A trustee is required to “keep adequate records of the administration of the trust.” Section 456.8-810, RSMo. This is closely related to the duties to act with prudence and report and inform to the beneficiaries. Failure to follow any of these duties is a breach of trust. It could lead to a damages claim. If…
Legal Articles
Trust Amendments and Modifications
When interpreting trusts, the intent of the settlor when the trust was created governs, and subsequent modifications are effective only in the manner expressed in the trust instrument. Banks v. Central Trust and Inv. Co., 388 S.W.3d 173, 176 (Mo. Ct. App. 2012). Generally, the settlor can modify the trust only in the manner provided…
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…
Exculpatory Clauses in Trust, Trust Litigation
An exculpatory clause is a provision which authorizes the trustee to engage in conduct that would otherwise be a breach of fiduciary duty. Before enacting the Uniform Trust Code, Missouri law was that “[a]n exculpatory clause is valid and not contrary to public policy…absent a showing that the settlor was improperly induced to insert it.”…
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…
Power of Attorney and Attorney-in-Fact Liability
Power of attorney instruments for finances are common estate planning tools. The parties to a power of attorney are the principal and attorney-in-fact. The principal designates and nominates the attorney-in-fact to engage in specified and authorized activities on the principal’s behalf. The attorney-in-fact is a fiduciary and must act in the principal’s interests. The relationship…
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…
Validly Amending Revocable Trusts
To be effective, an amendment to a revocable trust needs to be done in a precise way. Failure to follow the correct procedures may mean that the amendment — and any change(s) contained in the amendment — is invalid. Section 456.6-602, RSMo addresses how to amend a revocable trust. If the terms of the trust…