977 N.W.2d 919
Neb.2022Background
- Charles and Patricia Masek created the Charles and Patricia Masek Family Trust in 1993; Charles died in 2000 and Patricia became sole trustee and the trust became irrevocable. Patricia later amended the trust to add all five children as cotrustees; Barry, Mark, and Dianne were named successor cotrustees.
- Beginning about 2014, Mark and Dianne moved Patricia (who had dementia) and another child to Illinois; Barry and Colleen allege the move and ensuing conduct cut them off from Patricia and trust records.
- Colleen petitioned (2015) to remove Patricia as trustee; the court declined because trust-specified procedures to find her unfit were not followed. Illinois guardianship proceedings followed in 2020; Barry was appointed guardian/conservator for Patricia.
- Barry and Colleen filed an amended petition (June 2020) alleging appellants depleted trust assets (withdrawals and payments beginning in 2015) and sought surcharge/damages under the Nebraska Uniform Trust Code (NUTC). A Gage County evidentiary hearing occurred in September 2020 without appellants present.
- The county court found notice and jurisdiction proper, found withdrawals totaling $1,276,858, and entered judgment against Mark and Dianne for that amount plus fees. Appellants moved for new trial/special appearance challenging service and jurisdiction; the county court denied relief.
- The Nebraska Supreme Court reversed and remanded because the county court’s findings (no improper substitution/amendment of trustees) conflicted with the relief granted, and the court did not state the legal theory (participation in breach or de facto-trustee liability) supporting appellant liability.
Issues
| Issue | Plaintiff's Argument (Barry) | Defendant's Argument (Mark & Dianne) | Held |
|---|---|---|---|
| Personal jurisdiction / service of process | Notice was proper: trust registered in Gage County; mail and email service were given; counsel for appellants in related litigation received notice. | Service/process insufficient; court lacked personal jurisdiction and Nebraska long-arm contacts. | Supreme Court found most jurisdiction/service arguments without merit on the record and that parties had notice, but did not rest judgment on this point; reversal was on other grounds. |
| Whether appellants can be liable for breach of trust despite not being named trustees | Appellants participated in breaches (directed withdrawals, used trust funds) or acted as de facto trustees, so they are liable to the trust. | They were not trustees; court found no improper substitution or amendment, so they cannot be held for trustee breach. | Court held the county court’s findings conflicted with the judgment; remanded to allow development of evidence/argument whether appellants participated in breach or were de facto trustees. |
| Subject-matter jurisdiction / indispensable party (Patricia) | Relief could be maintained by Barry (guardian/administrator or trustee/beneficiary); Illinois guardianship and later death do not defeat jurisdiction. | Patricia (as trustee) was not properly served and was indispensable; absence deprived court of subject-matter jurisdiction. | Supreme Court found appellants’ jurisdiction arguments largely without merit on the record but did not resolve every collateral standing issue; remand for clarification. |
| Proper plaintiff/relief (who may recover) | Barry, as guardian/conservator and as trustee/beneficiary, was entitled to recover and obtain surcharge/judgment. | Judgment should be against the trust or a properly appointed trustee rather than Barry personally in multiple roles. | Court identified ambiguity in the county court’s judgment (Barry named in multiple capacities) and remanded for proceedings clarifying the proper plaintiff and legal basis for recovery. |
Key Cases Cited
- In re William Zutavern Revocable Trust, 309 Neb. 542 (Neb. 2021) (interpreting NUTC principles and used as precedent for trust-law analysis)
- In re Trust of Shire, 299 Neb. 25 (Neb. 2018) (authority on trust-administration review standards and NUTC interpretation)
- Chaney v. Evnen, 307 Neb. 512 (Neb. 2020) (appellate review obligations on statutory interpretation)
- In re Bankers Trust, 403 F.2d 16 (7th Cir. 1968) (discussing circumstances in which a party may be treated as a de facto fiduciary)
- Rose v. Rose, 427 S.W.3d 698 (Ark. Ct. App. 2013) (examples of de facto trustee liability in trust disputes)
- In re Irrevocable Trust of McKean, 183 P.3d 317 (Wash. Ct. App. 2008) (recognition of de facto-trustee concepts and liability)