Fiduciary and trust litigation can be very complex. In certain trust instruments, a trustee is granted “sole discretion” to do certain things. This language, however, can be very misleading. Even when a trustee is granted “sole discretion,” a trustee may be liable if the trustee willfully abuses his discretion, acts arbitrarily, fraudulently, dishonestly, or with…
Legal Articles
Fiduciary Litigation, Breach of Fiduciary Duty
The existence of a fiduciary duty is a question of law for the court to decide, while whether a breach of fiduciary duty occurs is a fact question. Scanwell Freight Express STL, Inc. v. Chan, 162 S.W.3d 477, 481 (Mo. 2005). So, in any fiduciary litigation, there are two main steps: (1) establishing that a…
Standing: Breach of Trust and Trustee Removal
Trust law distinguishes between “qualified beneficiaries” and “beneficiaries.” A “beneficiary” is a person that has a present or future beneficial interest in a trust or holds a power of appointment over trust property. Section 456.1-103(3), RSMo. A “qualified beneficiary” is different. It includes a beneficiary who is currently eligible to receive trust distributions, as well…
Trustee Discretion in Breach of Trust Claims
“A violation by a trustee of a duty the trustee owes to beneficiary is a breach of trust.” Section 456.10-1001, RSMo. Despite this broad statutory principle, and depending on the context, a trustee can have a number of defenses to a breach of trust claim. For example, where a trust instrument grants a trustee discretionary…
Trustee Bond
A trustee’s bond is essentially an insurance policy which designates a sum of money that may be recovered to the extent a trustee mismanages a trust estate. For example, if a trustee has a bond, and misappropriates assets, a beneficiary may be able to initiate a claim for breach of trust and recover against the…
Trustees & Standing to Appeal, Aggrieved
For a party to appeal a trial court’s judgment, the party must be “aggrieved.” A litigant is “aggrieved” when the judgment operates prejudicially and directly on his or her property rights or interest. Weldon Revocable Trust v. Weldon, 231 S.W.3d 158, 168 (Mo. Ct. App. 2007). In the context of trusts and decedent estates, it…
Trust Beneficiaries, Necessary Parties, Trust Litigation
In most instances, trust beneficiaries must be parties to a lawsuit when the lawsuit relates to the conduct of a trustee and/or the trust’s assets. “A necessary [party] is one who is so vitally interested in the subject matter of controversy that a valid judgment cannot be effectively rendered without the party’s presence.” Jones v….
Trusts and Nonjudicial Settlement Agreements
The law encourages parties and litigants to resolve disputes outside of court. To that end, Missouri’s Trust laws permit the creation of nonjudicial settlement agreements “with respect to any matter involving a trust.” Section 456.1-111.2, RSMo. There are at least two important qualifications to nonjudicial settlement agreements involving a trust. First, all “interested persons” —…
Statutory and Virtual Representation, Probate Litigation
“Virtual representation” is a judge-made preclusion doctrine where an order or judgment against one party binds another. Specifically, it precludes and prevents the relitigation of a claim if “the interest of the represented and the representative are so identical that the inducement and desire to protect the common interest may be assumed to be the…
Cotrustee Breach of Trust
There are additional fiduciary duties in play when there are cotrustees of a trust. If cotrustees are serving, the default rule is that they act by a majority decision. Section 456.7-703.1, RSMo. A cotrustee is under an obligation to participate in the performance of a trustee’s function — unless the trustee is absent, ill, legally…