Trusts & Estates – Law Firm Serving as Trustee or Successor Executor – Standing

A law firm organized as a professional limited liability company cannot serve as trustee or successor executor under state law.

The Court of Appeals reversed the trial court’s dismissal of the petition for declaratory judgment, and remanded for further proceedings on the executor’s qualification.

This appeal concerned whether a law firm, as a corporate entity, may serve as trustee of a testamentary trust or as successor executor under North Carolina law. We held that it cannot.

Leonard executed his will in 2012, naming his wife, Grace, as executor and the law firm of Robert Michael Schmidt, III as successor executor and trustee of the Leonard A. Russo Trust, which primarily held his residence. The trust provided for Grace’s lifetime benefit and, upon her death, the remainder to Petitioner. The will included a forfeiture clause for any beneficiary who contested its provisions.

Leonard died in 2018, and although Grace was named executor, she did not qualify for over five years. The law firm never sought to qualify. In July 2023, Petitioner filed a verified petition for declaratory judgment alleging that Grace’s prolonged failure to qualify constituted renunciation and that the law firm was statutorily barred from serving as trustee or executor. Respondents argued that the petition triggered the forfeiture clause and that the law firm was authorized to act.

The trial court denied dismissal for lack of standing but granted judgment on the pleadings, confirming Grace as executor and the law firm as trustee with authority to sell the residence.

Petitioner has standing because he did not contest the will but sought enforcement of its terms. Under N.C. Gen. Stat. §§53‑303(a) and 28A‑4‑2, a professional limited liability company is not authorized to act as a fiduciary, trustee, or executor unless specifically enumerated. The law firm is not among the eight categories listed and cannot rely on the legal services exception, which applies to individual attorneys, not corporate entities. The trial court therefore erred in concluding that the law firm could serve as trustee or successor executor.

Whether Grace waived her right to serve as executor by delaying qualification is a factual issue requiring a hearing. Finally, the denial of costs and attorney’s fees was improper because it relied on erroneous conclusions.

Petitioner has standing, the law firm is disqualified as trustee and successor executor, and the trial court erred in dismissing the petition without addressing Grace’s qualification.

Vacated in part; reversed in part; and remanded.

Russo v. Russo (Lawyers Weekly No. 011-010-26, 12 pp.) (Allegra Collins, J.) Appealed from Scotland County Superior Court (Dawn M. Layton, J.) James E. Hickmon, PLLC, by James E. Hickmon and Jeremy T. Canipe, for Petitioner-Appellant. Cranfill Sumner LLP, by Steven A. Bader and Melody J. Jolly, for Respondents-Appellees Robert Michael Schmidt and Michael Schmidt, Attorney at Law, PLLC. William R. Purcell, II, for Respondent-Appellee Grace Russo Long. Attorney General Jeff Jackson, by Assistant Attorney General Benjamin T. Spangler, for Amicus Curiae North Carolina Commissioner of Banks. North Carolina Court of Appeals