Missouri Trust Litigation: Proposed Distribution, Objecting to Distribution

Sometimes a trustee is unsure of how to distribute the assets. This can occur even where the terms of the trust are clear. This sometimes is caused by the nature of the assets (e.g., difficult to divide real estate), threats of litigation, or disputes on how things should be divided among the beneficiaries. There are Court procedures in which a trustee can seek court approval of a distribution scheme and give beneficiaries an opportunity to provide their input. There is also a a non-judicial way of doing so in Section 456.8-817, RSMo.
Under Section 456.8-817, RSMo, upon termination or partial termination of a trust, the trustee may send to the beneficiaries a proposal for distribution. The right of any beneficiary to object to the proposed distribution terminates if the beneficiary does not notify the trustee of an objection within thirty (30) days after the proposal was sent — but only if the proposal informed the beneficiary of the right to object and of the time allowed for objection. There are many reasons a trustee would want to do this. If no beneficiary objects, then the trustee may conduct the distribution and being insulated from any breach of trust claims. It may also facilitate a discussion among the beneficiaries and trustee on how best to wind-down the trust’s administration. 
As of this writing, really no cases have analyzed this statutory procedure. Interestingly, Section 456.8-817.3, RSMo states that a release by a beneficiary of a trustee from liability for breach of trust is invalid to the extent: (1) it was induced by improper conduct of the trustee; or (2) the beneficiary, at the time of the release, did not know of the beneficiary’s rights or of the material facts relating to the breach. It is conceivable, then, that a beneficiary could argue that this language forms an exception to a non-objection to the proposed distribution if the beneficiary is able to demonstrate that he/she is unaware of material facts relating to the breach. 
Trust litigation can be very complex legally because it involves the interpretation and application of special statutory provisions and often complex administration and distribution schemes. Trusts often involve family members and money disputes, which invariably increases the angst in disputes. 

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