In re William R. Zutavern Revocable Trust
309 Neb. 542
| Neb. | 2021Background
- William R. Zutavern created a revocable trust in 2008 and transferred his Wm. Zutavern Cattle Co. (WZCC) stock into trust; upon his death the trust funded a William R. Zutavern Family Trust and gave Meredith (his wife) lifetime income from the Family Trust.
- The Family Trust directs that, upon Meredith’s death, WZCC stock be distributed to "those of my children and/or grandchildren who are [then] actively involved in the operation and management of [WZCC]." Other Family Trust assets were directed to two children, Kelly and Maria.
- Shawn (a son) and his son Russell alleged they were members of that class (having worked in ranch operations but terminated in 2017), and that Meredith, as trustee, mismanaged the Family Trust (including selling ranch property and distributing proceeds) and refused accounting.
- Shawn and Russell filed a verified petition seeking removal of Meredith as trustee, an accounting, surcharge, and a temporary injunction to bar 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, holding Shawn and Russell lacked standing (not beneficiaries because not "actively involved" at time of Meredith’s death) and alternatively ruling § 30-3855(d) made the trustee’s duties owed exclusively to the corporation (WZCC); Shawn and Russell appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing: Are Shawn and Russell beneficiaries with standing to sue the trustee? | Shawn & Russell: They have contingent future beneficial interests as children/grandchildren in the Family Trust and thus standing. | Meredith et al.: They are not beneficiaries because they were not "actively involved" in WZCC at the relevant time; thus lack standing. | Court held Shawn and Russell are beneficiaries with contingent interests and have standing. |
| Effect of § 30-3855(d): Does the trustee owe duties exclusively to WZCC (via corporate powers) rather than beneficiaries? | Shawn & Russell: "Other power" in § 30-3855(d) refers to testamentary powers (e.g., power of appointment), not general corporate powers; trustee owes duties to beneficiaries. | Meredith et al.: "Other power" includes corporate powers (e.g., a corporation’s authority to determine who manages it), so trustee’s duties are owed exclusively to the corporate entity. | Court reversed: § 30-3855(d)’s "other power" is read in context as testamentary-style powers; trustee does not owe duties exclusively to the corporation here. |
| Trust language ambiguity: Is the phrase "actively involved in the operation and management of WZCC" ambiguous? | Shawn & Russell: Terms may be ambiguous and could support their beneficiary status. | Meredith et al.: Terms are plain; plaintiffs cannot show membership. | Court found the provision unambiguous: it limits distribution to children/grandchildren actively managing WZCC at Meredith’s death, but this did not defeat plaintiffs’ contingent beneficiary status. |
| Parol evidence: Could extrinsic evidence of settlor intent be considered? | Shawn & Russell: Offered evidence for injunction to show settlor’s intent. | Meredith et al.: Trust language is controlling; parol evidence barred. | Court held the Trust is unambiguous and parol evidence was properly excluded. |
| Temporary injunction: Was denial proper? | Shawn & Russell: Denial based on standing was erroneous; injunction merits unaddressed. | Meredith et al.: Denial appropriate given lack of standing. | Court vacated dismissal on standing and remanded so the district court can consider injunction on the merits. |
Key Cases Cited
- Manon v. Orr, 289 Neb. 484 (Neb. 2014) (discusses standing and parties of interest in revocable-trust contexts)
- In re Trust Created by McGregor, 308 Neb. 405 (Neb. 2021) (trust-administration review principles)
- Rafert v. Meyer, 290 Neb. 219 (Neb. 2015) (trustee fiduciary duties and strictness of loyalty standard)
- Newman v. Liebig, 282 Neb. 609 (Neb. 2011) (ascertainability requirement for beneficiaries)
- In re Estate of Hedke, 278 Neb. 727 (Neb. 2009) (policy and intensity of fiduciary duties in trusts)