Trusts: Nonjudicial Settlement Agreements

One of the main goals of a trust is to privately administer an individual’s or family’s affairs. When disputes arise relating to the propriety of a trust’s administration, or even assertions of breach of trust against the trustee, the matter can quickly become public in courts. As a way to avoid this publicity, Missouri law authorizes nonjudicial settlement agreements to resolve disputes.
To start, a nonjudicial settlement is generally a voluntary agreement between parties in which a compromise is reached to avoid further dispute or litigation. The parties to such a settlement must be all “interested persons,” which are defined as those whose consent would be required if the matter were in Court. In application, this usually means all beneficiaries and trustee(s) of the trust.
Section 456.1-111, RSMo, outlines a number of items that may be the subject of a nonjudicial settlement: (1) the interpretation or construction of the terms of the trust; (2) the approval of a trustee’s report or accounting; (3) direction to a trustee to refrain from performing a particular act or the grant to a trustee of any necessary or desirable power; (4) the resignation or appointment of a trustee and the determination of a trustee’s compensation; (5) transfer of a trust’s principal place of administration; and (6) liability of a trustee for an action relating to the trust.
Note, however, that there is one major limitation to nonjudicial settlement agreements: the agreement cannot contravene a material purpose of the trust.
Contact with questions germane to trusts, trustees, beneficiaries or probate generally.