## Facts

- Samuel A. Tamposi, Sr. created trusts intended to benefit him during life and, after his death, his six children and their issue; the final structure divided assets into multiple subtrusts.
- The trust instruments established a directed-trust arrangement separating functions between (1) “investment directors” with authority over investment and discretionary disbursements and (2) a directed trustee with administrative responsibilities.
- Samuel A. Tamposi, Jr. and Stephen Tamposi served as investment directors; Julie Shelton served as directed trustee of the Elizabeth M. Tamposi Trust for the benefit of Elizabeth (“Betty”) Tamposi and Betty’s children.
- Shelton and Betty petitioned the probate court seeking to shift primary discretion over needs-based distributions to the trustee and to give the trustee power to direct the investment directors regarding transfers and distributions.
- The litigation was prolonged and costly; the probate court found it substantially depleted trust assets and jeopardized funds available for Betty’s children.
- The governing instrument included an in terrorem clause penalizing certain beneficiary challenges to the trust.

## Issues

1. Whether the probate court correctly construed the trust to vest primary discretionary authority over investments and distributions in the investment directors rather than the directed trustee.
2. Whether Betty’s participation in the petition constituted a trust “contest” triggering the in terrorem clause and forfeiture of her beneficial interest.
3. Whether the probate court could require Shelton to pay respondents’ and intervenors’ attorney’s fees personally.
4. Whether the probate court properly removed Shelton as trustee for breach of fiduciary duty based on her conduct in initiating and pursuing the litigation.

## Decision

- The Supreme Court of New Hampshire affirmed the trust construction upholding the divided fiduciary structure and rejecting the requested reallocation of powers.
- The court affirmed the ruling that Betty’s participation triggered the in terrorem clause.
- The court affirmed Shelton’s removal as trustee based on findings that her conduct breached fiduciary duties and harmed the trust and beneficiaries.
- The court affirmed the probate court’s equitable authority to award attorney’s fees but remanded for further proceedings to clarify and support the scope, calculation, and allocation of the fee awards.

## Legal Principles

- A trust must be construed to effectuate the settlor’s intent as expressed in the instrument; courts will not grant relief that effectively rewrites the trust’s allocation of authority.
- A directed-trust structure may validly divide authority between investment directors with discretionary control over investments/distributions and a directed trustee with primarily administrative duties when clearly stated.
- An in terrorem clause may be triggered when a beneficiary’s litigation seeks to alter the trust’s operative scheme (as opposed to seeking enforcement of fiduciary duties within that scheme).
- In trust litigation, courts may award attorney’s fees in equity to do justice among the parties and protect the trust estate, including shifting fees to a fiduciary whose conduct unnecessarily harms the trust.
- A trustee may be removed when the trustee’s conduct breaches fiduciary duties or otherwise threatens the proper administration of the trust and the interests of beneficiaries.

## Conclusion

The court enforced the settlor’s split governance design by confirming the investment directors’ primary discretion, held that the beneficiary’s challenge triggered forfeiture under the in terrorem clause, and upheld removal of the trustee for fiduciary breach, while remanding only to ensure the attorney-fee award was properly supported and allocated.


Shelton v. Tamposi, 62 A.3d 741 (N.H. 2013)