TRUSTEES USE OF DECLARATORY JUDGMENT TO OBTAIN JUDICIAL INSTRUCTIONS
- posted: Oct. 01, 2018
- Estate Planning
Trustees are sometimes faced with difficult or impossible decisions during trust administration. While Courts are historically reluctant to issue advisory opinions or instructions, there is a substantial body of law, both procedural and substantive, giving the Trustee the right to ask the Court for instructions about administration of the Trust.
- Procedural Authority
Missouri Supreme Court Rule 87.02(b) makes general provision for any Trustee to seek instruction from the Court stating (in relevant part):
(b) Any person interested as or through an executor, administrator, trustee, guardian or other fiduciary, creditor, devisee, legatee, heir, next of kin or cestui que trust, in the administration of a trust, or of the estate of a decedent, an infant, lunatic or insolvent, may have a declaration of rights or legal relations in respect thereto:
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(2) To direct the executors, administrators, or trustees to do or abstain
from doing any particular act in their fiduciary capacity; or
(3) To determine any question arising in the administration of the
estate or trust, including questions of construction of wills and other
Rule 87.02(b) does not set out how such instructions are to be sought, although it suggests that a declaration be delivered by the Court. Of note, Rule 87.02(b)(3) clearly anticipates the possibility that other writings (like contracts or leases) could impact other people or entities.
- Substantive Authority
In addition to procedural authority in the Missouri Rules of Court, the statutory Trust Code provisions in Chapter 456, RSMo. make similar provision. §456.11-1106, RSMo. applies the Trust Code to all judicial proceedings involving current Trusts.
§456.2-201, RSMo. extends the Court's subject-matter jurisdiction to include a request for instructions related to administration of the Trust:
- The court may intervene in the administration of a trust to the extent its jurisdiction is invoked by an interested person or as provided by law.
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- A judicial proceeding involving a trust may relate to any matter involving the trust's administration, including a request for instructions and an action to declare rights.
§456.2-202, RSMo. details the powers of the Court, including not only a request for general instruction on what actions the Trustee should take, but also instructions directing the Trustee to refrain from taking specific actions, and extending required powers to the Trustee stating (in relevant part):
- A judicial proceeding involving a trust may relate to any matter involving the trust's administration, including, but not limited to a proceeding to:
(1) request instructions or declare rights;
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(3) interpret or construe the terms of the trust;
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(6) direct a trustee to refrain from performing a particular act or grant to a trustee any necessary or desirable power;
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(7) review the actions of a trustee, including the exercise of a discretionary power;
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(12) modify or terminate a trust;
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(15) approve employment and compensation of agents;
The same statute allows the Court to determine how a Trustee is to be compensated.
- Declaratory Judgment
Perhaps the best guidance about the mechanics of how a Trustee is to seek instruction lies within the Declaratory Judgment Act. §527.040, RSMo. provides that the Trustee of any Trust may apply to the Court for a Declaratory Judgment, seeking instruction about what acts the Trustee should take, or abstain from taking, in administration of the Trust. The same statute extends the Court's subject-matter jurisdiction to interpreting writings related to the trust (contracts being a good example).
§527.040, RSMo. appears to be the foundation from which Supreme Court Rule 87.02(b) was drawn.
The Declaratory Judgment Act also arguably provides the greatest degree of latitude, granting the Court broad and continuing powers under §527.080, RSMo. Application for supplemental relief under §527.080, RSMo. may only be made to the Court having original jurisdiction over the subject-matter trust.
- Joinder Of Third Parties
Perhaps most importantly, §527.110, RSMo. of the Declaratory Judgment Act makes provision for mandatory joinder, into the Declaratory Judgment action under the Trusteeship, of all interested parties who might be impacted by the Declaratory Judgment. The ability to draw all other litigants, from outside the Trust, into one cohesive cause of action is clearer under the Declaratory Judgment Act than under other authority. The ability to obtain a Declaratory Judgment binding people and entities outside the Trust is probably the most compelling reason for the Trustee to use the Declaratory Judgment Act when seeking instruction by the Court.
- Subject-Matter Jurisdiction & Doctrine of Abatement
If the Trust is created by a trust instrument, and not by judicial action, a Declaratory Judgment may be an independent cause of action. However, under a judicially created Trust, a Declaratory Judgment action is not appropriate as an independent cause of action, and instead must be brought within the case under which the Circuit Court created the Trust. One Judge cannot have subject-matter jurisdiction over the Trust while another has subject-matter jurisdiction over the Declaratory Judgment.
The Doctrine of Abatement provides that, once a Court acquires subject-matter jurisdiction in any case, jurisdiction over that subject-matter is exclusive and superior to any other Court acquiring jurisdiction in a later filed cause of action. Meyer v. Meyer, 21 S.W.3d 886 (Mo. App. E.D. 2000) teaches (albeit in a different context) that once the Court acquires subject-matter jurisdiction, no other Court may acquire jurisdiction over the same matter through filing of an independent cause of action.
In Meyer, a widow filed an Election of Surviving Spouse, triggering subject-matter jurisdiction in the Probate Court. Thereafter, a Declaratory Judgment action was filed in Circuit Court. The Meyer Court determined that the subject-matter jurisdiction over the issues was exclusive to the Probate Court because of the Doctrine of Abatement.
Overall, little guidance is available about the general construction of pleadings by which a Trustee seeks instruction from the Court. That said, given that third parties must be joined if impacted by the Declaratory Judgment action, care should be taken to use sound pleading practices under Supreme Court Rule 55 to ensure the third parties are properly bound by the Declaratory Judgment.
- Determination Of Fact By Jury
§527.090, RSMo. makes provision for trial by jury on fact issues, with such factual determinations to then be applied by the Court under the applicable law. K.D.R. vs. D.E.S., 637 S.W.2d 691 (Mo. banc. 1982) established that pure fact questions that are part of a Declaratory Judgment action may be tried to a jury, with legal issues thereafter being decided by the Court based on the facts found by the jury.
Jury Instructions would obviously be Not-In-M.A.I., but should be similar to the process by which Will Contests require a factual determination by the jury, followed by application of that fact by the Court. M.A.I. Chapter 15 addresses Will Contests, and M.A.I. Illustration 15.09 sets out a good example of the instruction set for the jury to find a fact (i.e. -- the document is or is not the last will of the decedent) to be applied by the Court under the applicable law of the case.
Of course, trial by jury can be waived (§510.190, RSMo.) if all parties agree.
- Fees & Costs
Under the Declaratory Judgment Act, §527.100, RSMo. makes provision for assessment of costs. It must be recalled that attorney's fees are not automatically assessable as costs under the Declaratory Judgment Act absent other specific findings by the Court. Missouri applies the American Rule, which requires that each party bear their own costs of litigation, including attorney=s fees and expenses, unless an exception applies. Exceptions include statutory provisions for an award of attorney=s fees, similar contract clauses, or for special or unique circumstances on a case-by-case basis.
§527.100, RSMo., does grant the Court power to tax costs in any action brought under the Declaratory Judgment Act. However, the appellate opinions interpreting §527.100, RSMo. teach that attorney's fees and expenses can be awarded as taxable costs in a Declaratory Judgment action only where special and unique circumstances exist such that imposition of an award of attorney's fees and expenses as taxable costs is warranted as an exception to the American Rule. Goellner v. Goellner Printing Company, 226 S.W.3d 176 (Mo. App. E.D. 2007) is instructive on how the special and unique circumstances exception to the American Rule may be applied in a Declaratory Judgment action.
If you have been appointed as Trustee of a Trust, and have questions about any action to take or not take in administering the trust, you should have an experienced trust attorney review the facts and circumstances of the Trust (as well as your questions), advise you how to best protect yourself, and represent you in a Declaratory Judgment action if instructions from the Court are required.
By: Joseph W. Rigler
DID YOU KNOW ? is presented by Williams, Robinson, Rigler & Buschjost, PC as a public information service only. None of the information contained herein is intended to be taken as legal advice. Each matter depends on unique facts which attorneys must consider in forming an opinion, and may depend on laws unique to a particular jurisdiction. No two cases are the same. If you want to know more about this subject, contact Williams, Robinson, Rigler & Buschjost, PC, or the attorney of your choice, and seek a formal opinion about your particular case.
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