was held harmless by Midwest Trust from any contribution for the same to avoid my need to appeal on the finding of personal liability.

Mistakes Made by the Various Actors

Vigil Trust

  • Notice.  Vigil could have notified the beneficiaries earlier than it did. Whether they were required to do so or not is debatable. The trust was silent on the timing of notice. The new Trust Code that went into effect July 1, 2014, requires notice sooner than was provided. However, those provisions do not apply to revocable trusts that became irrevocable prior to that date as may have been the case here. Regardless, Vigil acknowledged notice could have been provided sooner and that it would incorporate such practices into its future work. However, and importantly, the uncontroverted evidence was that earlier notice would not have changed the administration of the trust or the timing of its payout in any way.
  • ACS Gift. This was alleged to be a mistake by Vigil, but was really more of a problem with different divisions of ACS not being on the same page in terms of how to accept this gift. Even if setting the gift up to be paid over time was a mistake by Vigil under these circumstances, the period of time over which that set up existed was less than one month.
  • Scholarship Trust. Bruce Schools argued the gift was for it and the money should have been paid to it or the trust should not have been set up without its approval. Vigil could have done that to be sure. However, that it did not and that it instead chose the course it did to administer this gift does not really strike me as a mistake, particularly given how the administration of the gift was handled by the school after it was given the money, which risk was avoided by Vigil’s decision.

Judge Moran

  • Personal Liability.  Judge Moran determined that I should be jointly and severally liable for the damages he ordered in this case because I was the “trust protector” of the Geisler Trust. I agree that if I were the Trust Protector of the Trust, there would be some exposure to personal liability. But there was no Trust Protector of the Geisler Trust. The fact that Judge Moran made this finding is likely a function of the problem next following.
  • Delayed Ruling. After the last hearing at which testimony was taken in May, 2017, Judge Moran did not issue a ruling from the bench, but the participants were led to expect a ruling in the very near future. Months and thousands of dollars in lawyer’s fees later, in September Judge Moran issued his findings with respect to liability. His ruling on the issue of damages came in March, 2018, 10 months after he last heard testimony in the case. The delay between the conclusion of testimony and his rulings apparently contributed to at least one misstatement of the basic facts of the case in his ruling and raises the possibility it might have contributed to other aspects of his decision as well. 
  • Case Should Have Concluded in August, 2016. As mentioned above, the case was scheduled for a final hearing concluding it in August, 2016. But instead of resolving the case then, the matter was adjourned, experts were retained by each side, depositions were held and lawyer’s fees mounted. In his ruling the judge commented that the case was “in many ways a travesty”. That is correct. But he failed to acknowledge his own contribution to that result by not disposing of the case in August, 2016, which would have achieved a quicker result with a significantly smaller amount of legal fees incurred by all parties.
  • No Evidence to Support his Finding that Beneficiary Distrust was Caused by Delayed Notice. Judge Moran concluded that the sense of distrust among the beneficiaries in the case arose because of their delayed notice of their status as a beneficiary of the trust. He made this determination without a scintilla of evidence from any beneficiary to this effect since no beneficiary testified. The lawyers for the beneficiaries made this argument, but there was no beneficiary who presented evidence that this was the main reason for their distrust of the trustee. If a beneficiary had testified and presented evidence of this nature, of course they would have been asked if the outrageous and irresponsible allegations by ACS in their petition contributed to their sense of distrust of Vigil. It would be interesting to know whether the ACS allegations or delayed notice contributed more to the beneficiaries’ mistrust. But we will never know because no one testified to speak to that issue. Judge Moran should not have made the finding he did in this regard without any such evidence.
  • Mistakes by the Trustee Constitute a Breach of Trust. The judge’s problems with the trustee’s administration of the trust involve the 3 items cited by the successor trustee detailed above.  Judge Moran determined that these “misdeeds” rose to a level which constituted a legally significant “breach of trust”. Those experienced with trust administration know that determinations that the trustee committed breach of trust are normally reserved for situations where the trustee has committed egregious violations such as theft of trust property, completely indefensible decisions, etc. A judge experienced in probate matters would know this. But Judge Moran, perhaps borne of his lack of experience in this area, determined that items such as delayed notice constituted a breach of trust – when they cost not a single dime to the beneficiaries. A finding that what the trustee did in this case amounted to a breach of trust is either a very aggressive expansion of current doctrine or a very misguided determination.

All of these mistakes by the judge and more were slated to be part of an appeal of his decisions. However, the matter was settled by Midwest Trust with the beneficiaries and the successor trustee prior to any significant progress on an appeal. In the settlement the beneficiaries accepted significant reductions in their judgment amounts, arguably due to their concerns about whether Judge Moran’s decisions would be upheld on appeal.

Beneficiaries

It is hard to know what to say about the apparent ungratefulness the beneficiaries in this case exhibited concerning a very generous gift they received. Why they would waste significant portions of their gifts on needless legal fees which resulted in not one single extra penny for them is hard to understand. And why the paper would choose to publish an article impugning my reputation by mischaracterizing many aspects of the situation instead of writing about how public charities actually spend the gifts that they receive is unfathomable. The beneficiaries’ stewardship of their gifts was raised with the reporter as a possible subject for his article, but he was apparently blinded to this issue by his intent to write a disparaging article about me.  

Interestingly, Mr. Geisler had a second trust that gave a smaller – but still substantial - gift to a single charitable beneficiary. That trust was administered on the exact same time frame as the trust that was written about in the article. However, in that case instead of making a big stink about inconsequential administrative squabbles, the beneficiary accepted their gift with nothing other than thank you.

American Cancer Society (ACS)

  • Inconsistent Guidance to Vigil Trust about their Gift. By its terms, the gift for ACS was to be paid to it through their local Relay for Life events. For various practical reasons, the Relay for Life division instructed that their gift should be paid over a period of time. So originally the gift was set up to be paid out over a period of several years, starting at $80,000 in the first year and increasing each year thereafter until the gift was expired. When the major gifts division learned of ACS’ $750,000 gift from this trust, they set about trying to gain credit for this gift to their division instead.vii Ultimately, this led to ACS issuing a counter instruction to the trustee that they wanted their gift paid in a lump sum rather than over time. The lack of internal policies and controls within ACS to address the circumstances presented by this gift were as much if not more of a contributor to what happened here than the actions of Vigil Trust.

To date, and notwithstanding the donor’s specific request that the gift to ACS be paid through Relay for Life, it does not appear that a single penny of Mr. Geisler’s gift has actually been credited through Relay for Life events.

  • Unreasonable Demands for Information.  For whatever reason, ACS sought much more extensive information about the trust and its administration than it was rightfully entitled to receive. In making these requests, it was apparent the goal was to put ACS in a position to audit the actions of the trustee, a function which had already been performed by Vigil’s regulators and auditors. If ACS had been more grateful for its gift and less concerned about bullying its way to get what it wanted irrespective of its right to do so, none of this would have happened.
  • Defamatory Petition. It is hard to understand how a national, respected organization like ACS would allow its employee to “go rogue” as happened here and file something as outrageous and irresponsible as was filed in this matter. And this happened even though the employee, Michael Saenz, already possessed all the information he needed to know that what was being asserted was false. This is unforgivable.
  • A Generous Gift Wasted. At the end of the day, ACS spent nearly $200,000 airing its grievances with the trustee in this case. Although it did recoup a portion of those fees in the settlement of the appeal with Midwest Trust into which it entered, at the end of the day it still paid approximately $100,000 out of its pocket in connection with this matter. And for the expenditure of money, they received not a single additional penny in connection with this gift.

Who makes the decision for ACS to spend $100,000 for nothing?  Their CEO currently emphasizes the importance of proper stewardship of donor dollars. Was this really a good way for ACS to be spending a big chunk of a very generous gift?  Do people really want to continue to donate money to ACS when they choose to use these gifts to line the pockets of high-priced lawyers instead of using them to further their professed mission to fight cancer? I have been an advocate for clients to donate to ACS in the past, but based upon this example of how they expend the funds they have been given, that will not be the case anymore.  

Bruce High School

Spending Money They Didn’t have to Accomplish Nothing. Bruce School District has acknowledged that they have budget pressures due to reductions in state aid. At the end of the day they spent over $30,000 out of their pocket after receipt of settlement funds from Midwest Trust on these proceedings. Was it really worth it to spend that kind of money to complain that the separate trust was set up without their input? The money was there for their students, protected for them by the trust with the school retaining control of who would receive scholarships and how as well as the ability to change the trustee of the trust if they wanted. If I’m a member of the Bruce School District School Board – or a taxpaying citizen in the district – I’d be asking why we spent $30,000 to argue about whether the fund should be administered through the trust that was set up or given directly to the school for them to decide on all aspects of the setup themselves. That was really the sum and substance of Bruce School’s complaint in the matter. Was that a worthwhile expenditure of the district’s tax dollars?

What They Did with the Money After They Got it Directly Free of Trust.  As a result of the litigation, the trust Vigil Trust established was rescinded and the money was given directly to the school district. What did they do with it? They hired Rusk County Community Foundation to administer the gift. However, the Community Foundation’s charges for administering the gift are higher than the fees that were being paid to Vigil Trust to administer the Scholarship Trust. The terms of the agreement with the Community Foundation allow the Community Foundation, in its sole discretion, to determine that there is too much money in the fund to use for college scholarships for college-bound Bruce High School students and to divert it to other purposes it determines to be appropriate. And last year the scholarship fund awarded $20,000 to Bruce graduates. Under the terms of the trust that had been established by Vigil Trust, the annual total scholarship amount would have been approximately $35,000.viii  So the question remains – are the “benefits” achieved by allowing the school district to make its own decisions about how to administer this gift worth the $30,000+ they paid in legal fees to argue about the trust Vigil had created?

Diocese and Alzheimer’s Association

A Generous Gift Wasted. These entities each spent about $20,000 out of their own pockets – after what they received in connection with the settlement of the appeal – to be a part of this case. For their participation they received not one additional penny. If they had signed the paperwork they had in their hands in August, 2015, they would have received their $750,000 checks and their involvement with the matter would have been concluded. But instead they spent $20,000 of their very generous gift to tie up the conclusion of the administration of the trust in court for 3 years and line the pockets of their lawyers. If I were a financial supporter of either of these organizations, I’d think twice about continuing that support if this is an indication of how they choose to spend the money they receive.

Daily Herald summer intern Sam WIsneski

If you read the article, you can clearly see that for some reason this writer’s goal was not to report on the case in any fair and balanced way, but was rather to tarnish my reputation in the industry within which I have worked for over 3 decades. This writer was apparently bound and determined to write some sensationalized article that would create a name for himself early in his reporting career, even if it involved disregard for truth and inaccurate characterization of situations. Here are the most blatant of the factual mistakes presented in the article.

  • The Trustee. The article alleges I was acting as trustee of the trust. That is not true. Vigil Trust was acting as trustee. While I did some things to assist Vigil Trust/IITC in its administration of the trust, I had no authority to take action on behalf of Vigil Trust on my own and the uncontroverted testimony of the case is that anything I did in helping Vigil Trust administer the Geisler Trust was done at the direction of or with the approval of IITC/Vigil Trust. This inconvenient truth does not make for such a compelling story so it was disregarded.
  • Problems With “Handling Client Funds”. While there were originally outrageous allegations of impropriety made by ACS, the case record demonstrates that those allegations were ultimately determined to be totally without merit. Yet the reporter insinuated that the problems aired in the case involved “handling of client funds”, an untrue allegation which is extremely defamatory to someone in the business of working with clients’ money. The issues in the case ended up being squabbles over administrative decisions of the trustee; there was nothing involving any impropriety in the handling of funds.  100% of the funds of the account were accounted for and administered. All of the legal fees spent resulted in not a single penny more for any beneficiary.
  • Distribution Delays Designed to Benefit Vigil.  The article insinuates that the trustee was delaying its distribution of funds in order to collect more fees. It states that only $80,000 of the trust’s funds were distributed nearly a year after Geisler’s death. That is not true. The gift for the college-bound students graduating from Bruce High School was fully funded in June. The full gifts for the Alzheimer’s Association and the Superior Diocese as well as the remainder of the gift for the American Cancer Society were ready for final distribution in August, 2015. This was only 8 months after the grantor’s death and is actually quite prompt administration of a trust of this sort. The only reason the beneficiaries did not receive their money in August, 2015, is that they decided not to sign the paperwork they had in their hands to claim their gift. Instead, they decided to try to remove Vigil as trustee and this saga ensued.
  • I and “My Companies” Were Responsible for the Judgments Awarded. Midwest Trust, the current operator of the Vigil Trust trade name, was liable for the judgment the judge awarded. I have no connection with Midwest Trust other than the fact that we have a cooperative working relationship when our clients need a trustee to administer a trust. It is true that the Court did say I was to be jointly and severally liable for those damage awards, but he based that decision on his finding that I was the Trust Protector of the trust. As mentioned previously, I was NOT the trust protector of the trust. There was NO Trust Protector. As a result, Midwest Trust paid all settlements in the case and I was held harmless from contribution for the same.  
  • SEC Matter did not Involve Handling of Client Funds. The article speaks to a recent SEC fine we received related to an issue of what is called “constructive custody”. While any fine is undesirable and should be avoided if at all possible, the article insinuates that this fine involves improper handling of client funds. That is not true. The case involved a structure we had developed for helping Vigil Trust with on-the-ground issues it faces in administering trusts in Central Wisconsin. We had received specific guidance on this structure from a well-experienced compliance consultant. We had paid them to come in and audit this structure two years after it was in place to confirm that it was okay from a compliance perspective and their audit disclosed no deficiencies in this regard. But the SEC disagreed and fined us for using that structure, which had terminated in June, 2014, long before the SEC even came in for their exam. The violation at the heart of the fine involved the SEC’s ever-changing definition of what it means to have “constructive custody” of client funds, but did not involve actual custody of any client funds in any way. No client was harmed in any way by the structure which resulted in the fine.

Successor Trustee Terry Byrne

Terry Byrne is a good guy and a well-experienced bankruptcy trustee. However, by his own admission he had never administered a personal trust like the Geisler Trust. Rather than providing an “independent”, objective perspective on the case from a background of experience dealing with the issues presented, the court record demonstrates that he basically acted at the behest of the beneficiaries to do their bidding. The deficiencies he found in the actions of the trustee in the case nearly exactly parroted the criticisms of the trustee advocated by the beneficiaries. Terry Byrne had no basis or experience to support his conclusions about what he ended up stating he felt were improper actions by the trustee other than that he was bowing to the desires of the beneficiaries, who were paying his fees, who he referred to as his “clients” throughout the process and with whom he asserted a “common defense” objection to discovery requested of him by the trustee. While normally the review of the conduct of the prior trustee by a successor should be accorded high significance in a legal dispute, the fact that this successor trustee had zero experience handling cases of this nature and issued his findings under great duress from the beneficiaries should have rendered his findings meaningless.

In Conclusion

Maybe you feel all of the responsibility for this rests with Vigil Trust. And if that is your perspective now having read this, I respect that perspective although I disagree. The beneficiaries should have not brought the action at all; they were not dealing with some “fly by night” trustee, but an established institution who has handled these cases hundreds of times and is regulated, audited and bonded for client safety. The issues were really nothing more than some squabbles about administrative decisions, disagreements which are not at all uncommon when administering a trust. Once Terry Byrne issued his report, it was clear there was no unaccounted-for funds of the trust, so there was nothing financially to gain by continuing the matter. But continue it did, with tens of thousands of dollars in legal fees spent solely on the question of who will pay whose legal fees. The case shouldn’t have been brought at all, but once brought, it should have been aborted much sooner with much less expense all the way around.

The other takeaway from the situation is to be careful as you think through your charitable gifting plans. I used to be an ardent supporter of the American Cancer Society. Our company would participate in and sometimes sponsor some of their events, we would fund raise and encourage clients to give and we’d make sure to mention ACS as a possible charitable gift recipient for clients with charitable intent. I am an eager participant in their CP3 study, which may hopefully expand the knowledge base about the origins of cancer. But it is pretty much solely the actions of ACS and their employee, Michael Saenz, that are responsible for what happened with the case. Seeing how they and the other beneficiaries chose to spend a significant sum on legal fees without any prospect for adding to the value of their gift is disquieting. You’d think they’d be more responsible stewards of the gifts they receive, but with this example of stewardship, I will be looking elsewhere to fund my charitable intent and will be advising my clients to do the same.

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i Please note that in this petition ACS was asking to review the actions of Vigil Trust. Vigil Trust is a corporate trustee subject to regulation, examination and audit. In fact, the Geisler Trust file had been the particular focus of an external audit by Vigil Trust’s external auditors over the Summer of 2015. So the petition was requesting that actions of an audited and examined entity be reviewed.
ii I don’t know about you, but I thought that if someone made false allegations about you that they would be liable to you for damages caused by that defamation and that this would particularly be the case if the defamer had reason to know that what they were saying was inaccurate at the time it was said. But apparently there is a defamation exception that applies to allegations made in the course of legal proceedings. So that means you can make up whatever stories and lies you want in a filing in a legal proceeding and you cannot be held liable for those lies. And that is even though in today’s world we can have a situation like we have here, where a reporter can pick up the false information and spread it around instantly by an online post. This is not right as far as I am concerned, but apparently it is the world in which we live.
iii The beneficiaries were principally notified in June/early July when the two questions every beneficiaries ask when notified they will be receiving a gift – when and how much – are reasonably accurately known. He felt they should have been notified sooner.
iv During his investigation of this particular item, Mr. Byrne spoke only to people on ACS’ side of the case who were alleging this was improper. He did not speak with Ms. Richards or with anyone else in the Relay for Life division of ACS who had asked that the gift be paid out over time in reaching this conclusion.
v Interestingly, though, the record does show that he advised the school that they should consider just retaining the trust that was put in place rather than terminating the trust and taking the funds themselves, advice which the school ended up ignoring. The record also reflects the concern that Mr. Byrne had about his potential future liability as the trustee that allowed this to occur when he later learned how the school had decided to administer the funds.
vi The denial of Vigil Trust’s claim for recoupment of any of its expenses in defending the action is an incredible ruling in the trust world. The trust itself had language which permitted the trustee to recover its expenses in a situation such as this. Wisconsin law also contains such a provision. The reason this provision exists is to prevent situations where beneficiaries make a huge “to do” about nothing and make the trustee spend its money to defend itself with no ability to recover those expenses. It prevents beneficiaries from bringing frivolous claims and takes money out of their pockets if they challenge the trustee. Without such protection you’d be hard-pressed to find a professional trustee to serve because many trust administration cases involve gripes by beneficiaries about one aspect of administration or another. Here at the very least the trustee should have been entitled to recover its expenses defending the false claims in the petition, since that is exactly why the trust and statute provisions exist. But Vigil Trust was awarded nothing by the judge.
vii The major gifts division of ACS has annual quotas for its staff regarding the acquisition of lump sum gifts and pays bonuses to its staff that exceed those quotas.
viii Unfortunately the judge did not permit any of this evidence to be entered into the record because he said he did not want to hear about “I told you so” even though concerns about the proper ability to administer the gift were part of the reason the trustee did what it did.