In re William R. Zutavern Revocable Trust , 309 Neb. 542 ( 2021 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
09/03/2021 08:10 AM CDT
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Nebraska Supreme Court Advance Sheets
309 Nebraska Reports
IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542In re William R. Zutavern Revocable Trust.
Shawn W. Zutavern and Russell C. Zutavern,
appellants, v. Meredith A. Zutavern,
individually and as Trustee of the
William R. Zutavern Family
Trust, et al., appellees.
___ N.W.2d ___
Filed June 25, 2021. No. S-20-455.
1. Trusts: Equity: Appeal and Error. Trust administration matters are
reviewed for error appearing on the record, absent an equity question.
2. Judgments: Appeal and Error. When reviewing a judgment for errors
appearing on the record, the inquiry is whether the decision conforms
to the law, is supported by competent evidence, and is neither arbitrary,
capricious, nor unreasonable.
3. Motions to Dismiss: Appeal and Error. A district court’s grant of a
motion to dismiss is reviewed de novo.
4. Motions to Dismiss: Pleadings: Appeal and Error. When reviewing an
order dismissing a complaint, the appellate court accepts as true all facts
which are well pled and the proper and reasonable inferences of law and
fact which may be drawn therefrom, but not the plaintiff’s conclusion.
5. Wills: Trusts. The interpretation of the words in a will or a trust pre­
sents a question of law.
6. Judgments: Appeal and Error. In instances when an appellate court is
required to review cases for error appearing on the record, questions of
law are nonetheless reviewed de novo on the record.
7. Standing: Words and Phrases. Standing involves a real interest in the
cause of action, meaning some legal or equitable right, title, or interest
in the subject matter of the controversy.
8. Trial: Standing. Generally, standing in a trustee removal proceeding is
governed by Neb. Rev. Stat. § 30-3862(a) (Reissue 2016).
9. Trusts. Beneficiaries need not be named in the terms of the trust, but
may be designated by class terminology or by description.
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 54210. Motions to Dismiss: Pleadings. To prevail against a motion to dismiss
for failure to state a claim, a plaintiff must allege sufficient facts to state
a claim to relief that is plausible on its face.
11. Dismissal and Nonsuit: Pleadings: Appeal and Error. When analyz-
ing a lower court’s dismissal of a complaint for failure to state a claim,
an appellate court accepts the complaint’s factual allegations as true and
construes them in the light most favorable to the plaintiff.
12. Trusts: Property. A trust creates a fiduciary relationship in which one
person holds a property interest subject to an equitable obligation to
keep or use that interest for the benefit of another.
13. Trusts. The Nebraska Uniform Trust Code states that trustees owe the
beneficiaries of a trust duties that include loyalty, impartiality, prudent
administration, protection of trust property, proper recordkeeping, and
informing and reporting.
14. ____. All actions of the trustee must be in the interest of the benefici­
aries and no one else.
15. Statutes: Appeal and Error. Statutory interpretation presents a ques-
tion of law which an appellate court reviews independently of the
lower court.
16. Statutes: Legislature: Intent. The fundamental objective of statutory
interpretation is to ascertain and carry out the Legislature’s intent.
17. Statutes: Appeal and Error. When construing a statute, an appellate
court looks to the statute’s purpose and gives to the statute a reasonable
construction that best achieves that purpose, rather than a construction
that would defeat it.
18. Statutes: Legislature: Intent. Components of a series or collection of
statutes pertaining to a certain subject matter are in pari materia and
should be conjunctively considered and construed to determine the
intent of the Legislature, so that different provisions are consistent, har-
monious, and sensible.
19. Statutes. A court must give effect to all parts of a statute, and if it can
be avoided, no word, clause, or sentence will be rejected as superfluous
or meaningless.
20. ____. When interpreting a statute, well-established principles of statu-
tory interpretation require a court to take account of context and of other
statutes pertaining to the same subject.
21. Statutes: Words and Phrases. Under the associated words canon of
statutory interpretation, if two or more words are grouped together in a
statute, the meaning of a particular word may be determined by refer-
ence to the meaning of associated words and phrases.
22. Trusts. A trustee may exercise powers conferred by the Nebraska
Uniform Trust Code, except as limited by the terms of the trust.
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 54223. Contracts: Appeal and Error. Whether a document is ambiguous
is a question of law, and an appellate court considering such a ques-
tion is obligated to reach a conclusion independent of the trial court’s
decision.
24. Parol Evidence: Contracts. Unless a document is ambiguous, parol
evidence cannot be used to vary its terms.
Appeal from the District Court for Lancaster County:
John A. Colborn, Judge. Reversed and remanded for further
proceedings.
John V. Matson, James A. Tews, Brian J. Koenig, and Quinn
R. Eaton, of Koley Jessen, P.C., L.L.O., for appellants.
Daniel J. Guinan, Robert W. Futhey, and Ryan M. Ricke, of
Fraser Stryker, P.C., L.L.O., for appellees.
Heavican, C.J., Cassel, Stacy, Funke, Papik, and
Freudenberg, JJ.
Funke, J.
Shawn W. Zutavern and his son, Russell C. Zutavern, peti-
tioned the district court for Lancaster County for removal
of the trustee of a trust created by Shawn’s father, William
R. Zutavern. Shawn and Russell then moved to enjoin the
trustee’s potential sale of the family ranch. The court found
that Shawn and Russell were not beneficiaries and were owed
no duties by the trustee, dismissing the petition and motion
for injunction.
Shawn and Russell appeal. We conclude that Shawn and
Russell are beneficiaries and that the court erred by dismissing
their petition. The cause is remanded for further proceedings
consistent with this opinion.
BACKGROUND
Zutavern Family
William died on November 26, 2011. Meredith A. Zutavern
is William’s surviving spouse, and together William and
Meredith had four children, all still living: Shawn, Shayne T.
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542Zutavern, Kelly R. Leonard (Kelly), and Maria D. Zutavern.
William and Meredith lived on a ranch near Dunning, Blaine
County, Nebraska, and maintained significant real estate
holdings.
On February 29, 1988, William, Meredith, Shawn, and
Shayne incorporated Wm. Zutavern Cattle Co. (WZCC), a
Nebraska corporation. WZCC managed a ranch of approxi-
mately 22,000 acres in Blaine and Custer Counties. William
owned approximately 38 percent of the corporate stock.
Meredith owns 30 percent, Shawn owns 18 percent, and Shayne
owns 14 percent.
William’s Trust and Family Trust
On January 31, 2008, William, as the settlor and trustee,
and Meredith, as substitute trustee, executed a trust agreement
to establish the William R. Zutavern Revocable Trust (Trust).
The Trust included a provision setting forth William’s family
information, stating that he and Meredith had four children—
Shawn, Shayne, Kelly, Maria—“and several grandchildren.”
William transferred his corporate stock to himself as trustee
to create the Trust estate, which was “to be held, managed,
controlled, invested and re-invested, the income therefrom
to be controlled, and . . . to be administered, distributed and
disposed of as provided herein.” William held the power
to dispose of Trust income and principal. In the absence of
direction, he would receive Trust income at least quarterly.
William reserved the right to modify or terminate the Trust
during his life by delivery of written notice to the trustee
or substitute trustee. The Trust indicated that it “may not be
changed orally.” Meredith would serve as substitute trustee
upon William’s death or incapacitation, Shawn would serve as
substitute trustee upon Meredith’s death or incapacitation, and
Shayne would serve as substitute trustee upon Shawn’s death
or incapacitation.
The Trust states that the general powers, duties, and restric-
tions upon the trustee or substitute trustee include all powers
pursuant to the Nebraska Uniform Trust Code (NUTC), see
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542Neb. Rev. Stat. §§ 30-3801 to 30-38,110 (Reissue 2016 &
Cum. Supp. 2020), which are not in conflict with any Trust
provisions. The trustee or substitute trustee shall have the
power to invest and reinvest any Trust property, including
stocks, “in such manner as will be in the best interests of the
Trust beneficiaries, giving due consideration to the preserva-
tion of principal and the amount and regularity of the income
to be derived therefrom.” The trustee or substitute trustee shall
keep “books of account,” showing all transactions relating to
the Trust estate. The substitute trustee is required to furnish
annually to each beneficiary statements of receipts and dis-
bursements and a schedule of all Trust assets and liabilities.
Any beneficiary may at reasonable times inspect Trust records.
All powers and obligations granted or imposed by the Trust
are legally binding upon the parties to the trust agreement, and
upon their “successors, executors, administrators, assignees
and Trustees, as the case may be.”
The Trust instructs that upon William’s death, the substitute
trustee shall pay William’s debts and expenses. Thereafter,
regarding the residuary, the substitute trustee “is directed to
divide the Trust assets into two parts.” The first part, consisting
of an amount equal to the largest amount which could pass free
of federal estate taxes, was to be distributed to the William R.
Zutavern Family Trust (Family Trust). The second part, con-
sisting of the rest, residue, and remainder, was to be transferred
to Meredith “as hers absolutely and without restriction.”
The Family Trust was to “remain in trust and adminis-
tered and disposed of in accordance with” the provisions of
the Family Trust. The Family Trust provides that if Meredith
survives William, the trustee shall pay Meredith the Trust
income for her life. Then, upon Meredith’s death, the trustee
shall distribute all of the shares of WZCC stock that are held
in trust “to those of my children and/or grandchildren who are
[then] actively involved in the operation and management of
[WZCC].” Any other assets of the Family Trust shall be dis-
tributed to Kelly and Maria.
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542Shawn and Russell’s Petition Allegations
On November 18, 2019, Shawn and Russell filed a verified
petition in the district court for Lancaster County for removal
of the trustee, appointment of a successor trustee and special
fiduciary, an accounting, and a surcharge against the trustee.
Portions of the Trust were attached to the petition. The back-
ground section of the petition included the following relevant
factual allegations: Shawn and Russell alleged that they are
beneficiaries under the Family Trust, because they qualified as
“‘[William’s] children and/or grandchildren who are [, at the
time of Meredith’s death,] actively involved in the management
or operation of [WZCC].’” (Emphasis omitted.) Shawn alleged
that he worked full time on the ranch from 1980 until his
wrongful termination in the fall of 2017. Russell alleged that he
was employed by the ranch but was recently fired.
Shawn and Russell alleged that the Trust grants the trustee
no discretion in distributing the principal of the Family Trust
and that no one holds a power of appointment with respect
to the Family Trust. They alleged that in 2015 and 2016,
Meredith sold approximately one quarter of the ranch, referred
to as the “Flying A/Forester Property.” They alleged that the
sale proceeds were used to pay a company debt and that the
remaining funds were distributed to the WCZZ shareholders,
which included Meredith as the trustee of the Family Trust.
Shawn alleged that Meredith refused his numerous requests
for an accounting of Family Trust assets which consist of the
sale proceeds.
Shawn and Russell alleged that from the time of William’s
death in 2011 until the summer of 2017, Shawn, Shayne, and
Meredith served as directors of WZCC, with Shawn as presi-
dent, Shayne as vice president, and Meredith as ­secretary
and treasurer. They alleged that at an annual stock­holders
meeting on June 21, 2017, Meredith and Shayne removed
Shawn as president and appointed Meredith as president, sec-
retary, and treasurer. Shawn alleged that he has stopped receiv-
ing WZCC financial reports. Shawn alleged that Meredith
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542began making false accusations against him for the sole pur-
pose of removing him as a beneficiary of the Family Trust.
Shawn and Russell alleged that Meredith plans to sell the ranch
and equally split the proceeds among her children, regardless
of ownership. Shawn alleged that Meredith has improperly
handled the Family Trust and fears that she will “attempt
an illegal, oppressive and improper sale of the Ranch in the
near-term.”
In their first claim for relief, Shawn and Russell asserted
that Meredith has breached fiduciary duties in her capacity as
trustee of the Family Trust. They asserted that Meredith intends
to sell the ranch and will do so by exercising her shareholder
votes as trustee of the Family Trust, in combination with her
personal shareholder votes. Shawn and Russell asserted that
such a sale would violate the Trust and constitute a breach of
the trustee’s duties and that they “intend to seek injunctive relief
against the trustee.” Shawn and Russell alleged that Meredith
breached her fiduciary duties as trustee of the Family Trust
in the following ways: failing to administer the Family Trust
in good faith; failing to properly report and account Family
Trust assets to Shawn and Russell, in violation of § 30-3878;
voting WZCC stock in a manner contrary to the best interests
of Shawn and Russell, in violation of § 30-3867(f ); breaching
her duty of impartiality among beneficiaries, in violation of
§ 30-3868; failing to administer the Family Trust as a prudent
person by engaging in self-dealing and failing to exercise rea-
sonable care, skill, and caution, in violation of § 30-3869; and
failing to keep adequate records of the administration of the
Family Trust, in violation of § 30-3875. Shawn and Russell
alleged that as a direct and proximate result of Meredith’s
breach of fiduciary duties, they have suffered immediate and
irreparable harm and have incurred money damages. Shawn
and Russell requested relief in the form of a declaration that
Meredith has breached her duties as trustee; injunctive relief
preventing further breaches; and an award of damages, costs,
attorney fees, and other just relief.
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542For their second claim for relief, Shawn and Russell asserted
that Meredith should be removed as trustee and that a succes-
sor trustee and special fiduciary should be appointed under
§ 30-3862 to take possession of the Family Trust until the
case is resolved. Shawn and Russell reasserted their previous
allegations, and they alleged that their hostile relationship with
Meredith has interfered with her performance as trustee.
For their third claim for relief, Shawn and Russell requested
an accounting and inventory, which they alleged that Meredith
had failed to provide, contrary to § 30-3878 and the terms
of the Family Trust. They requested relief in the form of an
accounting of the Family Trust since William’s death and an
inventory of all assets owned by the Family Trust at the time
of William’s death.
For their fourth claim for relief, Shawn and Russell asserted
that Meredith should be surcharged for any improper exercise
of power or moneys converted.
Shawn and Russell’s Motion
for Temporary Injunction
Three days later, on November 21, 2019, Shawn and Russell
moved for a temporary injunction. The motion was simultane-
ously filed in three separate actions, each of which were filed
in district court on the same date, which include (1) the instant
trust action, (2) a derivative action filed against WZCC by
Shawn, and (3) a breach of contract action filed by Shawn and
Russell against WZCC; Meredith, as trustee and as a corporate
officer and director; and Shayne, Kelly, and Maria, individ­
ually and as a corporate director, respectively. The latter two
cases remain pending and awaiting trial. The motion requested
the court to enjoin Meredith, in her capacity as trustee of the
Family Trust and in her capacity as an officer and director of
WZCC, from selling or attempting to sell the ranch during the
pendency of the litigation.
On December 23, 2019, Meredith, individually and as
trustee of the Family Trust; Shayne; Kelly; and Maria moved
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542to dismiss the petition. They alleged that Shawn and Russell
lacked standing because they are not beneficiaries; that the peti-
tion failed to allege sufficient facts to establish that Meredith,
as trustee, owed fiduciary duties to Shawn and Russell; and
that the petition failed to state a plausible claim for relief. The
court held a hearing on the motion to dismiss and motion for
temporary injunction.
District Court’s Order
On May 29, 2020, the court issued an order dismissing
the petition and motion for temporary injunction, finding that
Shawn and Russell lacked standing because they are not ben-
eficiaries under the Family Trust. The court found that neither
Shawn nor Russell are named as beneficiaries under the Family
Trust and that the only way they could qualify as beneficiaries
would be if they were “actively involved in the management
or operation of [WZCC] at the time of Meredith’s death.” The
court found that because Shawn and Russell were terminated
from employment in 2017, they did not qualify as benefici­
aries. As an alternative holding, the court found that even if
Shawn and Russell were beneficiaries, Meredith would owe
them no duties as trustee of the Family Trust. The court cited
to § 30-3855(d), which provides:
While the trust is irrevocable and during the period the
interest of any beneficiary not having a present interest
may be terminated by the exercise of a power of appoint-
ment or other power, the duties of the trustee are owed
exclusively to the holder of the power to the extent of the
property subject to the power.
(Emphasis supplied.)
The court then cited to provisions of the Nebraska Model
Business Corporation Act (NMBCA), see Neb. Rev. Stat.
§§ 21-201 through 21-2,232 (Cum. Supp. 2020). The court
stated, “Under Nebraska law, a corporation has the power to
determine who is involved in the management and operation of
the corporation. See Neb. Rev. Stat. §§ 21-227; 21-284.” The
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542court further stated, “Thus, pursuant to § 30-3855, Meredith,
as Trustee of the Family Trust, owes her duties exclusively
to [WZCC], not to Shawn or Russell.” The court indicated
this conclusion is supported by Manon v. Orr, 1 wherein the
Nebraska Supreme Court held that contingent beneficiaries of a
revocable trust lacked standing because they had only a “mere
expectancy” with “no real interest in the cause of action or a
legal or equitable right, title, or interest in the subject matter
of the controversy.” The district court found that any inter-
est Shawn and Russell have in the Family Trust is a “‘mere
expect­ancy’” insufficient to confer standing.
Further, the court rejected Shawn and Russell’s argument
that the Family Trust terms such as “actively involved” and
“management or operation” are ambiguous. The court found
that there was nothing ambiguous about such terms and that
even if they were ambiguous, Shawn and Russell failed to
allege how any ambiguity would support their contention that
they are beneficiaries.
Shawn and Russell appealed. We moved the case to our
docket on our own motion.
ASSIGNMENTS OF ERROR
Shawn and Russell assign, restated, that the district court
erred in (1) finding that Shawn and Russell are not benefici­
aries and thus lacked standing; (2) finding that if Shawn and
Russell were beneficiaries, Meredith, as trustee, would owe
duties exclusively to WZCC, and not to Shawn and Russell;
(3) finding the Trust terms to be unambiguous; (4) excluding
evidence of the settlor’s intent; and (5) denying the motion for
temporary injunction.
STANDARD OF REVIEW
[1,2] Trust administration matters are reviewed for error
appearing on the record, absent an equity question. 2 When
1
Manon v. Orr, 289 Neb. 484, 488, 856 N.W.2d 106, 109 (2014).
2
In re Trust Created by McGregor, 308 Neb. 405, 954 N.W.2d 612 (2021).
See In re Trust of Cook, 28 Neb. App. 624, 947 N.W.2d 870 (2020).
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542reviewing a judgment for errors appearing on the record, the
inquiry is whether the decision conforms to the law, is sup-
ported by competent evidence, and is neither arbitrary, capri-
cious, nor unreasonable. 3
[3,4] A district court’s grant of a motion to dismiss is
reviewed de novo. 4 When reviewing an order dismissing a
complaint, the appellate court accepts as true all facts which
are well pled and the proper and reasonable inferences of law
and fact which may be drawn therefrom, but not the plaintiff’s
conclusion. 5
[5,6] The interpretation of the words in a will or a trust
presents a question of law. 6 In instances when an appellate
court is required to review cases for error appearing on the
record, questions of law are nonetheless reviewed de novo on
the record. 7
ANALYSIS
Shawn and Russell Are Beneficiaries
and Have Standing
[7] Shawn and Russell argue the district court erred in
determining that they lacked standing to assert claims against
Meredith as trustee because they were not beneficiaries of the
Trust. Standing involves a real interest in the cause of action,
meaning some legal or equitable right, title, or interest in the
subject matter of the controversy. 8 Shawn and Russell argue
that they qualify as beneficiaries under the Family Trust pur-
suant to § 30-3803(3), which defines “beneficiary” as a per-
son that “has a present or future beneficial interest in a
trust, vested or contingent.” Meredith, Shayne, Kelly, and
3
Id.
4
Manon, supra note 1.
5
Id.
6
In re Trust Created by McGregor, supra note 2.
7
Id.8
In re Conservatorship of Abbott, 295 Neb. 510, 890 N.W.2d 469 (2017).
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542Maria argue the district court correctly determined that Shawn
and Russell are not beneficiaries, because they are no longer
actively involved in WZCC’s management or operation. In
determining that Shawn and Russell were not beneficiaries,
the district court found that neither of them qualify as a child
or grandchild of William’s “who are [at the time of Meredith’s
death] actively involved in the management or operation
of [WZCC].”
[8] Generally, standing in a trustee removal proceeding is
governed by § 30-3862(a), 9 which provides that “[t]he settlor,
a cotrustee, or a beneficiary may request the court to remove
a trustee, or a trustee may be removed by the court on its own
initiative.” 10 As mentioned, the NUTC defines a beneficiary as
“a person that . . . has a present or future beneficial interest in
a trust, vested or contingent.” 11 The NUTC statutes are derived
from the Restatement (Third) of Trusts. 12
The Restatement (Third) of Trusts provides that “benefici­
aries” of a trust are the persons or classes of persons, or their
successors in interest, upon whom the settlor manifested an
intention to confer beneficial interests, vested or contingent,
under the trust. 13 In addition, persons who hold special or
general powers of appointment or have reversionary interests
are beneficiaries. 14 A beneficiary’s interest may be a present
or future interest, and may or may not be subject to condi-
tions, the discretionary decisions of a trustee or another, or a
power of appointment or revocation. 15 A trust may provide that
9
Id.
10
§ 30-3862(a). See Restatement (Third) of Trusts § 94 (2012).
11
§ 30-3803(3). See Restatement, supra note 10, comment b.
12
See, In re Estate of Stuchlik, 289 Neb. 673, 857 N.W.2d 57 (2014),
modified on denial of rehearing 290 Neb. 392, 861 N.W.2d 682 (2015); In
re Estate of Hedke, 278 Neb. 727, 775 N.W.2d 13 (2009).
13
Restatement (Third) of Trusts § 48, comment a. (2003).
14
Id.
15
Id., § 49, comment b.
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542a beneficiary is to take an interest only on the happening of
a designated event or that such interest is to terminate on the
happening of an event. Unless contrary to public policy, such a
condition is valid. 16
[9] Additionally, Meredith, Shayne, Kelly, and Maria argue,
and the district court agreed, that Shawn and Russell are not
beneficiaries, because they are not specifically named under
the Family Trust. However, beneficiaries need not be named
in the terms of the trust, but may be designated by class termi-
nology or by description. 17 Trusts are often established for the
benefit of classes consisting of the testator’s children and other
descendants; other forms of description also may be used. 18
The requirement is that a beneficiary be “definite.” 19 Pursuant
to § 30-3828(b), “A beneficiary is definite if the beneficiary
can be ascertained now or in the future, subject to any appli-
cable rule against perpetuities.” 20
The ascertainable beneficiary requirement is shown by an
illustration from the Restatement (Third) of Trusts, which
resembles the fact pattern in the present case:
S’s will leaves her residuary estate to T in trust to pay
$10,000 to each person who is a full-time employee of S
at the time of her death, and to pay $25,000 to each of S’s
brothers and sisters who are living at her death, with the
rest of the trust estate to be held in trust (in accordance
with terms described in the will) for S’s issue. 21
Under this example, the beneficiaries are ascertainable by
description, even though they are not specifically named. 22
16
See id., comment a.
17
Chicago Pol. Sergeants’ Assn. v. Pallohusky, 2019 IL App (1st) 181194,
128 N.E.3d 436, 431 Ill. Dec. 766 (2019); Restatement, supra note 13,
§ 44, comment b.
18
Restatement, supra note 13, § 44, comment b.
19
§ 30-3828(a)(3).
20
See In re Estate of West, 252 Neb. 166, 560 N.W.2d 810 (1997).
21
Restatement, supra note 13, § 44, comment b. (emphasis supplied).
22
See id.
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542A class of beneficiaries is not indefinite merely because it
consists of a changing or shifting group, the number of whose
members may increase or decrease. 23 Typical examples of
definite classes for trust beneficiaries are “children” or “grand­
children,” the “issue” or “descendants,” or the “heirs” or “next
of kin” of a designated person. 24
In Newman v. Liebig, 25 this court applied the common-
law rule that a beneficiary must be ascertainable from the
trust instrument. Here, Shawn and Russell are beneficiaries
ascertainable from the Trust. The Trust specifically states that
Shawn is one of William’s four children and that William has
“several grandchildren.” Any of Shawn’s children would be
included as William’s grandchildren. The Trust contemplated
that if any of William’s children should pass away prior to
receiving a distribution from the Trust estate, the interest of
William’s deceased child shall pass to the children of the
deceased, also known as William’s grandchildren. Thus, Shawn
and Russell come within a definite class of beneficiaries under
the Family Trust.
Furthermore, the fact that Shawn and Russell are not pres-
ently working at WZCC does not negate their status as benefi-
ciaries. Just like the illustration of the full-time employee of
the testator shown above, Shawn and Russell are members of
a definite class of beneficiaries, even though William placed a
condition upon the class. The fact that a member of the class
may ultimately take nothing does not prevent that beneficiary
from maintaining suit; each of the beneficiaries of such a trust
is in this position, for if none could sue, the trustee might com-
mit a breach of trust with impunity. 26 Premised on the policy
of ensuring that someone has the power to enforce the trustee’s
fiduciary duties, courts have held that future beneficiaries of
23
Restatement, supra note 13, § 45, comment a.
24
Id.
25
Newman v. Liebig, 282 Neb. 609, 810 N.W.2d 408 (2011).
26
See Restatement, supra note 13, § 45, comment f.
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542a trust, whether vested or contingent, have standing to bring an
action against a trustee. 27 Therefore, we hold that Shawn and
Russell are beneficiaries under § 30-3862(a) because they have
a contingent future beneficial interest in the Family Trust. We
agree with Shawn and Russell that the district court’s deter-
mination that they were not beneficiaries and lacked standing
was erroneous.
The district court’s reliance on Manon is misplaced. 28 In
Manon, a still-living settlor sold parcels of land that were
included in the corpus of her revocable trust, and the settlor’s
children brought suit to place a constructive trust on the real
estate. The court looked to a previous version of § 30-3855,
presently found with the same language at § 30-3855(b), which
provides: “While a trust is revocable, rights of the beneficiaries
are subject to the control of, and the duties of the trustee are
owed exclusively to, the settlor.”
Because § 30-3855(b) provides that the “rights of the bene­
ficiaries are subject to the control of . . . the settlor,” the court
found that in the case of a revocable trust, the only real party
in interest would be the settlor, or one representing the settlor’s
interest. 29 Here, it is undisputed that the Trust is irrevocable
and that upon his passing, William relinquished any further
control over Trust assets to the Family Trust. As such, the
rationale of Manon is not applicable.
Court’s Interpretation of
§ 30-3855(d) Was Erroneous
[10,11] Shawn and Russell next argue the district court
erred in finding that, pursuant to § 30-3855(d), Meredith, as
trustee, owes duties exclusively to WZCC. To prevail against
a motion to dismiss for failure to state a claim, a plaintiff
27
In re Estate of Spencer, 417 S.W.3d 364 (Mo. App. 2013). See, also,
Rachins v. Minassian, 251 So. 3d 919 (Fla. App. 2018).
28
See Manon, supra note 1.
29
See, id.; In re Trust of Cook, supra note 2.
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Cite as 309 Neb. 542must allege sufficient facts to state a claim to relief that is
plausible on its face. 30 When analyzing a lower court’s dis-
missal of a complaint for failure to state a claim, an appellate
court accepts the complaint’s factual allegations as true and
construes them in the light most favorable to the plaintiff. 31
Consequently, we look to the factual pleadings in the peti-
tion, accepting all allegations as true and drawing all reason-
able inferences therefrom in favor of Shawn and Russell to
determine whether they have stated a plausible claim against
Meredith as trustee.
[12-14] A trust creates a fiduciary relationship in which one
person holds a property interest subject to an equitable obliga-
tion to keep or use that interest for the benefit of ­another. 32
Upon acceptance of a trusteeship, a trustee has a duty to
“administer the trust in good faith, in accordance with its terms
and purposes and the interests of the beneficiaries, and in
accordance with the [NUTC].” 33 The NUTC states that trust-
ees owe the beneficiaries of a trust duties that include loyalty,
impartiality, prudent administration, protection of trust prop-
erty, proper recordkeeping, and informing and reporting. 34 All
actions of the trustee must be in the interest of the beneficiaries
and no one else. 35
All powers of a trustee, whether express or implied, are
held in a fiduciary capacity, and their exercise or nonexercise
is subject to the fiduciary duties of trusteeship. 36 “[B]ecause
30
Rafert v. Meyer, 290 Neb. 219, 859 N.W.2d 332 (2015).
31
Id.32
In re Estate of Stuchlik, supra note 12; Karpf v. Karpf, 240 Neb. 302, 481
N.W.2d 891 (1992).
33
§ 30-3866.
34
In re Conservatorship of Abbott, supra note 8; In re Estate of Stuchlik,
supra note 12.
35
See, In re Estate of Hedke, supra note 12; Karpf, supra note 32.
36
See, § 30-3880(a) and (b); Restatement (Third) of Trusts § 78, comment
a., and § 85, comment b. (2007).
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Cite as 309 Neb. 542trustees have great control over the beneficiaries’ property
interests and beneficiaries cannot readily terminate their fidu-
ciaries or dispose of their interests, ‘[t]he duty of loyalty is,
for trustees, particularly strict even by comparison to the stan-
dards of other fiduciary relationships.’” 37 Trusts raise policy
concerns regarding the potential for self-dealing, because trust
beneficiaries often have inferior knowledge about a transac-
tion and have a limited ability to protect their interests absent
the trustee’s full disclosure or court approval. 38 Fiduciary
duties in the trust context are “particularly intense so that,
in most instances, its prohibitions are absolute for prophy-
lactic reasons.” 39 The policy of trust law removes temptation
for a trustee when personal interests conflict with fiduciary
duties and provides assurance to beneficiaries that they “will
not be deprived of a trustee’s disinterested and objective
judgment.” 40 With the laws and policies of the NUTC fresh in
mind, we turn to discuss the district court’s interpretation of
§ 30-3855(d).
[15-19] Statutory interpretation presents a question of law
which an appellate court reviews independently of the lower
court. 41 The fundamental objective of statutory interpretation
is to ascertain and carry out the Legislature’s intent. 42 When
construing a statute, an appellate court looks to the statute’s
purpose and gives to the statute a reasonable construction
that best achieves that purpose, rather than a construction
that would defeat it. 43 Components of a series or collection of
37
In re Estate of Hedke, supra note 12, 278 Neb. at 755-56, 775 N.W.2d at
36, quoting Restatement, supra note 36, § 78, comment a.
38
Id., citing George T. Bogert, Trusts § 95 (6th ed. 1987).
39
Restatement, supra note 36, § 78, comment b. at 96.
40
Id.
41
State v. Jedlicka, 305 Neb. 52, 938 N.W.2d 854 (2020).
42
Id.43
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542s­ tatutes pertaining to a certain subject matter are in pari mate-
ria and should be conjunctively considered and construed to
determine the intent of the Legislature, so that different provi-
sions are consistent, harmonious, and sensible. 44 A court must
give effect to all parts of a statute, and if it can be avoided,
no word, clause, or sentence will be rejected as superfluous or
meaningless. 45
Section 30-3855(d) provides:
While the trust is irrevocable and during the period the
interest of any beneficiary not having a present interest
may be terminated by the exercise of a power of appoint-
ment or other power, the duties of the trustee are owed
exclusively to the holder of the power to the extent of the
property subject to the power.
Initially, we focus our analysis on the statutory language
“power of appointment.” The NUTC does not specifically
define power of appointment; as a result, powers of appoint-
ment are construed according to the principles of the common
law. 46 A general power of appointment means that an interest
in the property passes to the donee at the donor’s death. 47 A
limited power of appointment means that an interest in the
property passes not to the donee, but, rather, to a specific
class of beneficiaries at the donor’s death. 48 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 neces-
sary to give effect to the donor’s intent and design. 49 Where
there is a prohibition, limitation, or restriction in a power of
44
In re Interest of Seth C., 307 Neb. 862, 951 N.W.2d 135 (2020).
45
Id.46
In re Robert L. McDowell Revocable Trust, 296 Neb. 565, 894 N.W.2d 810(2017).
47
In re Estate of Nelson, 253 Neb. 414, 571 N.W.2d 269 (1997).
48
Id.49
In re Robert L. McDowell Revocable Trust, supra note 46.
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Cite as 309 Neb. 542appointment, such provision will control and the donee will not
be permitted to disregard the same. 50
It is undisputed that the Trust did not grant Meredith a
power of appointment. Instead, the parties dispute the mean-
ing of § 30-3855(d)’s phrase “other power.” The district court
accepted the argument of Meredith, Shayne, Kelly, and Maria
that, under the NMBCA, a corporation has the power to deter-
mine who is involved in the management or operation of the
corporation. Although neither the parties nor the district court
identified a specific provision of the NMBCA in their analysis,
their interpretation adopts the general position that a corpora-
tion’s power to hire and fire employees qualifies as an “other
power” under the NUTC. Shawn and Russell argue that the
district court’s interpretation of § 30-3855(d) was erroneous,
because the reference to “other power” is merely a reference
to “power of withdrawal,” as used in § 30-3855(c) and defined
under § 30-3803(11).
[20,21] The parties’ competing interpretations of § 30-3855
raise a novel issue, as there is no provision using the same
language under the Uniform Trust Code or in statutes in other
jurisdictions. Statutes, however, are not properly interpreted in
isolation. 51 Rather, when interpreting a statute, well-established
principles of statutory interpretation require a court to take
account of context and of other statutes pertaining to the same
subject. 52 Further, under the associated words canon of statu-
tory interpretation, if two or more words are grouped together
in a statute, the meaning of a particular word may be deter-
mined by reference to the meaning of associated words and
phrases. 53 This canon is often wisely applied where a word
50
Id.
51
State v. A.D., 305 Neb. 154, 939 N.W.2d 484 (2020).
52
Id.53
82 C.J.S. Statutes § 439 (2009). See, Jedlicka, supra note 41; State v.
McKinney, 273 Neb. 346, 730 N.W.2d 74 (2007); State v. Kipf, 234 Neb.
227, 450 N.W.2d 397 (1990).
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542is capable of many meanings in order to avoid the giving of
unintended breadth to a statute. 54 Our cases have stated that
words grouped in a list within a statute should be given related
meaning. 55 “Although most associated-words cases involved
listings[,] a listing is not prerequisite.” 56 As we explain, these
principles lead us to conclude that the district court erred in its
interpretation that the phrase “other power” under § 30-3855(d)
refers to powers found in statutes outside of the NUTC, such
as the NMBCA.
Under § 30-3855, the meaning of “other power” is informed
and limited by the meaning of the preceding phrase “power
of appointment.” Our case law recognizes power of appoint-
ment as a specific type of testamentary power, not a general
corporate power. As mentioned, a beneficiary’s interest can
be subject to a power of appointment. A holder of the power
of appointment can distribute trust property to a beneficiary
and in effect can appoint the property to a new or existing
trust for the benefit of the beneficiary. 57 Context is provided
by § 30-3855’s inclusion of “power of appointment,” as well
as other similar testamentary powers. Section 30-3855(a) dis-
cusses a settlor’s power to revoke a trust and provides that
“[t]o the extent a trust is revocable by a settlor in conjunction
with a person other than a trustee . . . the trustee may follow
a direction from the settlor and the other person holding the
power to revoke.” Section 30-3855(b) provides that “[w]hile a
trust is revocable, rights of the beneficiaries are subject to the
control of, and the duties of the trustee are owed exclusively
to, the settlor.” Section 30-3855(c) states that “the holder of a
54
See McDonnell v. U.S., ___ U.S. ___, 136 S. Ct. 2355, 195 L. Ed. 2d 639(2016).
55
Jedlicka, supra note 41, citing State v. Smith, 286 Neb. 77, 834 N.W.2d
799 (2013), and State v. Kipf, supra note 53.
56
Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of
Legal Texts 197 (2012). Accord U.S. v. Hill, 963 F.3d 528 (6th Cir. 2020).
57
See In re Estate of Sibley, 246 Ariz. 498, 442 P.3d 805 (Ariz. App. 2018).
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542power of withdrawal has the rights of a settlor of a revocable
trust under this section.” Therefore, § 30-3855(a), (b), (c), and
(d) all refer to testamentary powers. Understood through the
Legislature’s association of these powers with “other power,”
we interpret “other power” to refer to a testamentary power,
however so labeled. Under this interpretation, “other power”
is given a meaning that is related to, but independent from,
“power of appointment,” such that “other power” is not ren-
dered superfluous or meaningless. This interpretation harmo-
nizes § 30-3855(d) with § 30-3823, which employs the phrase
“holder of a power of appointment or other power to terminate
an interest.” 58
The district court’s interpretation is premised on general
corporate powers rather than any specific testamentary pow-
ers granted to WZCC by the Trust. In order to avoid giving
unintended breadth to the statutory provision, we must reject
the district court’s interpretation that “other power” under
the NUTC incorporates general corporate powers under the
NMBCA. We conclude that the district court’s broad interpre-
tation of a vague phrase such as “other power” risks unset-
tling the duties imposed upon trustees by the Legislature. The
court therefore erred in interpreting § 30-3855(d) to mean that
Meredith exclusively owes duties as trustee to WZCC.
[22] In addition, the terms and obligations of the Trust con-
tradict the argument of Meredith, Shayne, Kelly, and Maria that
§ 30-3855(d) controls who Meredith owes duties as trustee. A
trustee may exercise powers conferred by the NUTC, except
as limited by the terms of the trust. 59 Upon our review of
the Trust, we find no provisions which state that Meredith’s
duties are owed exclusively to WZCC. The Trust makes clear
that Meredith, when executing the trust agreement as succes-
sor trustee, agreed to be duty bound to the beneficiaries. The
58
See, also, e.g., Colo. Rev. Stat. §§ 15-1-202 and 15-1-203 (2020) (using
phrase “power of appointment or other power of disposition”).
59
See § 30-3880(a)(2).
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542Trust grants Meredith the authority to invest and reinvest any
Trust property, but this must be effectuated “in such manner
as will be in the best interests of the Trust beneficiaries.” The
Trust requires Meredith to keep “books of account” for the
Trust estate, to annually furnish Trust account statements to
each beneficiary, and to at reasonable times allow beneficiaries
to inspect Trust records. Meredith specifically agreed that these
Trust terms are legally binding upon her. Based on the terms of
the Trust and the allegations of the petition, summarized above,
we conclude that Shawn and Russell have alleged sufficient
facts to state plausible claims against Meredith in her capacity
as trustee of the Family Trust.
Trust Terms Unambiguous
[23] Shawn and Russell assign that the district court erred
in finding the terms of the Family Trust to be unambiguous.
Whether a document is ambiguous is a question of law, and
an appellate court considering such a question is obligated to
reach a conclusion independent of the trial court’s decision. 60
The only provision of the Family Trust at issue is that
which states, upon Meredith’s death, the trustee shall distribute
WZCC stock “to those of my children and/or grandchildren
who are [then] actively involved in the operation and manage-
ment of [WZCC].”
We conclude that the district court correctly found the provi-
sion of the Family Trust to be unambiguous. When the Trust is
considered as a whole, the only reasonable interpretation is that
William intended an interest in his stock to pass to his children
or grandchildren who were actively managing or operating
WZCC at the time of Meredith’s death.
This assignment of error has largely been rendered moot.
Shawn and Russell seemingly make this argument to estab-
lish themselves as beneficiaries. The terms creating a class
of ­beneficiaries are unambiguous, and as we have explained,
60
In re Trust Created by Cease, 267 Neb. 753, 677 N.W.2d 495 (2004).
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IN RE WILLIAM R. ZUTAVERN REVOCABLE TRUST
Cite as 309 Neb. 542Shawn and Russell are beneficiaries with a future contingent
interest. This assignment of error is without merit.
Evidence Properly Excluded
[24] Shawn and Russell argue that the district court erred
in excluding evidence of William’s intent. Shawn and Russell
offered this evidence for purposes of their motion for temporary
injunction, which was filed in the present case and two com-
panion cases. This appeal concerns only the trust case. We have
affirmed the district court’s determination that the language in
the Trust is unambiguous. Unless a document is ambiguous,
parol evidence cannot be used to vary its terms. 61 In addition,
the Trust states that it “may not be changed orally.” The district
court correctly excluded parol evidence of William’s intent.
This assignment of error is without merit.
Motion for Temporary Injunction
Shawn and Russell argue that the district court erred in deny-
ing their motion for temporary injunction. The district court did
so on standing grounds and did not consider the merits of the
motion. We have concluded that Shawn and Russell as bene­
ficiaries have standing to assert claims against Meredith as
trustee. Upon remand, the district court shall consider the mer-
its of Shawn and Russell’s motion for temporary injunction.
CONCLUSION
The district court erred in determining that Shawn and
Russell were not beneficiaries and lacked standing to assert an
action against Meredith as trustee. The district court erred in
relying upon § 30-3855(d) to conclude that Meredith, as trustee,
exclusively owed duties to WZCC. The judgment is reversed,
and the cause is remanded for further proceedings.
Reversed and remanded for
further proceedings.
Miller-Lerman, J., not participating.
61
Id.