In a declaratory judgment or instructions action to determine intended beneficiaries of a trust and/or their relative equitable interests, should trustee defend its terms as written or take no sides?

Charles E. Rounds, Jr.
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True, the trustee has a duty to defend the trust. See generally §6.2.6 of Loring and Rounds: A Trustee’s Handbook (2021), which section is reproduced in the appendix below. The trustee, however, also is saddled with a duty of impartiality, which is the subject of §6.2.5 of the handbook. Can these duties be reconciled when it comes to complaints for instruction and declaratory judgment actions? Should the trustee actively participate or assume a neutral posture? It depends. One California court in a 2020 decision explains: “[W]here an attack is being made upon the validity of a trust, the trustee has the duty of participating actively in its defense… [but where] he acts …merely as a defendant stakeholder, he ordinarily has neither duty nor right to so participate.” Wing v. Goldman Sachs Tr. Co., N.A., 851 S.E.2d 398 (N.C. Ct. App. 2020) (quoting Hershatter v. Colonial Trust Co., 73 A.2d 97, 101 (Conn. 1950)).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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