In re Robert L. McDowell Revocable Trust , 296 Neb. 565 ( 2017 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
06/23/2017 09:14 AM CDT
- 565 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
In re Robert L. McDowell R evocable Trust.
Jane O. Hornung, appellee and cross-appellee, v.
Sandra K. Stockall, Trustee of the Betty
Jane McDowell R evocable Trust and
individually, appellant, and Roger R.
Stockall, Trustee of the Robert L.
McDowell R evocable Trust,
appellee and cross-appellant.
___ N.W.2d ___
Filed May 5, 2017. No. S-16-071.
1. Trusts. The interpretation of the words of a trust is a question of law.
2. Trusts: Equity: Appeal and Error. Absent an equity question, an
appellate court reviews trust administration matters for error appear-
ing on the record; but where an equity question is presented, appellate
review of that issue is de novo on the record.
3. Decedents’ Estates. In Nebraska, powers of appointment are construed
according to the principles of the common law.
4. Decedents’ Estates: Intent. In the construction of powers of appoint-
ment, the cardinal principle is that the intention of the donor is
controlling.
5. ____: ____. The donee of a power of appointment must keep within its
terms, and where the donor prescribes the method of its execution, that
method must be strictly followed, so far at least as may be necessary to
give effect to the donor’s intent and design.
6. Decedents’ Estates. Where there is a prohibition, limitation, or restric-
tion in a power of appointment, such provision will control and the
donee will not be permitted to disregard the same.
7. ____. A power of appointment is considered special or limited when the
donee’s appointment is limited to a group which is not unreasonably
large and which does not include the donee.
- 566 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
8. Trusts: Intent. Rules of construction for interpreting a trust are applied
when the language of the trust is not clear; but if the language clearly
expresses the settlor’s intent, the rules do not apply.
9. Appeal and Error. Plain error is error plainly evident from the record
and of such a nature that to leave it uncorrected would result in damage
to the integrity, reputation, or fairness of the judicial process.
10. Trusts: Words and Phrases. A breach of trust includes every omission
or commission which violates in any manner the obligation of carrying
out a trust according to its terms.
11. Trusts. Every violation by a trustee of a duty required of it by law,
whether willful and fraudulent, or done through negligence, or arising
through mere oversight or forgetfulness, is a breach of trust.
12. ____. According to Neb. Rev. Stat. § 30-3890 (Reissue 2016), a viola-
tion by a trustee of a duty the trustee owes to a beneficiary is a breach
of trust.
Appeal from the County Court for Custer County: Tami K.
Schendt, Judge. Affirmed as modified.
John M. Lingelbach, James Tews, and Minja Herian, of
Koley Jessen, P.C., L.L.O., for appellant.
Brian S. Koerwitz and Kent E. Endacott, of Endacott, Peetz
& Timmer, P.C., L.L.O., and Heidi Hornung-Scherr, of Scudder
Law Firm, P.C., L.L.O., for appellee Jane O. Hornung.
Richard A. DeWitt and David J. Skalka, of Croker, Huck,
Kasher, DeWitt, Anderson & Gonderinger, L.L.C., for appellee
Roger R. Stockall.
H eavican, C.J., Wright, Cassel, Stacy, K elch, and
Funke, JJ.
Stacy, J.
This is a dispute between the adult children of Robert L.
McDowell and Betty Jane McDowell, both deceased. The issue
presented is whether Betty validly exercised a limited power of
appointment given to her by Robert’s trust when she appointed
the assets in Robert’s trust to her own revocable trust. The
- 567 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
county court found Betty’s appointment was ineffective and
ordered that the assets be recovered and distributed through
Robert’s trust. We affirm as modified.
I. FACTS
Robert and Betty were the owners of McDowell Cattle
Company, which consists of farmland and pasture near Arnold,
Nebraska. Robert and Betty each owned 270 shares of the
company.
In 2001, Robert and Betty drafted wills and revocable trusts
with nearly identical language. Robert’s trust provided in rel-
evant part:
From and after my death all principal of the trust not
allocated to the said Trust shall be administered and dis-
tributed as Trust “A” as follows:
....
(d) Upon the death of my wife in the event my wife
shall survive me, the then principal of Trust “A” shall be
distributed to or held in trust for the benefit of such one
or more of my issue, the spouses of any such issue, and
tax-exempt charitable organizations, in such shares and
proportions and subject to such powers, terms and condi-
tions, as my wife shall appoint by will and any principal
of Trust “A” not appointed effectively by my wife shall
continue to be administered as Trust “A” pursuant to the
following provisions of this instrument.
Robert died before Betty. After his death, Betty executed a new
will. In this will, she provided:
I hereby exercise any power of appointment given to me
under the . . . Robert L. McDowell Revocable Trust . . .
(including Trust “A” . . .), and direct that all such prop-
erty over which I have a power of appointment, together
with all of my property, whether real or personal, is
hereby devised to the Trustee or Trustees of the [Betty
Jane McDowell Revocable Trust], to be administered
by the Trustee as part of the property of said . . . Trust,
- 568 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
and to be held or distributed according to the terms
thereof . . . .
Robert and Betty had two children who survived them:
Jane O. Hornung and Sandra K. Stockall. Pursuant to the
terms of Betty’s will, both Robert’s 270 shares of McDowell
Cattle Company—from his “Trust ‘A’” (Trust A)—and Betty’s
270 shares passed through Betty’s trust to Stockall. Hornung
received nothing under the terms of Betty’s trust, but was a
potential beneficiary under Robert’s trust.
After at least some of Robert’s assets from Trust A were
distributed through Betty’s trust, Hornung filed suit in the
county court for Custer County requesting instructions and a
declaration of rights of the beneficiaries of Robert’s trust, pur-
suant to Neb. Rev. Stat. § 30-3812 (Reissue 2016). Hornung
alleged that “[t]he power of appointment exercised under
Betty’s Will is invalid and ineffective as the Betty Jane
McDowell Revocable Trust is not a person or beneficiary to
which the assets of Trust A could be transferred.” Hornung
alleged that the assets of Trust A should instead be distributed
pursuant to the terms of Robert’s trust, which provided that
any residue was to be distributed in equal shares to Hornung
and Stockall. Hornung’s petition “request[ed] that the Court
instruct the Trustee of [Robert’s trust] to recover, preserve,
and distribute the principal of Trust A accordingly and . . .
issue a preliminary order estopping the transfer of any assets
of Trust A.”
Stockall, in her capacity as the trustee of Betty’s trust and
in her individual capacity, counterclaimed in the county court
action. Her counterclaim also sought instructions and a dec-
laration of rights of the beneficiaries under Robert’s trust.
Stockall denied that the power of appointment exercised by
Betty was invalid. Stockall’s counterclaim requested that the
court enter an order (1) finding that Betty’s exercise of the
power of appointment was valid and enforceable, (2) approv-
ing the actions taken by the trustee of Robert’s trust in “dis-
tributing the remaining principal of [Trust A] to the Trustee of
- 569 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
Betty’s Trust in accordance with Betty’s exercise of the power
of appointment,” and (3) requiring the trustee of Robert’s
Trust “to promptly distribute the remainder of the principal
of [Trust A] in accordance with Betty’s exercise of the power
of appointment . . . to the Trustee of Betty’s Trust . . . .” Our
record reflects that notice of the action and the counterclaim
was provided to the trustees of both Robert’s trust and Betty’s
trust and to all potential beneficiaries of either trust.
A bench trial was held. Hornung, Stockall, and the trustee
of Robert’s trust participated. The court determined Betty’s
exercise of the power of appointment was ineffective because
it exceeded the scope of the limited power granted in Robert’s
trust, in that it commingled the Trust A assets with Betty’s
trust assets and thus benefited Betty, her estate, and credi-
tors of her estate so that it was not limited to one of the
three classes of beneficiaries Robert designated. The court
ordered the trustee of Robert’s trust to recover all assets of
Trust A and to distribute them in accordance with the terms
of Robert’s trust.
Stockall appealed, and the trustee of Robert’s trust (who
is also Stockall’s husband) filed a cross-appeal. We granted
Stockall’s petition to bypass the Nebraska Court of Appeals
and moved this appeal to our docket.
II. ASSIGNMENTS OF ERROR
Stockall assigns, restated, that the county court erred in (1)
finding Betty’s exercise of the power of appointment granted
to her by Robert’s trust was ineffective; (2) finding Betty
exceeded the power granted to her by Robert’s trust; (3) find-
ing merged assets (assets appointed from Robert’s trust and
assets that originally constituted Betty’s trust) were used to pay
taxes and creditors of Betty’s estate; (4) finding Betty benefited
herself, her estate, her creditors, and the creditors of her estate
by merging the Trust A assets with her trust; (5) finding Neb.
Rev. Stat. § 30-3850(a)(3) (Reissue 2016) would allow Betty’s
creditors to reach the assets Betty appointed from Robert’s
- 570 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
trust to her trust; (6) finding Betty’s appointment of the Trust A
assets to her trust caused those assets to be taxable as part of
Betty’s gross estate; and (7) finding Betty did not designate a
permissible appointee in her will and instead opted to appoint
the Trust A property to her trust.
The trustee of Robert’s trust assigns on cross-appeal,
restated, that the county court (1) erred in ordering him as
trustee to recover all Trust A assets and then distribute them
under Robert’s trust and (2) lacked subject matter jurisdiction
to determine that Betty’s exercise of the power of appointment
was invalid or to hold that transfers from Robert’s and Betty’s
trusts were void.
III. STANDARD OF REVIEW
[1,2] The interpretation of the words of a trust is a question
of law.1 Absent an equity question, an appellate court reviews
trust administration matters for error appearing on the record;
but where an equity question is presented, appellate review of
that issue is de novo on the record.2
IV. ANALYSIS
1. A ppointment Was ineffective
Stockall argues the county court erred in finding Betty’s
exercise of the power of appointment was ineffective. We find
no error on this issue.
[3-6] In Nebraska, powers of appointment are construed
according to the principles of the common law.3 In the con-
struction of powers of appointment, the cardinal principle is
that the intention of the donor is controlling.4 The donee of a
1
In re Family Trust Created Under Akerlund Trust, 280 Neb. 89, 784
N.W.2d 110 (2010).
2
In re Margaret Mastny Revocable Trust, 281 Neb. 188, 794 N.W.2d 700
(2011).
3
Applegate v. Brown, 168 Neb. 190, 95 N.W.2d 341 (1959).
4
Id.
- 571 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
power of appointment must keep within its terms, and where
the donor prescribes the method of its execution, that method
must be strictly followed, so far at least as may be necessary to
give effect to the donor’s intent and design.5 Where there is a
prohibition, limitation, or restriction, such provision will con-
trol and the donee will not be permitted to disregard the same.6
[7] Here, Robert’s trust gave Betty the power to “appoint by
will” the Trust A property to “be distributed to or held in trust
for the benefit of such one or more of my issue, the spouses
of any such issue, and tax-exempt charitable organizations.”
The parties agree this power of appointment was a special
or limited power of appointment. A power of appointment is
considered special or limited when the donee’s appointment is
limited to a group which is not unreasonably large and which
does not include the donee.7 Here, Robert made it clear the
permissible group included only tax-exempt charitable institu-
tions, Robert’s issue, and spouses of his issue.
To determine whether Betty effectively exercised this lim-
ited power of appointment, we look to the provisions of
Betty’s will, which provided:
[A]ll such property over which I have a power of appoint-
ment, together with all of my property, whether real or
personal, is hereby devised to the Trustee [of Betty’s
revocable trust], to be administered by the Trustee as part
of the property of said . . . Trust, and to be held or distrib-
uted according to the terms thereof.
Notably, the beneficiaries of Betty’s trust were Stockall and
several of Robert’s grandchildren. Betty’s trust thus ultimately
distributed all her property and all the property from Robert’s
Trust A to Robert’s issue.
5
Id.
6
Id.
7
In re Estate of Muchemore, 252 Neb. 119, 560 N.W.2d 477 (1997),
disapproved on other grounds, In re Estate of Nelson, 253 Neb. 414, 571
N.W.2d 269 (1997).
- 572 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
The question presented is whether Betty’s limited power of
appointment was effectively exercised when she devised Trust
A assets to her personal trust in this manner. Stockall argues
the appointment was effective because, after passing through
Betty’s trust, the Trust A property eventually was distributed
to Robert’s issue, a permissible group identified in Robert’s
trust. Hornung argues that the appointment was not effective,
because Betty’s trust is not in the permissible group under
Robert’s trust, so the unqualified appointment to her trust was
ineffective even if the property eventually was distributed to
those in the permitted group under Robert’s trust.
This court has not previously considered the effectiveness
of exercising a limited appointment under such circumstances.
We find guidance in cases from other jurisdictions which have
addressed similar circumstances.
In BMO Harris Bank N.A. v. Towers,8 parents created two
trusts granting their son a limited power to appoint assets
of the parents’ trusts to certain beneficiaries. The son’s will
devised all of his estate to his trust, thus commingling the
assets he received from the parents’ trusts with his own trust
assets. The court determined this was an ineffective exercise of
the power of appointment, because the son exercised the power
of appointment in favor of himself and he was not a permis-
sible beneficiary under the parents’ limited power of appoint-
ment. The court reasoned that no language in the son’s trust
segregated the assets of his parents’ trusts from the assets of his
trust and consequently, the son’s creditors could have used the
commingled assets to satisfy the son’s debts.
The case of In re Estate of Reisman9 is also instructive.
There, a wife’s trust granted her husband a limited power of
appointment and designated her children and any descend­
ants of her children as the permissible beneficiaries of the
8
BMO Harris Bank N.A. v. Towers, 2015 IL App (1st) 133351, 43 N.E.3d
1131, 398 Ill. Dec. 221 (2015).
9
In re Estate of Reisman, 266 Mich. App. 522, 702 N.W.2d 658 (2005).
- 573 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
assets. The husband’s will appointed the assets to his trust.
Importantly, however, the trust contained language expressly
stating that the assets appointed to his trust via the limited
power of appointment were not an asset of his estate. The court
held that this express language differentiating the assets ren-
dered the appointment effective, because the assets never could
have benefited the husband, his estate, or his creditors.
Betty’s will attempted to exercise her power of appoint-
ment by devising all of the Trust A assets to her own trust.
But her trust was not in the permissible group, and her trust
contained no language separating the Trust A assets from the
remainder of her trust assets. To the contrary, Betty’s will
provided that the Trust A assets were devised to her trust “to
be administered by the Trustee as part of the property of [the
trust].” By devising the Trust A assets to her trust without
expressly providing that the Trust A assets were not to be
commingled with her other assets, Betty improperly exer-
cised the power of appointment for her benefit. Merger of the
Trust A assets with Betty’s assets resulted in nondesignated
objects (Betty, her estate, her creditors, and creditors of her
estate) potentially benefiting from the power of appointment,
and rendered her appointment ineffective.10 After reviewing
the record, we find no error in the county court’s determi-
nation that Betty’s exercise of the power of appointment
was ineffective.
2. Doctrines of Selective A llocation
and Substantial Compliance Do
Not Save Invalid A ppointment
Stockall argues that even though Betty’s will devised Trust
A assets to her own trust, the county court should have applied
the doctrines of selective allocation and/or substantial compli-
ance to find Betty’s exercise of the power of appointment was
10
See, BMO Harris Bank N.A., supra note 8; In re Estate of Reisman, supra
note 9.
- 574 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
effective. This court has never applied either doctrine in a case
such as this.
(a) Selective Allocation
The doctrine of selective allocation is generally recog-
nized by both the Restatement (Second) of Property and
the Restatement (Third) of Property.11 According to the
Restatement (Third), “If the donee of a power of appointment
exercises the power in a document that also disposes of owned
property, the owned and appointive property are deemed to
be allocated in the manner that best carries out the donee’s
intent.”12 Stockall urges us to apply this doctrine, through
which she asserts we can assume that only those assets in
Betty’s trust that she owned during her lifetime were used
to pay the expenses of administering her final affairs and the
claims of any of her creditors. Stockall contends that such a
construction of Betty’s trust would render Betty’s power of
appointment effective.
Stockall argues that applying selective allocation is particu-
larly apt in this case, because distribution via Betty’s trust ulti-
mately resulted in the property’s being distributed to Robert’s
issue and Robert’s issue was one of the groups designated
to receive his Trust A assets. Stockall also argues that even
though Betty’s will appointed Trust A assets to Betty’s own
trust, neither Betty, her estate, her creditors, nor any creditors
of Betty’s estate actually benefited from the invalid appoint-
ment, because the assets of Betty’s trust, independent of the
Trust A assets, were more than sufficient to cover Betty’s debts
and expenses.
Although the doctrine of selective allocation is recognized
in the Restatements, the doctrine has not been recognized or
11
3 Restatement (Third) of Property: Wills and Other Donative Transfers
§ 19.19 (2011); Restatement (Second) of Property: Donative Transfers
§ 22.1 (1986).
12
3 Restatement (Third), supra note 11 at 335.
- 575 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
adopted in any of our prior jurisprudence. Nor is it a doctrine
that is commonly applied by other jurisdictions. Our research
reveals that historically, only a few states (Massachusetts,
Pennsylvania, and New York) have judicially recognized the
doctrine.13 We have found no reported case applying the doc-
trine in the past 40 years, and the parties direct us to none.
Our research suggests that legislatures in several states
have recognized the doctrine by adopting all or provisions of
the Uniform Powers of Appointment Act.14 That act addresses
selective allocation by stating, “If a powerholder exercises a
power of appointment in a disposition that also disposes of
property the powerholder owns, the owned property and the
appointive property must be allocated in the permissible man-
ner that best carries out the powerholder’s intent.”15 To date,
the Nebraska Legislature has not adopted the Uniform Powers
of Appointment Act.
[8] More important, the doctrine of selective allocation is
a rule of construction.16 Rules of construction for interpreting
a trust are applied when the language of the trust is not clear;
but if the language clearly expresses the settlor’s intent, the
rules do not apply.17 We see no reason to resort to a rule of
construction when the terms of both Robert’s trust and Betty’s
will and trust are clear and unambiguous. Indeed, the county
13
See Joel E. Hoffman, Powers of Appointment and Selective Allocation, 46
Cornell L. Rev. 416 (1961).
14
See, Unif. Powers of Appointment Act, 7C U.L.A. 394 (Supp. 2016);
Colo. Rev. Stat. Ann. § 15-2.5-308 (West Cum. Supp. 2016); Mo. Ann.
Stat. § 456.1050 (West Cum. Supp. 2017); N.M. Stat. Ann. § 46-11-308
(Cum. Supp. 2016); N.C. Gen. Stat. § 31D-3-308 (2015); Va. Code Ann.
§ 64.2-2720 (Cum. Supp. 2016).
15
Unif. Powers of Appointment Act, supra note 14, § 308, 7C U.L.A. at 418.
16
See 2 Restatement (Third) of Property: Wills and Other Donative Transfers
§ 11.3 (2003) and 3 Restatement (Third), supra note 11, ch. 19, Part E,
Introductory Note.
17
In re Wendland-Reiner Trust, 267 Neb. 696, 677 N.W.2d 117 (2004).
- 576 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
court made an express finding to this effect, and no party
challenges that finding on appeal. On this record, we decline
Stockall’s invitation to judicially adopt the doctrine of selec-
tive allocation.
(b) Substantial Compliance
Both the Restatement (Second) and the Restatement (Third)
recognize the rule of substantial compliance.18 According to
the Restatement (Third):
Substantial compliance with formal requirements of an
appointment imposed by the donor, including a require-
ment that the instrument of exercise make reference
or specific reference to the power, is sufficient if (i)
the donee knew of and intended to exercise the power,
and (ii) the donee’s manner of attempted exercise did
not impair a material purpose of the donor in imposing
the requirement.19
Stockall urges us to apply the rule of substantial compliance
in order to find Betty’s exercise of the power of appointment
was effective. She argues that this rule should be applied,
because “Robert’s goal of allowing Betty to control disposition
of [his Trust A assets] at her death in favor of Robert’s issue
was accomplished.”20
The doctrine of substantial compliance can apply when the
person exercising the power of appointment fails to comply
with all the formal requirements imposed by the donor on
the appointment.21 Formal requirements relate to the manner
of the appointment, not its substance.22 They include such
18
3 Restatement (Third), supra note 11, § 19.10; Restatement (Second),
supra note 11, § 18.3.
19
3 Restatement (Third), supra note 11, § 19.10 at 280.
20
Brief for appellant at 32.
21
3 Restatement (Third), supra note 11, § 19.10.
22
See id., comment b.
 - 577 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
things as a specific reference to the power of appointment
in the document attempting to assert it or a requirement
that the appointment be made by deed under seal.23 Here,
Betty’s attempted exercise of the power of appointment did
not fail to comply with any formal requirement imposed by
Robert’s trust. Instead, it substantively failed because by
merging the Trust A assets with her own trust assets, Betty
attempted to exercise the power of appointment in favor
of one who was not in the permissible group. The doctrine
of substantial compliance is not applicable to this factual
circumstance.
Moreover, this court has long recognized that “‘[w]here
the creator of a power defines the method of its execution,
that method must be strictly followed, so far, at least, as may
be necessary to give effect to his intent and design. This
rule is fundamental.’”24 The rule of substantial compliance
presents an “ends justify the means” approach that is at odds
with this court’s established jurisprudence. The county court
correctly refused to apply the rule of substantial compliance
in this case, and Stockall’s argument to the contrary is with-
out merit.
3. Duty of Robert’s Trustee
In his cross-appeal, the trustee of Robert’s trust argues the
county court erred in ordering him to recover the Trust A
assets and distribute them in accordance with Robert’s trust.
He argues that because the court made an express finding that
he did not breach Robert’s trust when he transferred Trust A
property to Betty’s trust, the court had no authority to utilize
the remedies for breach of trust available under Neb. Rev.
Stat. § 30-3890 (Reissue 2016). Thus, the trustee of Robert’s
23
Id., comments c. and d.
24
Massey v. Guaranty Trust Co., 142 Neb. 237, 242, 5 N.W.2d 279, 282
(1942), quoting Arlington State Bank v. Paulsen, 57 Neb. 717, 78 N.W.
303 (1899).
- 578 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
trust argues, the court had no power to void the act of the
trustee in transferring Trust A property to Betty’s trust, or to
compel the trustee to recover the Trust A property and distrib-
ute it in accordance with Robert’s trust.
[9] It is true that the county court order includes a finding
that Robert’s trustee “acted appropriately, reasonably, and in
good faith under the circumstances, and he did not commit a
breach of trust in executing his duties as Trustee of Robert’s
Trust.” No party challenges this factual finding. However, upon
our review of the record, we find the court committed plain
error in making this finding, because it cannot be reconciled
with the finding that Betty’s appointment of Trust A property
to her own trust was ineffective. Plain error is error plainly
evident from the record and of such a nature that to leave it
uncorrected would result in damage to the integrity, reputation,
or fairness of the judicial process.25 An appellate court may, at
its option, notice plain error.26
[10,11] As we previously explained, Betty’s exercise of the
power of appointment was ineffective on its face, because
it violated the limited power of appointment granted her by
Robert’s trust. A breach of trust includes every omission or
commission which violates in any manner the obligation of
carrying out a trust according to its terms.27 Every violation
by a trustee of a duty required of it by law, whether will-
ful and fraudulent, or done through negligence, or arising
through mere oversight or forgetfulness, is a breach of trust.28
When the trustee of Robert’s trust transferred Trust A assets to
25
Connelly v. City of Omaha, 284 Neb. 131, 816 N.W.2d 742 (2012); Cesar
C. v. Alicia L., 281 Neb. 979, 800 N.W.2d 249 (2011).
26
United States Cold Storage v. City of La Vista, 285 Neb. 579, 831 N.W.2d
23 (2013); Folgers Architects v. Kerns, 262 Neb. 530, 633 N.W.2d 114
(2001).
27
In re Estate of Linch, 136 Neb. 705, 287 N.W. 88 (1939); In re Louise V.
Steinhoefel Trust, 22 Neb. Ct. App. 293, 854 N.W.2d 792 (2014).
28
Johnson v. Richards, 155 Neb. 552, 52 N.W.2d 737 (1952).
- 579 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
Betty’s trust pursuant to an ineffectively exercised power of
appointment, he committed a breach of trust.29
[12] According to § 30-3890, a violation by a trustee of a
duty the trustee owes to a beneficiary is a breach of trust. And
to “remedy a breach of trust that has occurred or may occur,”
the court may, among other things, “compel the trustee to per-
form the trustee’s duties,”30 “compel the trustee to redress a
breach of trust by . . . restoring property,”31 or “void an act of
the trustee, impose a . . . constructive trust on trust property,
or trace trust property wrongfully disposed of and recover the
property or its proceeds.”32 Additionally, the court has authority
to “order any other appropriate relief.”33
Here, after determining that Betty’s exercise of the power
of appointment was ineffective and void, the county court
ordered:
[The] successor trustee to the Robert McDowell Trust, is
hereby instructed to recover all assets, income, and prin-
cipal properly attributable to [Trust A] since Robert[’s]
death (including as it relates to [Trust A’s] ownership
interest in McDowell Cattle Company), preserve such
assets, income, and principal, and distribute such assets,
income, and principal in accordance with Article Fourth,
Paragraph (e)(2) of Robert’s Trust. The Court shall retain
jurisdiction to ensure that the trustee of Robert’s Trust
carries out this Order.
Because the trustee of Robert’s trust breached the trust
when he distributed the Trust A assets pursuant to an invalid
exercise of appointment, the county court had available all the
29
See, also, 3 Restatement (Third), supra note 11, § 19.17(a) at 329 (“[a]
fiduciary who transfers property pursuant to a direct appointment to an
impermissible appointee commits a breach of trust”).
30
§ 30-3890(b)(1).
31
§ 30-3890(b)(3).
32
§ 30-3890(b)(9).
33
§ 30-3890(b)(10).
- 580 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
IN RE ROBERT L. McDOWELL REVOCABLE TRUST
Cite as 296 Neb. 565
remedies for breach of trust under § 30-3890(b). And the rem-
edies ordered by the county court were among those permitted
by statute. To the extent the trustee of Robert’s trust argues
otherwise, his cross-appeal is without merit.
V. CONCLUSION
For the foregoing reasons, we modify the decision of the
county court to the extent it failed to find that the trustee of
Robert’s trust breached the trust, but we otherwise affirm the
decision of the county court.
A ffirmed as modified.
Miller-Lerman, J., not participating.