Many complicated issues arise in a trust administration, for which third party experts (accountants, attorneys, etc.) can provide advice. Of course, the next step after receiving such advice is to follow that advice when appropriate. intent, which the corporate trustee must implement in its administration of the trust. Understand the Mandatory Obligations Reflecting its central role in trust administration, the trust document itself may modify the otherwise ordinary obligations of the corporate trustee, subject to the mandatory provisions imposed by the Nebraska Uniform Trust Code. Those mandatory terms cannot be varied by the settlor in the trust. They include: • The duty to act in good faith and in accordance with the terms and purposes of the trust and interests of the beneficiaries (subject to NEB. REV. STAT. §§ 30-4309, 30-4311, 30-4312); • The requirement that a trust and its terms be for the benefit of its beneficiaries; • The duty to keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests; • A trust instrument cannot relieve a trustee of liability for a breach of trust committed in bad faith or with reckless indifference or if such a term of a trust instrument was insert as a result of an abuse of a fiduciary or confidential relationship between the trustee and settlor. NEB. REV. STAT. §§ 30-3805, 30-3897. Consequently, in addition to having a detailed understanding of the trust document, the corporate trustee’s actions must be guided by the mandatory provisions of Nebraska trust law that are applicable to all trusts, and to all trustees. Determine the Beneficiaries and the Duties Owed to Each While determining beneficiaries presents an ordinary and simple task in most instances, certain types of beneficiaries raise special concerns, as illustrated by the analysis regarding contingent beneficiaries. The question of duties owed to a contingent beneficiaries was address last year by the Supreme Court of Nebraska in In re William R. Zutavern Revocable Trust, 309 Neb. 542 (2021) (“Zutavern”). In Zutavern, the Trust at issue limited the distribution of the Trust property (shares in a company) “to those of my children and/or grandchildren who are [at the time of the surviving spouse’s death] actively involved in the operation and management of [the company running the family ranching operation].” Id. at 546. One of the settlor’s children and one of the settlor’s grandchildren, who had been fired from the ranching operation, filed suit. Id. at 547. The surviving spouse, and current trustee, moved to dismiss and argued that, because the two individuals were no longer “actively involved in the operation and management” of the family ranch, they were no longer beneficiaries and, therefore, did not have standing to sue the trustee. Id. at 549-50. The trial court granted the motion to dismiss, finding that the son and grandson were not beneficiaries and, as a result, were owed no duties by the trustee; the Nebraska Supreme Court reversed. Id. at 544. The Court explained that a beneficiary need only be definite – meaning that such “beneficiary can be ascertained now or in the future, subject to any applicable rule against perpetuities.” Id. at 554 (citing NEB. REV. STAT. § 30-3828(b)). That the plaintiff son and grandson were not currently working on the ranch was irrelevant, as the timing of the determination focused on the future, upon the surviving spouse’s death. Because the son and grandson were in the class of beneficiaries generally described in the Trust (“those of my children and/ or grandchildren ...”) subject to the later determination (being “actively involved in the operation and management” of the ranch), they had standing to sue to enforce the trustee’s fiduciary duties. Id. at 555-56. They had a contingent future beneficial interest in the Trust, and that alone was sufficient to prosecute their claims in court. Id. The decision correlates directly with the Nebraska Uniform Trust Code’s definitional section. The Code defines a “beneficiary” as a person who either (a) has a present or future beneficial interest in a trust, vested or contingent; or (b) in a capacity other than that of trustee, holds a power of appointment over trust property. NEB. REV. STAT. § 30-3803(3). The Zutavern case makes it clear that a definite beneficiary (or Counselor's Corner — continued on page 18 NEBRASKA BANKERS ASSOCIATION 17
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