A dispute between trustees and beneficiaries of the estate of the late artist Florence Thomas has resulted in the filing of several civil complaints.
On May 15, 2012, the board of directors of the Paul and Florence Thomas Memorial Art School Foundation received notice from attorneys for the estate of Florence Thomas that a 178-acre parcel in Grayson County, Va. — an asset left to the school by the Florence Thomas Living Trust — was to be sold to pay taxes on Thomas’ estate.
According to a press release by the foundation, the legal notice was the first the board had heard of the parcel. The art school, a nonprofit and the charitable beneficiary of the trust, had been established and funded in accordance with Thomas’ wishes following her death in March 2007.
The trust was set up to be tax-neutral; after funding the school and providing for Thomas’ daughter, Betty Plummer, no “death taxes” would be assessed.
The trustee — by definition, the advocate for the trust’s beneficiaries — was now petitioning for the power to liquidate an asset the school had not known was theirs to cover tax liabilities that should not have existed.
The Florence Thomas Living Trust was established in December, 1996, by celebrated Ashe County artist and teacher, Florence Thomas, with the purpose of establishing an art school. Herself the first trustee, she named Plummer successor trustee, followed by a short list of other possible successors.
The trustee serving on May 15 was Peter Parish, whose name does not appear in the list of successors.
On Aug. 28, the Florence Thomas Art School filed a request for declaratory relief, asking the Ashe County Superior Court to “determine the rightful trustee … and to prevent the rightful trustee from using assets … designated to the school for paying estate taxes until the court rules on the validity that action.”
Court records indicate the tax liabilities resulted from overfunding of a pour-over trust, which is a revocable trust that is structured to receive and dispose of assets at the settlor’s death, named the Thomas-Plummer Trust. This trust was to be funded from the Florence Thomas Living Trust with an amount not to exceed the federal estate tax exclusion.
It was overfunded by $584,200 — a fact which no party in the dispute denies.
On Oct. 25, the court appointed J. Stanley Atwell as an independent, neutral trustee of the Florence Thomas Living Trust. Parish now serves as trustee of the Thomas-Plummer Trust.
According to their press release, the board learned Wednesday that attorneys for Thomas’ estate and living trust “are challenging the issue of the proper beneficiary” of the trust.
In a related complaint filed Dec. 13, plaintiffs Atwell, Parish and Plummer are seeking compensatory damages from attorney Grady Lonon of Jefferson, and investment broker Naomi Johnson of Watauga County.
Lonon allegedly was both attorney for the Florence Thomas estate and trust, and an “agent and incorporator” of the art school when he drafted a 2004 amendment to the trust, deleting a list of previous beneficiaries and naming the art school in their place, according to the complaint.
It is also alleged that, as administrator of Thomas’ estate, he failed to account for and distribute the Grayson County acreage, according to court records in the related suit.
Johnson is alleged to have overfunded the Thomas-Plummer Trust, and engaged in “constructive fraud” by “intentionally securing a relation of trust” with Betty Plummer, while mismanaging the trust, diluting it with “significant commissions,” according to court records filed in the case.
Johnson is also on the list of the Florence Thomas Living Trust’s successor trustees.
While the 2004 amendment of the Florence Thomas Living Trust changed the trust’s beneficiaries, Thomas’ wish to establish an art school in Ashe County was unaltered, according to court records.
The Paul and Florence Thomas Memorial Art School Foundation has issued a press release addressing the civil court case.
“As a volunteer board of directors, our fiduciary responsibility is to manage the financial resources to operate an art school and gallery in Ashe County for the people of Ashe…as directed by Florence Thomas in her Living Trust…In doing so, it is our intention to be transformative, transparent and to develop a sustainable organization.”
The Ashe County Superior Court is scheduled to hear the case on March 4.