Necessary and Indispensable Parties in Trust Lawsuits:  Second District Clarifies Rule in Trust Probate Dispute

Who is a Necessary Party?

The term “necessary party” has been defined in a variety of ways, but generally most litigators will agree that a “necessary party” is:

(1) as a party whose rights and interests are to be affected by a court order; and
(2) whose actions with reference to the subject matter of litigation are to be controlled by the court order; or
(3) a person without whose joinder as a party an effective court order or judgment cannot be rendered in the plaintiff’s favor; or
(4) A person who is materially interested in the subject matter of a suit and who will be directly affected by an adjudication of the controversy.

Whatever definition one uses, it is undisputed and well-settled law that if a necessary party hasn’t been named in any kind of lawsuit, then court cannot proceed until that person is joined. (more…)

Washington joins other states in growing trend

The doctrine of de facto trustee is gaining popularity in its recognition by state court’s and trust and estate jurisprudence. A person is a de facto trustee where the person (1) assumed the office of trustee under a color of right or title and (2) exercised the duties of the office. A person assumes the position of trustee under color of right or title where the person asserts “an authority that was derived from an election or appointment, no matter how irregular the election or appointment might be.” A de facto trustee’s good-faith actions are binding on third persons. Because the purported successor trustee in Allen Trust acted as trustee and assumed its office through an appointment it reasonably believed to be effective, it was a de facto trustee and was entitled to compensation for its services. Washington recently joined the growing number of jurisdictions using the de facto trustee concept (Alabama, New York, Oklahoma, and Oregon all recognize the concept.) (more…)

What is the legal duty of a fiduciary?

The answer from Justice Cardozo is still quoted today:  “A trustee is held to something stricter than the morals of the market place.  Not honesty alone, but the punctillo of an honor most sensitive, is then the standard of behavior.”

Meinhardt v. Salmon, 249 N.Y. 458, 464, 164 N.E. 545, 546 (1928).

Trust Language Isn’t Set in Stone — Should the Nurse Get the Apartment? Maybe. The Trustee Has Standing to Argue She Should Via Reforming the Language of the Trust.

Cecilia Reid was Edgar Sonder’s nurse for several years.  Being a responsible man, Edgar Sonder created a “pour over” trust in May 2000, naming himself as trustee.  (A “pour over” trust is a trust that is funded by assets “pouring over” from an estate, and is a common vehicle used in estate planning.)

Later, Mr. Sonder amended the trust, naming Nurse Reid as its sole successor trustee.  The trust in its final version (Edgar Sonder amended the document twice before he died) included instructions on how his assets were to be distributed; several gifts were itemized. (more…)