April 19, 2013
Authored by: Luke Lantta
We’ve looked at a lot of cases to figure out who needs to be named as a party in trust litigation. And we’ve assumed that, if a party is suing to have the trust declared invalid or is suing the trustee for breach of fiduciary duty, then all trust beneficiaries need to be joined as parties to the litigation. That may be the rule, but where there’s a rule there’s apparently an exception. In Harvill v. Harvill (link provided by Justia.com), a federal court in Tennessee gives us guidance on possible exceptions.
The court determined that a purported beneficiary of a trust didn’t need to be joined as a party where:
(1) Someone else, like the trustee, would defend the same position as the absent beneficiary; and
(2) The absent beneficiary had essentially disclaimed any interest in the trust.
The second point raises an interesting question – if the sole beneficiary of a trust disclaims any interest in the trust, does a trustee still have a duty to uphold the trust insofar as defense of the trust presumably upholds the grantor’s intent?