In re William R. Zutavern Revocable Trust
309 Neb. 542
| Neb. | 2021Background
- William R. Zutavern created a revocable trust (later funding a Family Trust) holding his Wm. Zutavern Cattle Co. (WZCC) stock; on his death the Family Trust gave WZCC stock to "those of my children and/or grandchildren who are [then] actively involved in the operation and management of [WZCC]."
- William died in 2011; Meredith (his spouse) became substitute trustee and held/distributed trust assets; Shawn (son) and Russell (grandson) allege they qualified as contingent beneficiaries but were fired/removed from ranch employment in 2017.
- Shawn and Russell filed suit seeking removal of Meredith as trustee, an accounting, surcharge, and a temporary injunction to prevent sale of the ranch; Meredith and other family members moved to dismiss for lack of standing and failure to state a claim.
- The district court dismissed, ruling Shawn and Russell were not beneficiaries (no longer "actively involved" at time of Meredith's death) and alternatively concluding § 30-3855(d) meant a trustee’s duties could be owed exclusively to a corporation (WZCC).
- The Nebraska Supreme Court reversed: it held Shawn and Russell are ascertainable contingent beneficiaries with standing, rejected the district court’s expansive reading of "other power" in § 30-3855(d), and remanded for further proceedings (including consideration of the injunction).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / beneficiary status | Shawn & Russell are beneficiaries (contingent) because the Trust defines class (children/grandchildren) regardless of present employment | They lost beneficiary status by not being "actively involved" in WZCC at relevant time | Held: Shawn & Russell are ascertainable contingent beneficiaries and have standing to sue the trustee |
| Scope of § 30-3855(d) ("other power") | "Other power" refers to testamentary-style powers (e.g., power of withdrawal), not general corporate powers | The district court/defendants read "other power" broadly to include corporate powers (e.g., hiring/firing) so trustee owed duties exclusively to WZCC | Held: "Other power" should be read in context with testamentary powers; court rejected importing general corporate powers; trustee’s duties are owed to beneficiaries, not exclusively to corporation |
| Ambiguity of Trust phrase "actively involved in the operation and management" | Plaintiffs argued terms could be ambiguous as applied to facts | Defendants argued the phrase is clear and precludes plaintiffs since they were terminated | Held: Provision is unambiguous; but plaintiffs still are contingent beneficiaries under that clear class definition |
| Exclusion of settlor parol evidence & injunction | Plaintiffs sought to introduce parol evidence of William's intent and obtain a temporary injunction to block sale | Defendants urged exclusion of parol evidence and dismissal of injunction motion for lack of standing | Held: Parol evidence properly excluded because the Trust is unambiguous; injunction denial must be reconsidered on remand now that standing is established |
Key Cases Cited
- Manon v. Orr, 289 Neb. 484 (Neb. 2014) (discusses limits on beneficiary standing for revocable trusts while settlor retains control)
- In re Trust Created by McGregor, 308 Neb. 405 (Neb. 2021) (trust-administration standard of review and related trust principles)
- Rafert v. Meyer, 290 Neb. 219 (Neb. 2015) (trustee duty and pleading standard discussion)
- In re Estate of Stuchlik, 289 Neb. 673 (Neb. 2014) (trust fiduciary principles and beneficiary definitions)
- Newman v. Liebig, 282 Neb. 609 (Neb. 2011) (ascertainability requirement for beneficiaries)