In re William R. Zutavern Revocable Trust
309 Neb. 542
| Neb. | 2021Background
- William R. Zutavern created a revocable trust in 2008 and died in 2011; the Trust transferred William’s WZCC corporate stock into a Family Trust to be administered after his death.
- The Family Trust directs that upon Meredith’s death the trustee distribute WZCC stock to William’s children and/or grandchildren who are “then actively involved in the operation and management of [WZCC].”
- Meredith (surviving spouse) serves as substitute trustee; Shawn (son) previously worked full time on the ranch until his termination in 2017; Russell (grandson) also had been employed and was later fired.
- In November 2019 Shawn and Russell sued to remove Meredith as trustee, sought an accounting, surcharge, and a temporary injunction to prevent sale of the ranch, alleging breaches of fiduciary duties and that they qualify as beneficiaries who are harmed by Meredith’s actions.
- The district court dismissed for lack of standing, finding Shawn and Russell were not beneficiaries (they were not actively employed at Meredith’s death) and also held, alternatively, that under Neb. Rev. Stat. § 30-3855(d) the trustee’s duties were owed exclusively to WZCC (a corporate entity), not to Shawn and Russell.
- The Nebraska Supreme Court reversed and remanded: it held Shawn and Russell have contingent beneficiary status and standing, rejected the district court’s reading of § 30-3855(d) as extending to general corporate powers, and remanded for further proceedings (including reconsideration of the injunction request).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / beneficiary status | Shawn and Russell claim they are beneficiaries (future contingent interest) as children/grandchildren who may qualify under the Family Trust class description | Meredith et al. say they are not beneficiaries because the class requires being actively involved at the time of Meredith’s death and they were terminated before that | Court: Shawn and Russell are ascertainable members of the beneficiary class with contingent future interests and thus have standing |
| Meaning of § 30-3855(d) (to whom trustee duties are owed) | "Other power" is a testamentary-type power and does not incorporate general corporate powers; trustee duties are owed to beneficiaries under the Trust terms | District court/defendants argued "other power" reaches corporate powers (e.g., a corporation’s power to determine managers/employees), so duties are owed exclusively to WZCC | Court: "Other power" should be read in context as a testamentary-style power; district court erred to equate it with general corporate powers; trustee duties are not exclusively owed to WZCC |
| Ambiguity of Family Trust phrase "actively involved in the operation and management of WZCC" | Plaintiffs suggested context or facts could create ambiguity supporting their claim to be beneficiaries | Defendants argued the phrase is unambiguous and requires activity at time of Meredith’s death | Court: Language is unambiguous; class description is definite; but that does not defeat plaintiffs’ contingent beneficiary status |
| Exclusion of extrinsic evidence and preliminary injunction | Plaintiffs sought to introduce evidence of settlor’s intent and requested a temporary injunction to prevent a ranch sale | Defendants urged exclusion of parol evidence and argued no standing for injunction | Court: Parol evidence properly excluded because instrument is unambiguous; injunction must be reconsidered on remand now that plaintiffs have standing |
Key Cases Cited
- Manon v. Orr, 289 Neb. 484 (Neb. 2014) (discussing standing in revocable-trust context where settlor retained control)
- Newman v. Liebig, 282 Neb. 609 (Neb. 2011) (ascertainability requirement for trust beneficiaries)
- Rafert v. Meyer, 290 Neb. 219 (Neb. 2015) (standards for evaluating pleadings on dismissal)
- In re Trust Created by McGregor, 308 Neb. 405 (Neb. 2021) (review standards for trust-administration appeals)
- In re Trust Created by Cease, 267 Neb. 753 (Neb. 2004) (determination of ambiguity as a question of law)
- In re Estate of Hedke, 278 Neb. 727 (Neb. 2009) (trustee fiduciary duties and strict duty of loyalty)
- In re Estate of Stuchlik, 289 Neb. 673 (Neb. 2014) (interpretation and application of Uniform Trust Code provisions)