The Hawaii Intermediate Court of Appeals recently ruled on a family trust dispute involving two brothers, Alexander and Eric Krieg. The court's decision, filed on May 28, 2026, addresses allegations of breach of fiduciary duty related to the management of their late parents' trusts. This ruling is significant as it clarifies the responsibilities of trustees in managing trust assets and the legal standards for determining breaches of fiduciary duty.
The case stems from a series of events following the deaths of Karl and Marguerite Krieg, who established separate revocable trusts in 1993. The ruling affects both brothers, as it determines how their parents' assets are to be distributed and whether any wrongdoing occurred in the management of those assets.
Background
In December 1993, Karl and Marguerite Krieg executed their revocable trust agreements, which included provisions for the management of their assets. After Marguerite's death in June 2017, Karl became the successor trustee of her trust, which became irrevocable upon her passing. As trustee, Karl was responsible for managing the trust's assets, which included their Kailua-Kona residence and a Merrill Lynch account.
In July 2017, shortly after Marguerite's death, Karl transferred assets from Marguerite's trust into his own trust, which included a half-interest in the family home. This transfer was later contested by Eric, who alleged that Karl breached his fiduciary duties by making these transfers without proper justification. Eric filed a petition in February 2022 seeking instructions and relief for breach of trust.
The Ruling
The Hawaii Intermediate Court of Appeals reviewed the probate court's summary judgment, which had favored Eric. The court found that the probate court erred in granting summary judgment without considering whether the asset transfers made by Karl were necessary for his support, maintenance, and health, as required by the trust provisions.
The court ruled, "We conclude that the probate court erred in granting summary judgment in Eric's favor," and emphasized the need for an evidentiary hearing to resolve material facts regarding the necessity of the asset transfers.
The appellate court determined that the probate court had not adequately addressed the genuine issues of material fact regarding whether the transfers were justified under the trust's terms. The judges involved in the ruling included Presiding Judge Katherine G. Leonard and Associate Judges Keith K. Hiraoka and Kimberly T. Guidry.
Impact
This ruling has significant implications for trust management and the duties of trustees in Hawaii. It underscores the importance of adhering to the specific terms of a trust and the legal responsibilities that come with managing trust assets. The decision also highlights the need for clear evidence when determining whether a trustee has acted within their rights or breached their fiduciary duties.
Going forward, the case sets a precedent for similar disputes involving trust management, particularly in cases where asset transfers are made by a trustee. It emphasizes that beneficiaries have the right to question the actions of trustees and seek legal recourse if they believe their interests have been compromised.
What's Next
The case has been remanded to the probate court for further proceedings, including an evidentiary hearing to resolve the factual issues identified by the appellate court. The probate court will need to determine whether Karl's actions were necessary for his support and whether the asset transfers were justified under the trust's terms. Details regarding any potential appeals or related cases were not available in the court filing.