Trust Law News: Landmark Court Rulings Every Trustee Should Know

• Recent court decisions in trust law emphasize the importance of adhering to fiduciary duties, with rulings clarifying that breaches can lead to limited remedies if assets are no longer under the trustee’s control.
• Trustees should be aware that no-contest clauses may not apply to actions seeking their removal, providing beneficiaries greater leeway to challenge administration without risking disinheritance, though this depends on specific clause language.
• In trust amendments, statutory methods often remain available unless the trust explicitly states its procedure is exclusive, reducing the risk of invalidation due to technical non-compliance.
• Courts are increasingly treating trust interests as marital property in divorces, potentially exposing remainder interests to division even if not yet vested, highlighting the need for protective planning like prenuptial agreements.
• There appears to be no constitutional right to jury trials in trust modification proceedings in some jurisdictions, leaving such matters to judicial discretion and potentially streamlining resolutions.

Introduction

Trust law continues to evolve through judicial interpretations that balance settlor intent, beneficiary rights, and trustee responsibilities. Recent rulings from state supreme courts and appellate bodies have addressed critical issues such as amendment procedures, trustee removals, and the treatment of trust assets in external disputes like divorces. These decisions matter now amid rising trust litigation driven by economic uncertainties and family dynamics. Trustees, beneficiaries, and estate planners are directly impacted, as these precedents influence how trusts are administered and contested.

Key Developments in Trust Law

In the past year, courts have provided clarity on longstanding ambiguities. For instance, California’s Supreme Court has harmonized trust amendment standards with national trends, while Virginia’s appellate court has limited the scope of no-contest clauses. These rulings underscore the need for precise drafting to avoid unintended litigation.

Implications for Trustees

Trustees must navigate these changes carefully, ensuring compliance with fiduciary standards to mitigate risks of removal or liability. Monitoring jurisdictional variations is essential, as what holds in one state may not in another.

This article explores landmark court rulings in trust law news that every trustee should know, drawing from recent and historical precedents to provide comprehensive guidance. As a seasoned legal analyst with experience in covering regulatory frameworks and court processes, I reference established principles from bodies like the American Law Institute and state supreme courts to explain these developments. The analysis separates factual case outcomes from expert insights on their broader implications, maintaining neutrality throughout.

Introduction

In the realm of trust law news, landmark court rulings serve as pivotal guideposts for trustees navigating their fiduciary obligations. These decisions, often from state supreme courts and appellate tribunals, clarify ambiguities in trust administration, amendment, and dispute resolution. With trust litigation on the rise—fueled by complex family structures, economic volatility, and evolving tax considerations—these rulings are particularly timely. They affect trustees by reinforcing duties of loyalty, impartiality, and prudence, while also impacting beneficiaries who may seek accountability through common procedures like petitions for removal or modification. Businesses and institutions managing trusts must adapt to these precedents to ensure compliance and minimize exposure to lawsuits. This article breaks down key rulings, their contexts, and practical effects, offering verifiable insights for those monitoring trust law developments.

Background & Legal Context

Trust law in the United States draws from common law principles dating back to English equity courts, codified in statutes like the Uniform Trust Code (UTC) adopted by many states. Core concepts include the settlor’s intent, as expressed in the trust instrument, and the trustee’s fiduciary duties under standards like the Restatement (Third) of Trusts. Historical landmarks, such as the U.S. Supreme Court’s Nichols v. Eaton (1875), established the validity of spendthrift clauses, protecting trust income from creditors by prohibiting beneficiary assignments. This precedent laid the foundation for modern asset protection in estate planning.

More recent federal rulings, like North Carolina Department of Revenue v. Kimberley Rice Kaestner 1992 Family Trust (2019), limited state taxation of trusts to cases with sufficient connections beyond a beneficiary’s residence, influencing multi-jurisdictional trust situs decisions. State-level developments build on these, addressing gaps in local statutes. For example, California’s Probate Code §§15401-15402 governs trust revocations and amendments, while Virginia’s Code §64.2-1405 outlines trustee appointments and removals. Prior cases, such as King v. Lynch (2012) in California, emphasized strict adherence to trust-specified procedures, creating splits in appellate interpretations that recent rulings have resolved.

Legislative intent often favors flexibility to honor settlor wishes while protecting vulnerable parties, as seen in updates like Delaware’s Trust Act 2025, which refined rules for trust decanting and directed trusts. These backgrounds highlight how courts balance statutory defaults with trust-specific terms, a theme recurring in contemporary trust law news.

Key Legal Issues Explained

Several core issues dominate recent trust law rulings, explained here in plain English with references to legal standards.

First, trust amendments: Under the UTC §602(c) and similar state laws, settlors of revocable trusts can amend via methods in the trust or by statute. The key question is whether trust procedures displace statutory fallbacks. In Haggerty v. Thornton (2024, affirmed 2025), the California Supreme Court ruled that statutory methods (e.g., a signed writing delivered to the trustee under Probate Code §15401(a)(2)) apply unless the trust explicitly declares its method exclusive, using words like “only by” or “exclusively.” This aligns with the Restatement (Third) of Trusts §63, prioritizing settlor intent while avoiding invalidations over minor formalities like notarization.

Second, trustee removal and no-contest clauses: No-contest (in terrorem) clauses disinherit challengers to a will or trust. Virginia Code §64.2-1405 allows court intervention for “good cause” in trustee appointments. In Bakwin v. Bakwin (2025), the Virginia Court of Appeals held that petitions to disqualify a trustee do not trigger no-contest clauses, as they address administration rather than validity. This draws from the Third Restatement of Trusts, emphasizing beneficiary rights to seek accountability without fear of forfeiture.

Third, constructive trusts and fiduciary breaches: A constructive trust is an equitable remedy imposed to prevent unjust enrichment, often in breach cases. Texas Trust Code requires co-trustee unanimity for actions. In In re Trust A & Trust C (2024), the Texas Supreme Court limited constructive trusts to assets under the breaching trustee’s control, opting for money judgments when restoration is impossible or harmful.

Fourth, jury trials in modifications: Trust modifications under Texas Property Code §112.054 address changed circumstances. In In re Poe Trust (2025), the Texas Supreme Court confirmed no statutory or constitutional right to jury trials in these “special proceedings,” leaving fact-finding to judges.

Fifth, trusts in divorce: Family law intersects with trusts when assets are deemed marital property. In C.S. v. R.H. (2025, New York), irrevocable trust assets were treated as marital due to spousal control and use, entitling the non-beneficiary spouse to equitable distribution. Similarly, Gervolino v. Gervolino (2025, Connecticut) classified remainder interests as divisible marital property under the state’s “all-property” scheme.

Sixth, appealability in trust administration: Minnesota Trust Code allows orders restoring property or removing trustees. In In re Trust Created Under Agreement by and Between Janet E. Johnson (2025), the Minnesota Supreme Court ruled such orders are not interlocutorily appealable under Rule 103.03(b), promoting efficient administration.

These issues illustrate how courts apply equitable principles to real-world scenarios, such as family disputes or tax planning.

This table organizes major rulings for quick reference, highlighting their contributions to trust law news.

Latest Developments or Case Status

As of January 2026, trust law news reflects ongoing adaptations. The Haggerty ruling (finalized 2025) has prompted reviews of trust documents nationwide, with no pending appeals. Bakwin remains authoritative in Virginia, though broader no-contest language may invite future challenges. The Texas cases (In re Trust A & C and In re Poe) are settled, influencing 2025 legislative updates like expanded guardian approvals. In New York and Connecticut, the divorce-related rulings (C.S. and Gervolino) are recent and unappealed, but they signal a trend toward eroding trust protections in family law. The Minnesota Johnson decision critiques have emerged, with some experts calling it “doctrinally nonsensical” for limiting equity remedies, potentially leading to legislative fixes. Federal courts continue citing trust precedents, as in Thole v. U.S. Bank (2020), applying standing rules to fiduciary suits. Monitoring includes upcoming U.S. Supreme Court terms for potential trust impacts.

Who Is Affected & Potential Impact

Trustees are primarily affected, facing heightened scrutiny of actions like amendments or distributions. Breaches, as in In re Trust A & C, could result in personal liability via money judgments, impacting corporate trustees through reputational harm. Beneficiaries gain tools for oversight, such as removal petitions without no-contest fears (Bakwin), but risk trust erosion in divorces (C.S., Gervolino). Settlors and estate planners must draft explicitly to enforce preferences, e.g., exclusive amendment clauses post-Haggerty. Businesses using trusts for asset protection may see increased litigation costs, while families could face unintended wealth divisions. Broader consequences include tax implications (Kaestner) and administrative efficiency (Johnson), potentially raising compliance burdens for institutions like banks or bar associations.

What This Means Going Forward

These rulings signify a judicial shift toward flexibility and beneficiary protection in trust law, aligning with UTC trends. Trustees should prioritize documentation and seek counsel for modifications, as bench trials (Poe) emphasize judicial gatekeeping. Drafting best practices now include clear exclusivity language and spendthrift provisions to withstand divorce challenges. Readers should monitor state legislatures, such as Texas’s 2025 updates on estate filings, and federal developments via the Supreme Court docket. This evolving landscape underscores the value of proactive planning to uphold settlor intent amid uncertainties.

Conclusion

Landmark rulings in trust law news reinforce the delicate balance between fiduciary duties and equitable relief, offering clarity for trustees while highlighting risks in administration and external disputes. These decisions from respected courts like the California and Texas Supreme Courts underscore the public interest in fair trust management, encouraging ongoing vigilance. Staying informed through reliable sources ensures compliance and protects stakeholder interests. This article is for informational purposes only and does not constitute legal advice.

Frequently Asked Questions

What is a no-contest clause in a trust, and when does it apply?

A no-contest clause disinherits beneficiaries who challenge the trust’s validity. Per Bakwin v. Bakwin, it typically does not apply to trustee removal actions, which are administrative rather than validity challenges, allowing beneficiaries to pursue accountability under statutes like Virginia Code §64.2-1405.

How can a revocable trust be amended if the procedure is not followed exactly?

If the trust does not explicitly make its method exclusive, statutory defaults apply, such as a signed writing delivered to the trustee (California Probate Code §15401). Haggerty v. Thornton upheld such flexibility, focusing on settlor intent over technicalities.

Are trust assets protected in divorce proceedings?

Not always; courts may deem them marital property if controlled or used by spouses, as in C.S. v. R.H. (New York) or Gervolino v. Gervolino (Connecticut), leading to equitable division of interests.

What remedies are available for trustee breaches?

Equitable remedies like constructive trusts are limited to controllable assets (In re Trust A & Trust C). Otherwise, money judgments for damages suffice, per fiduciary standards in the Restatement (Third) of Trusts.

Do trustees have a right to jury trials in modification suits?

In Texas, no, as ruled in In re Poe Trust; these are special proceedings resolved by judges, not “causes” under the state constitution.

Can trust administration orders be appealed immediately?

Often not; In re Janet E. Johnson Trust (Minnesota) held that orders restoring property or removing trustees are non-final and not interlocutorily appealable.