In God We Trust

May 2, 2018 § 1 Comment

As we discussed yesterday, it was a dispute over whether the local church held property in trust for the denomination that brought First Presbyterian Church of Starkville into litigation with the Presbytery of Saint Andrew, PCUSA.

Justice Randolph’s majority opinion in Presbytery of Saint Andrew, PCUSA v. First Presbyterian Church PCUSA of Starkville, Mississippi, decided April 12, 2018, includes a precise summary of the law of trusts in Mississippi. I thought it would be something you might find useful:

¶23. Generally, trusts are classified under two broad categories: (1) express trusts and (2) implied trusts. Mississippi law requires that “no trust of or in any real property can be created except by written instrument signed by the party who declares or creates such trust. . . .” Miss. Code Ann. § 91-8-407 (Rev. 2013). Neither party asserted the existence of any writing signed by the proper FPC officials after authorization that satisfies Section 91-8-407,whether by original deed or separate trust instrument. Likewise, no declaration of trust is filed in the land records of Oktibbeha County, Mississippi, as provided by Section 91-8-407(b)(2).

¶24. No express trusts were entered into by the parties under traditional Mississippi trust law. No reference exists in any deed to creation of a trust relationship. It follows that no clear expression of an intent to create a trust exists, nor any reference even to the term “trust.” Neither party has asserted the opposite. Likewise, no separate document such as a trust instrument exists in writing. Again, neither party asserts the contrary.

¶25. None of the elements of creation of an express trust are present, such as the writing, the clear intent of the trustor, or the confirming authority of creation of a trust and the transfer of property by the governing body. See Church of God Pentecostal, 716 So. 2d at 208. Therefore, no traditional express trust nor any legally enforceable and separate traditional trust instrument exists or existed that would operate to vest a beneficial interest in and over the legally titled property of FPC to PCUSA.

¶26. While an express trust must be written, implied trusts differ in that they arise by implication of the law or are presumed from the circumstances. Mississippi recognizes two types of implied trusts: (1) constructive trusts and (2) resulting trusts.

¶27. A constructive trust is a judicially imposed remedy used to prevent unjust enrichment when one party wrongfully retains title to property. McNeil v. Hester, 753 So. 2d 1057, 1064 (Miss. 2000). FPC purchased the property at issue. No evidence exists that PCUSA invested any funds into the acquisition of any of the parcels of land. No evidence of any documents, oral conversations, minutes, or other written or oral supporting evidence exists that any arrangement of trust was contemplated in the tradition of a constructive trust. No constructive trust is implied by law based on the facts as agreed upon by the parties.

¶28. A resulting trust “is designed to give effect to the unwritten but actual intention of the parties at the time of the acquisition of title to the affected property.” Robert E. Williford, Trusts, 8 Encyclopedia of Mississippi Law § 73:2, 422 (2001). Additionally, Section 91-8-407(a)(2) specifically requires the intention to create a trust. When FPC incorporated in 2003, no intention to create a trust or create an express trust relationship existed. Furthermore, it is clear that PCUS disclaimed any interest in church trust property until just before the merger forming PCUSA. Although a trust provision was placed in the constitution when PCUSA was formed, the local churches were granted the right to opt out of that provision. FPC took measures on several different occasions to exercise its right to opt out. It did so in session meetings and bylaws of incorporation; it did so with reassurances by officers of PCUSA that compliance with the opt-out would allow FPC to hold title to its property. It is
reasonable to conclude the consistent position of FPC as representative of its intent that FPC wanted to remain, as it always had, the owner of its property. There is no evidence of a resulting trust.

 

The Price of Breach of Trust

February 7, 2017 § Leave a comment

The law of trusts in Mississippi may be the least litigated area of our jurisprudence, judging from the paucity of reported cases on trust issues.

That’s why I was planning to do a post on the COA’s recent 30-page decision by Judge Barnes in Cassibry v. Cassibry, decided January 24, 2017. But Philip Thomas posted about the case on his excellent Mississippi Litigation Review and Commentary blog, so you can read his take at this link. At the trial level, the trustee was found to have violated the trust and was assessed a judgment in the amount of $144,865.86, plus post-judgment interest of eight percent per annum, and was ordered to pay $17,902 in costs and $28,500 in attorney’s fees. He was also ordered to transfer 7,757 shares of stock to the prevailing party. On appeal the COA affirmed but remanded for further proceedings on the issue of attorney’s fees, which the appellee conceded was not properly documented at trial.

One minor quibble with Mr. Thomas’s post: he refers to the trial court’s ruling as a “verdict,” but since it came from a chancellor and not a jury, it was a judgment. Not intended as a swipe at the knowledgeable Mr. Thomas.  Just pointing this out for the young chancery lawyers and law students. Mr. Thomas will tell you that he spends most of his time in federal and circuit court, and not in chancery, so he can be forgiven the lapse into his more familiar verbiage.

Many trusts are extra-judicial, grant extremely broad discretion to the trustee, and waive accountings and other reporting. I guess that’s why relatively few are litigated. I had a case in my court years ago in which the beneficiary claimed a breach of trust because the trustee refused to disburse any money to him at all. The trust specifically gave the trustee unfettered discretion in that regard. The beneficiary also complained that the trustee had sold some of the assets of the trust; however, the trust gave him broad discretion in that area, also. The case fell to summary judgment and, to my knowledge was never appealed. It would have been interesting to litigate, since the were conflicting provisions as to which state’s laws controlled, and none of them were Mississippi.

An epic case in which the trustee was removed for non-monetary breach of duty to the beneficiaries is Wilbourn v. Wilbourn, decided April 24, 2012.

Mississippi’s Uniform Trust Code

July 16, 2014 § Leave a comment

The law of trusts in in this state has undergone a major transformation, effective July 1, 2014, with adoption of the Mississippi Uniform Trust Code.

Mississippi’s law of trusts now will be more closely aligned with that of other states that have adopted the uniform law.

The bill passed by the legislature is 132 pages long, a tad much to try to expound on here, but to give you an idea of the new law’s breadth, here is merely the title of the bill:

AN ACT TO CREATE THE MISSISSIPPI UNIFORM TRUST CODE, TO BE CODIFIED IN TITLE 91, CHAPTER 8, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE CREATION, ADMINISTRATION, MODIFICATION, TERMINATION, AND VALIDITY OF TRUSTS; TO CREATE NEW SECTION 91-8-101, MISSISSIPPI CODE OF 1972, TO CREATE A SHORT TITLE; TO CREATE NEW SECTION 91-8-102, MISSISSIPPI CODE OF 1972, TO PRESCRIBE THE SCOPE OF THE ACT; TO CREATE NEW SECTION 91-8-103, MISSISSIPPI CODE OF 1972, TO ENACT DEFINITIONS; TO CREATE NEW SECTION 91-8-104, MISSISSIPPI CODE OF 1972, TO ENUMERATE THE CIRCUMSTANCES CONSTITUTING “KNOWLEDGE”; TO CREATE NEW SECTION 10 91-8-105, MISSISSIPPI CODE OF 1972, TO CREATE DEFAULT AND MANDATORY RULES; TO CREATE NEW SECTION 91-8-106, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE APPLICATION OF COMMON LAW AND PRINCIPLES OF EQUITY; TO CREATE NEW SECTION 91-8-107, MISSISSIPPI CODE OF 1972, TO PRESCRIBE GOVERNING LAW; TO CREATE NEW SECTION 15 91-8-108, MISSISSIPPI CODE OF 1972, TO DELINEATE THE PRINCIPAL PLACE OF ADMINISTRATION; TO CREATE NEW SECTION 91-8-109, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR NOTICE AND WAIVER THEREOF; TO CREATE NEW SECTION 91-8-110, MISSISSIPPI CODE OF 1972, TO SPECIFY QUALIFIED BENEFICIARIES; TO CREATE NEW SECTION 20 91-8-111, MISSISSIPPI CODE OF 1972, TO AUTHORIZE NONJUDICIAL SETTLEMENT AGREEMENTS; TO CREATE NEW SECTION 91-8-112, MISSISSIPPI 22 CODE OF 1972, TO PROVIDE RULES OF CONSTRUCTION; TO CREATE NEW SECTION 91-8-201, MISSISSIPPI CODE OF 1972, TO SPECIFY THE ROLE OF THE COURT; TO CREATE NEW SECTION 91-8-202, MISSISSIPPI CODE OF 1972, TO SPECIFY JURISDICTION; TO CREATE NEW SECTION 91-8-203, MISSISSIPPI CODE OF 1972, TO DEFINE SUBJECT-MATTER JURISDICTION; TO CREATE NEW SECTION 91-8-204, MISSISSIPPI CODE OF 1972, TO PRESCRIBE VENUE; TO CREATE NEW SECTION 91-8-205, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR JUDICIAL ACCOUNTINGS AND SETTLEMENTS; TO CREATE NEW SECTION 91-8-301, MISSISSIPPI CODE OF 1972, TO SPECIFY WHEN REPRESENTATION IS BINDING; TO CREATE NEW SECTION 91-8-302, MISSISSIPPI CODE OF 1972, TO PROVIDE WHEN THE HOLDER MAY BIND OTHERS; TO CREATE NEW SECTION 91-8-303, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR REPRESENTATION BY FIDUCIARIES AND PARENTS; TO CREATE NEW SECTION 91-8-304, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR REPRESENTATION BY PERSONS WITH SIMILAR INTERESTS; TO CREATE NEW SECTION 91-8-305, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR APPOINTMENT OF REPRESENTATIVES; TO CREATE NEW SECTION 91-8-401, MISSISSIPPI CODE OF 1972, TO PROVIDE METHODS FOR CREATING TRUSTS; TO CREATE NEW SECTION 91-8-402, MISSISSIPPI CODE OF 1972, TO SPECIFY REQUIREMENTS; TO CREATE NEW SECTION 91-8-403, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR FOREIGN TRUSTS; TO CREATE NEW SECTION 43 91-8-404, MISSISSIPPI CODE OF 1972, TO REQUIRE A LAWFUL PURPOSE; TO CREATE NEW SECTION 91-8-405, MISSISSIPPI CODE OF 1972, TO ALLOW COURT SELECTION OF A CHARITABLE PURPOSE; TO CREATE NEW SECTION 91-8-406, MISSISSIPPI CODE OF 1972, TO VOID A TRUST CREATED UNDER DURESS; TO CREATE NEW SECTION 91-8-407, MISSISSIPPI CODE OF 1972, TO ALLOW AN ORAL TRUST; TO CREATE NEW SECTION 91-8-408, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR TRUSTS FOR ANIMALS; TO CREATE NEW SECTION 91-8-409, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR NONCHARITABLE TRUSTS LACKING A DISCERNABLE BENEFICIARY; TO CREATE NEW SECTION 91-8-410, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR MODIFICATION OR TERMINATION OF TRUSTS; TO CREATE NEW SECTION 54 91-8-411, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR MODIFICATION OR TERMINATION OF NONCHARITABLE IRREVOCABLE TRUSTS BY CONSENT; TO CREATE NEW SECTION 91-8-412, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR MODIFICATION OR TERMINATION DUE TO UNFORESEEN CIRCUMSTANCES; TO CREATE NEW SECTION 91-8-413, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR INTERPRETATION ACCORDING TO THE SETTLOR’S INTENT; TO CREATE NEW SECTION 91-8-414, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR MODIFICATION OR TERMINATION OF AN UNECONOMIC TRUST; TO CREATE NEW SECTION 91-8-415, MISSISSIPPI CODE OF 1972, TO ALLOW REFORMATION TO CORRECT MISTAKES; TO CREATE NEW SECTION 91-8-416, MISSISSIPPI CODE OF 1972, TO ALLOW MODIFICATION TO OBTAIN TAX OBJECTIVES; TO CREATE NEW SECTION 91-8-417, MISSISSIPPI CODE OF1972, TO ALLOW COMBINATION AND DIVISION OF TRUSTS; TO CREATE NEW SECTION 91-8-601, MISSISSIPPI CODE OF 1972, TO SPECIFY REQUIRED CAPACITY; TO CREATE NEW SECTION 91-8-602, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR REVOCATION OR AMENDMENT OF REVOCABLE TRUST; TO CREATE NEW SECTION 91-8-603, MISSISSIPPI CODE OF 1972, TO PROVIDE SETTLOR’S POWERS; TO CREATE NEW SECTION 91-8-604, MISSISSIPPI CODE OF 1972, TO PLACE A LIMITATION ON AN ACTION TO CONTEST VALIDITY; TO CREATE NEW SECTION 91-8-701, MISSISSIPPI CODE OF 1972, TO ALLOW ACCEPTANCE OR DECLINE OF TRUSTEESHIP; TO CREATE NEW SECTION 91-8-702, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR A TRUSTEE’S BOND; TO CREATE NEW SECTION 91-8-703, MISSISSIPPI CODE 77 OF 1972, TO PROVIDE FOR COTRUSTEES; TO CREATE NEW SECTION 91-8-704, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR VACANCIES AND APPOINTMENTS; TO CREATE NEW SECTION 91-8-705, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR RESIGNATION OF TRUSTEES; TO CREATE NEW SECTION 91-8-706, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR REMOVAL OF A TRUSTEE; TO CREATE NEW SECTION 91-8-707, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR DELIVERY OF PROPERTY BY A FORMER TRUSTEE; TO CREATE NEW SECTION 91-8-708, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE COMPENSATION OF TRUSTEE, TRUST ADVISORS AND TRUST PROTECTORS; TO CREATE NEW SECTION 91-8-709, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR REIMBURSEMENT; TO CREATE NEW SECTION 91-8-710, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR EXCLUDED FIDUCIARIES OF DIRECTED TRUSTS; TO CREATE NEW SECTION 91-8-711, MISSISSIPPI CODE OF 1972, TO ALLOW A FIDUCIARY TO ACCEPT OR DECLINE SERVING A DIRECTED TRUST; TO CREATE NEW SECTION 91-8-712, MISSISSIPPI CODE OF 1972, TO PROVIDE THE FIDUCIARY’S BOND FOR A DIRECTED TRUST; TO CREATE NEW SECTION 91-8-713, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR A VACANCY IN A DIRECTED TRUST; TO CREATE NEW SECTION 91-8-714, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE RESIGNATION OF THE FIDUCIARY OF A DIRECTED TRUST; TO CREATE NEW SECTION 91-8-715, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR THE REMOVAL OF A FIDUCIARY OF A DIRECTED TRUST; TO CREATE NEW SECTION 91-8-801, MISSISSIPPI CODE OF 1972, TO SPECIFY THE DUTY OF A TRUST ADMINISTRATOR; TO CREATE NEW SECTION 91-8-802, MISSISSIPPI CODE OF 1972, TO REQUIRE THE DUTY OF LOYALTY; TO CREATE NEW SECTION 91-8-803, MISSISSIPPI CODE OF 1972, TO REQUIRE IMPARTIALITY; TO CREATE NEW SECTION 91-8-804, MISSISSIPPI CODE OF 1972, TO REQUIRE PRUDENCE; TO CREATE NEW SECTION 91-8-805, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR PAYMENT OF COSTS; TO CREATE NEW SECTION 91-8-806, MISSISSIPPI CODE OF 1972, TO REQUIRE THE TRUSTEE’S USE OF SPECIAL SKILLS; TO CREATE NEW SECTION 91-8-807, MISSISSIPPI CODE OF 1972, TO ALLOW DELEGATION BY A TRUSTEE; TO CREATE NEW SECTION 91-8-808, MISSISSIPPI CODE OF 1972, TO SPECIFY WHEN A SETTLOR HAS THE POWER TO DIRECT; TO CREATE NEW SECTION 91-8-809, MISSISSIPPI CODE OF 1972, TO REQUIRE CONTROL AND PROTECTION OF TRUST PROPERTY; TO CREATE NEW SECTION 91-8-810, MISSISSIPPI CODE OF 1972, TO REQUIRE RECORDKEEPING AND IDENTIFICATION OF TRUST PROPERTY; TO CREATE NEW SECTION 91-8-811, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR ENFORCEMENT AND DEFENSE OF CLAIMS; TO CREATE NEW SECTION 91-8-812, MISSISSIPPI CODE OF 1972, TO REQUIRE COLLECTION OF PROPERTY; TO CREATE NEW SECTION 91-8-813, MISSISSIPPI CODE OF 1972, TO IMPOSE A DUTY TO INFORM AND REPORT; TO CREATE NEW SECTION 91-8-814, MISSISSIPPI CODE OF 1972, TO IMPOSE STANDARDS ON THE EXERCISE OF DISCRETIONARY POWERS; TO CREATE NEW SECTION 91-8-815, MISSISSIPPI CODE OF 1972, TO SPECIFY THE GENERAL POWERS OF A TRUSTEE; TO CREATE NEW SECTION 91-8-816, MISSISSIPPI CODE OF 1972, TO SPECIFY THE SPECIFIC POWERS OF A TRUSTEE; TO CREATE NEW SECTION 91-8-817, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR DISTRIBUTION UPON TERMINATION; TO CREATE NEW SECTION 91-8-901, MISSISSIPPI CODE OF 1972, TO INCORPORATE THE PRUDENT INVESTOR ACT BY REFERENCE; TO CREATE NEW SECTION 91-8-1001, MISSISSIPPI CODE OF 1972, TO PROVIDE REMEDIES FOR BREACH OF TRUST; TO CREATE NEW SECTION 91-8-1002, MISSISSIPPI CODE OF 1972, TO PROVIDE DAMAGES FOR BREACH OF TRUST; TO CREATE NEW SECTION 91-8-1003, MISSISSIPPI CODE OF 1972, TO ELIMINATE DAMAGES IN ABSENCE OF BREACH; TO CREATE NEW SECTION 91-8-1004, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR ATTORNEY’S FEES AND COSTS; TO CREATE NEW SECTION 91-8-1005, MISSISSIPPI CODE OF 1972, TO ENACT A LIMITATION OF ACTION AGAINST A TRUSTEE; TO CREATE NEW SECTION 91-8-1006, MISSISSIPPI CODE OF 1972, TO CREATE IMMUNITY FOR RELIANCE ON THE TRUST INSTRUMENT; TO CREATE NEW SECTION 91-8-1007, MISSISSIPPI CODE OF 1972, TO CREATE IMMUNITY FOR CERTAIN OTHER EVENTS AFFECTING ADMINISTRATION; TO CREATE NEW SECTION 91-8-1008,  MISSISSIPPI CODE OF 1972, TO PROVIDE FOR A TRUSTEE’S EXCULPATION; TO CREATE NEW SECTION 91-8-1009, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR A BENEFICIARY’S CONSENT, RELEASE OR RATIFICATION; TO CREATE NEW SECTION 91-8-1010, MISSISSIPPI CODE OF 1972, TO LIMIT A TRUSTEE’S PERSONAL LIABILITY; TO CREATE NEW SECTION 91-8-1011, MISSISSIPPI CODE OF 1972, TO SPECIFY A TRUSTEE’S INTEREST AS A GENERAL PARTNER; TO CREATE NEW SECTION 91-8-1012, MISSISSIPPI CODE OF 1972, TO PROVIDE PROTECTION FOR A PERSON DEALING WITH A 148 TRUSTEE; TO CREATE NEW SECTION 91-8-1013, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR CERTIFICATION OF A TRUST; TO CREATE NEW SECTION 91-8-1014, MISSISSIPPI CODE OF 1972, TO ALLOW ENFORCEMENT  OF A NO-CONTEST CLAUSE; TO CREATE NEW SECTION 91-8-1101, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR UNIFORMITY IN APPLICATION AND CONSTRUCTION; TO CREATE NEW SECTION 91-8-1102, MISSISSIPPI CODE OF 1972, TO SPECIFY THE RELATION OF THE ACT TO THE ELECTRONIC SIGNATURES ACT; TO CREATE NEW SECTION 91-8-1103, MISSISSIPPI CODE OF 1972, TO PROVIDE FOR SEVERABILITY; TO CREATE NEW SECTION 91-8-1106, MISSISSIPPI CODE OF 1972, TO MAKE TRANSITION PROVISIONS; TO CREATE NEW SECTION 91-8-1107, MISSISSIPPI CODE OF 1972, TO PLACE LIMITATIONS ON SETTLORS OF IRREVOCABLE TRUSTS; TO CREATE NEW SECTION 91-8-1108, MISSISSIPPI CODE OF 1972, TO PROVIDE FACTORS TO BE CONSIDERED IN CERTAIN CHALLENGES; TO CREATE NEW SECTION 91-8-1109, MISSISSIPPI CODE OF 1972, TO PROVIDE SPECIAL PROTECTIONS FOR TRUSTS FOR THE DISABLED; TO CREATE NEW SECTION 91-8-1201, MISSISSIPPI CODE OF 1972, TO SPECIFY THE POWERS OF 165 TRUST ADVISORS AND TRUST PROTECTORS; TO CREATE NEW SECTION 91-8-1202, MISSISSIPPI CODE OF 1972, TO SPECIFY THE FIDUCIARY DUTY OF TRUST ADVISORS AND TRUST PROTECTORS; TO CREATE NEW SECTION  91-8-1203, MISSISSIPPI CODE OF 1972, TO SUBJECT TRUST ADVISORS AND PROTECTORS TO COURT JURISDICTION; TO CREATE NEW SECTION 91-8-1204,  MISSISSIPPI CODE OF 1972, TO LIMIT THE DUTY OF REVIEW OF AN  EXCLUDED FIDUCIARY; TO CREATE NEW SECTION 91-8-1205, MISSISSIPPI CODE OF 1972, TO SPECIFY THE FIDUCIARY’S LIABILITY; TO CREATE NEW SECTION 91-8-1206, MISSISSIPPI CODE OF 1972, TO CREATE A LIMITATION OF LIABILITY FOR A TRUST ADVISOR OR PROTECTOR; TO REPEAL SECTIONS 91-9-1, 91-9-2, 91-9-3, 91-9-5, 91-9-7 AND 91-9-9, MISSISSIPPI CODE OF 1972, WHICH CONSTITUTE TITLE 91, CHAPTER 9, ARTICLE 1, TRUSTS – GENERAL PROVISIONS; TO REPEAL SECTIONS 91-9-101, 91-9-103, 91-9-105, 91-9-107, 91-9-109, 91-9-111, 91-9-113, 91-9-115, 91-9-117 AND 91-9-119, MISSISSIPPI CODE OF 1972, WHICH CONSTITUTE TITLE 91, CHAPTER 9, ARTICLE 3, UNIFORM 181 TRUSTEE POWERS; TO REPEAL SECTIONS 91-9-201, 91-9-203, 91-9-205, 91-9-207, 91-2-209, 91-9-211, 91-9-213, MISSISSIPPI CODE OF 1972, WHICH CONSTITUTE TITLE 91, CHAPTER 9, ARTICLE 5, RESIGNATION AND SUCCESSION OF TRUSTEES; TO REPEAL SECTIONS 91-9-301, 91-9-303 AND 91-9-305, MISSISSIPPI CODE OF 1972, WHICH CONSTITUTE TITLE 91, CHAPTER 9, ARTICLE 7, REMOVAL OF TRUSTEES; AND FOR RELATED 187 PURPOSES.

In essence, this new law repeals our old trust code and replaces it with the uniform law, which is a change that I think is timely and necessary. Many regional and national financial institutions are trustees or trust advisors, and this law will make the law more clear and certain for them, with the positive effect that less litigation will be necessary to interpret and enforce trust provisions.

IF YOU CAN’T TRUST A TRUSTEE, WHO CAN YOU TRUST?

March 5, 2013 § Leave a comment

“In God we trust; all others pay cash.”  —  Graffiti

A trust is aptly named. Its grantor literally trusts the trustee to carry out his or her wishes with respect to the money or property placed in the trustee’s care.

In the case of Smiley v. Yllander, handed down December 11, 2012, by the COA, the chancellor found at trial that Jeanette Smiley had created a trust when she deeded her home and 140 acres to her nephew, Gary, and his wife, Mary Ann. The deed by which she conveyed the property included this provision:

This conveyance is executed trusting that Gary Lamar Smiley will follow the dictates of my Last Will and Testament with regard to the disposition of the above described property. In the event, however, that said Gary Lamar Smiley should predecease me, then, in that event, his executor/administrator shall follow the dictates and dispose of said property according to my Last Will and Testament.

By her express language, then, Jeanette trusted Gary to deal with her estate as directed in her will.

Alas, as sometimes happens, things did not go as Jeanette had envisioned. Gary and Mary Ann clearcut timber on property specifically reserved in the will for other family members, and the other family members sued, not only for the wrongful timber removal, but also alleging that Mary Ann had misappropriated over $100,000 of Jeanette’s money.

The chancellor found that the deed created a trust and awarded the plaintiffs $292,000 for removal of the timber, and another $44,000 for misappropriation.

Gary and Mary ann appealed.

The COA reversed and remanded the trust issue because the chancellor was unclear about the standard of proof that she applied. Judge Maxwell’s opinion is a good primer on the law of creation of trusts and the burden of proof required for each. Here’s what he wrote:

¶11. Generally, trusts are classified under two broad categories: (1) express trusts and (2) implied trusts. Express trusts arise from a party’s manifestation of an intention to establish such an agreement and are created by a trust instrument. Miss. Code Ann. § 91-9-103(a) (Supp. 2012). If the trust holds real property as an asset, the trust agreement must be in writing and signed by the grantor. Miss. Code Ann. § 91-9-1 (Rev. 2004); Alvarez v. Coleman, 642 So. 2d 361, 366-67 (Miss. 1994).

¶12. While an express trust must be written, implied trusts differ in that they arise by implication of the law or are presumed from the circumstances. Mississippi recognizes two types of implied trusts: (1) resulting trusts and (2) constructive trusts. A resulting trust “is designed to give effect to the unwritten but actual intention of the parties at the time of the acquisition of title to the affected property.” In re Estate of Gates, 876 So. 2d 1059, 1064 (¶17) (Miss. Ct. App. 2004) (quoting Robert E. Williford, Trusts, 8 Encyclopedia of Mississippi Law § 73:2, at 422 (2001)). A constructive trust is a judicially imposed remedy used to prevent unjust enrichment when one party wrongfully retains title to property. McNeil v. Hester, 753 So. 2d 1057, 1064 (¶24) (Miss. 2000). The primary difference between the two is that “in a resulting trust, the acquisition . . . is mutually agreeable[,] and the inequity arises out of the trustee’s subsequent unwillingness to honor the terms of the parties’ original agreement”; whereas a constructive trust may be imposed when “acquisition of title is somehow wrongful as to the purported beneficiary[.]” Simmons v. Simmons, 724 So. 2d 1054, 1057 (¶7) (Miss. Ct. App. 1998).

¶13. Here, the chancellor found a trust existed but did not distinguish the particular type. Though both parties insist the chancellor imposed a constructive trust, or something akin to it, a plain reading of her order shows she likely found Jeanette had intended to create an express trust by executing the deed “trusting” Gary would follow the dictates of her will—which did in fact leave the ninety-acre tract to the plaintiffs. According to the chancellor, the deed “was subject to the terms of the will and did not serve to vest fee title in the Smiley Defendants.” That the chancellor likely believed an express trust, rather than implied trust, arose is further supported by her finding that Gary and Mary Ann had “knowingly and willfully violated the explicit terms of that trust.”

¶14. But regardless of the type of trust implicated, “to establish a trust, the evidence must be more than a mere preponderance. The proof must be clear and convincing.” Lee v. Yeates, 256 So. 2d 371, 372 (Miss. 1976) (emphasis added). And here, it is not at all obvious whether this standard was employed. We note that in the chancellor’s order indicates she found:

Plaintiffs have met their burden of proof by a preponderance of the evidence on all necessary elements and are entitled to recover for the wrongful removal of the timber from the acres devised to them under the terms of the will. Even though the property was conveyed to the Smiley Defendants, such conveyance was specifically subject to a trust for Plaintiffs’ benefit, and the Smiley Defendants knowingly and willfully violated the explicit terms of that trust. (Emphasis added).

While the chancellor may have indeed considered the trust issue separately under the clear-and-convincing-evidence standard, she did not specifically say so in her order. This omission, coupled with the chancellor’s reference to the preponderance standard when describing the burden of proof “on all necessary elements,” supports our decision to remand to ensure the chancellor considers the trust issue under the clear-and-convincing-evidence standard. See Estate of Langston v. Williams, 57 So. 3d 618, 622 (¶17) (Miss. 2011).

Aside from the nifty trust-law-in-a-nutshell aspect of this case, it illustrates what can happen when the trial judge applies the wrong standard of proof or is unclear whether she applied the right standard. You can avoid this kind of result by offering to do proposed findings of fact and conclusions of law that set out and cite authority for the appropriate standard. Or, if you aren’t that industrious, timely file an MRCP 59 motion asking the judge whether she really meant “clear and convincing” rather than preponderance, and cite a supporting case or two. It might just save you a retrial.

CHECKLIST FOR DOING AN ACCOUNTING IN A PROBATE MATTER

April 11, 2011 § 16 Comments

_____ State the time period covered by the accounting, starting with the date of the last accounting, or if a first account with the date the estate, guardianship or conservatorsip was opened.

_____ List all assets of the estate as of the ending date of the last accounting. (MCA §91-7-277, §91-7-93, §93-1333, §93-13-67, and §93-113-259 and UCCR 6.03).

______ List the date, source, and amount of each item of income since the last accounting. (MCA §91-7-277, and §93-13-67).

______ Total the income and state a total.

______ List the date, payee, explanation or description, amount, and authority (the date of each authorizing court order) for each disbursement since the ending date of the last accounting. (MCA §91-7-277, 91-7-279, §93-13-67p, and §93-13-71 and UCCR 6.04 and 6.05).

______ Attach all documents supporting all income and disbursements. This is the “voucher” requirement that was previously posted about here. The required documentation includes ALL statements of any accounts or investments showing income or disbursements. This may also include canceled checks and receipts. (See statutes and rules cited above).

______ Total the disbursements and state the totals.

______ List and explain for all non-financial assets that appeared on the previous accounts, but are no longer in the control of the fiduciary.

______ A request for payment for the fiduciary including a bill or itemization to support request. (MCA §91-7-299 and §93-13-67 and UCCR 6.11).

______ A request for attorney fees, including a bill or itemization to support said request. (MCA §91-7-281 and §93-13-79 and UCCR 6.12).

______ Close with a summary calculation of the value of the estate coming into the hands of the fiduciary at the opening of the accounting period, a total of the income, a total of the disbursements, and a total balance in the fiduciary’s control that will be the beginning figure for the next account.

______ Have the fiduciary sign and swear to the accounting. (MCA §91-7-277 and §93-13-37 and UCCR 6.02).

Thanks to Jane Miller, Senior Staff Attorney for the 12th District.

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