member of a definite class of beneficiaries) with a contingent future beneficial interest, even if the contingency is not presently met or even likely to be met in the future, is owed fiduciary duties. Thus, any trustee should be careful when reviewing a Trust, and determine who the beneficiaries are, under the Trust itself and Nebraska law. Generally, fiduciary duties are owed to all beneficiaries, with some limited exceptions. To this end, only if a trust is revocable by the settlor can the trustee follow the settlor’s directions that are “contrary to the terms of the trust.” NEB. REV. STAT. § 30-3855(a). And, indeed, “[w]hile a trust is revocable, rights of the beneficiaries are subject to the control of, and the duties of the trustee are owed exclusively to, the settlor.” NEB. REV. STAT. § 30-3855(b). Understanding the nature of the trust, the beneficiaries, and the duties owed to those beneficiaries will set up a trustee for success. Change Existing Business Operations if Needed Upon assuming his or her role, a trustee may realize that the persons associated with the trust property have become accustomed to operating in a particular way, irrespective of the terms of the governing trust document. As uncomfortable as it may be for the beneficiaries or others who operated the business, a trustee could be in breach of their fiduciary duties if they fail to change the operations to ensure the interests of all beneficiaries are considered. This exact issue arose recently in In re Estate of Forgey, wherein the Nebraska Supreme Court assessed a penalty against a trustee who Counselor's Corner — continued from page 17 failed to collect rent, 298 Neb. 865, 906 N.W.2d 618 (2018). In that case, there was a family-operated cattle operation in which the profits were shared, but no rent was paid by the participants. Id. at 888. After the grantor passed away, the trustee (one of the individuals operating the cattle business) continued in the cattle business without collecting rent. Id. The Nebraska Supreme Court found that the continued commitment to the status quo was a breach of fiduciary duty. Id. at 889. The Court assessed a penalty against the trustee of the amount of rent he failed to collect against the remaining operators of the cattle operation (the trustee himself and another beneficiary). Id. at 890. Therefore, a trustee must be cautious about following the prior business operations or patterns, if not consistent with the trust documents or the best interests of the beneficiaries. The beneficiaries may push or try to pressure a trustee to follow those business practices, but the trustee should be guided by the trust document and Nebraska law. Use Experts When Needed Equally important to the trustee’s sound administration is the consultation of experts. To illustrate, in the Forgery case discussed above, the Nebraska Supreme Court also penalized the trustee for losses associated with the failure to file the trust’s federal estate tax return, which resulted in penalties and interest of approximately $2,200,000. In re Est. of Forgey, 298 Neb. 865, 872–73, 906 N.W.2d 618, 626–27 (2018). The trustee had hired a CPA who prepared the tax return, but then nevertheless failed to sign and mail it on time. Id. at 872. NEBANKERS.ORG 18
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