The trustee’s longstanding duty in equity to defend the trust’s terms. Unless applicable law provides otherwise, the trustee has an overarching duty to carry out the lawful intentions of the settlor as they have been duly manifested in the terms of the trust. Many a judicial decision in a trust matter opens with the maxim that settlor intent is the lodestar that must guide the court in its deliberations. A critical incident of the trustee’s duty to be guided by the settlor’s intentions as manifested in the trust’s terms is the duty to defend those terms. So also the equity court itself has an affirmative autonomous “administrative” duty to defend the manifest intentions of settlors who are deceased or not otherwise before the court. The court may not take its marching orders in this regard from the attorneys representing the other parties to a trust relationship, such as trust counsel and the lawyers for the beneficiary-litigants.

The Uniform Trust Code and the trustee’s duty to defend the trust’s terms. The UTC neglects to “state” in its Article 8 the trustee’s critical common law duty to defend the trust’s terms. But the UTC also neglects to expressly negate the duty. Thus, the duty remains very much alive and well in the jurisdictions that have enacted the UTC. “The UTC is supplemented by the common law of trusts and principles of equity.” Actually, vice versa is more precise. The application of the doctrines of deviation, reformation, modification, and rectification, topics that are taken up generally in §8.15.22 of Loring and Rounds: A Trustee’s Handbook (2023), are constrained and tempered by the trustee’s duty to defend. The UTC’s failure to expressly “state” the trustee’s duty to defend the trust’s terms is a trap for the unwary trust professional who labors under the misconception that in any given situation all applicable trust law lurks only within the UTC’s four corners. As an aside, the UTC’s failure to mention the trustee’s duty to defend the trust’s terms may well be to support the UTC’s most subversive and least publicized provision, namely the facially innocuous UTC §404 “benefit-of-the-beneficiaries” rule. The Rule is discussed in §6.1.2 of Loring and Rounds: A Trustee’s Handbook (2023), the relevant portion of which section is set forth in the appendix below. The Handbook is available for purchase at https://law-store.wolterskluwer.com/s/product/loring-rounds-a-trustees-handbook-2022e-misb/01t4R00000OVWE4QAP.

Now comes Wing v. Goldman Sachs Trust Company, 382 N.C. 288 (2022). The plaintiffs in Wing had been removed by amendment as beneficiaries of a revocable trust. They asserted that the defendants, successor beneficiaries via amendment, had unduly influenced the now-deceased settlor to execute the amendment(s). Without regard to the trustee’s duty to carry out the settlor’s lawful wishes as manifested in the trust’s terms the Court went straight to North Carolina’s version of §811 of the UTC, which deals with third-party claims against the trust estate. After groping about in the official commentary, the Court emerged with a self-evident paraphrasing of the UTC section. Some are certain to construe the paraphrase as effectively gutting a trustee’s general duty to defend the trust’s terms, even as that duty is understood in the context of the trustee’s overarching duty to carry out the settlor’s lawful intentions. “…but we do hold that a duty to defend pursuant to N.C.G.S. § 36C-8-811 only arises when the action may result in a loss to the trust estate.” Yes, but what about the extensive pre-existing and still-viable non-statutory equity jurisprudence emanating from a trustee’s overarching affirmative duty to carry out the trust’s lawful terms? Dead silence. The analysis began with the UTC and ended with the UTC. Were the trustee’s general duty to defend limited to defending the integrity of the trust corpus, the trust would be illusory, which this trust is not. The UTC’s benefit-of-the-beneficiaries rule mentioned above and elaborated on below has an intent-defeating flavor to it. Now we have Wing.