Testator, a widower, died one year ago at the age of 86 survived by his only two children, Angela and Brian (ages 40 and 45), twelve grandchildren (ranging in age from 17 to 27), and six great- grandchildren (ranging in age from 2 to 7). Testator’s will bequeathed his entire estate to his “great-grandchildren living when my will is probated.” Testator’s will was probated two months after Testator died.

Before he died, Testator created a revocable trust with Friend as trustee. Friend was a longtime confidante of Testator and his family, with intimate knowledge of all of their financial and personal affairs. The trust provided that upon Testator’s death the trust income could be paid to and among Testator’s issue in such shares as Friend determined, with any unpaid income to be accumulated. It also provided that upon the death of Angela and Brian, the trust would terminate, and the corpus would be distributed to Testator’s then living issue.

The trust contained no provisions relating to its administration. Because Friend was not very experienced in the administration of trusts and particularly in selecting appropriate trust investments, she interviewed a number of possible bank trust officers to assist her in administering the trust. Then she contracted with Bank, an institution wholly unfamiliar with Testator’s family, to make all determinations regarding the distribution of trust income and how the trust’s assets should be prudently invested.

Bank immediately sold all of the trust assets and reinvested all of the proceeds in XYZ Corporation, a telecommunications company whose shares are publicly traded. Bank paid $60 per share for this stock. Today, however, each share is worth only $21. The loss in value is due to the general decline in the telecommunications industry and not to any inherent weaknesses in XYZ.

Twice, after contracting with Bank, Friend called Bank to see how things were going. On these two occasions Friend was advised that “all is well.” Friend never made further inquiries.

The common-law Rule Against Perpetuities, as modified by the wait-and-see doctrine, applies in this jurisdiction.

1. To whom should Testator’s probate estate be distributed? Explain.

2. What fiduciary duties, if any, did Friend breach with respect to the trust? Explain.