Litigation Involving a Trust
estate planning and real estate over
the past two decades, individuals are
frequently asked to serve as a trustee
of a trust without fully understanding
that role. Having a basic understanding
of a trustee's relationship to a trust is
important, particularly in the event of
litigation. Individuals serving as trustees
as well as attorneys called upon to
litigate matters affecting a trust should
be informed of the basics.
Litigation may include a trust in a
number of circumstances. For example,
a beneficiary of a trust may seek the
to administer the trust in accordance
with the trust documents. Individuals
may attempt to transfer assets to a trust
in order to shield them from creditors,
in violation of a state's fraudulent
conveyance act. A trustee may need
to sue to protect assets belonging to
the trust. The list of instances where
litigation involving a trust may arise is
endless. Certain fundamentals regarding
trust litigation, however, remain the
same.
A trust is merely a right in property
held in a fiduciary relationship by one
party, called the "trustee," for the benefit
of another party, called the "beneficiary."
The trustee holds title to property
or "corpus" in the trust, while the
beneficiary collects the benefits. With the
exception of business trusts, which are
generally more akin to corporate entities
in their purpose and characteristic of
having freely transferable interests, a
trust should be considered a relationship
to property rather than a separate entity.
A trust's status as a relationship to
property rather than an entity presents
preliminary issues for a litigator under
both federal and state rules of civil
procedure.
Under Federal Rule of Civil
Procedure 17(b), the capacity of a trust
to sue or be sued is determined by
the laws of the state where the court
is located. Fed.R.Civ.P. 17(b). The
overwhelming weight of authority holds
that a trust, under state law, does not
have the capacity to sue or be sued in
its own name. See Coverdell v. Mid-
South Farm Equipment Ass'n, 335
F.2d 9, 12-13 (6th Cir.1964); Limouze
v. M.M. & P. Maritime Advancement,
Program, 397 F.Supp. 784, 789-90
(D.Md.1975); White v. Lundeberg
Maryland Seamanship School, Inc., 57
F.R.D. 128, 130 (D.Md.1972); Yonce v.
Miners Mem'l Hosp. Ass'n, 161 F.Supp.
178, 188 (W.D.Va.1958); Colorado
Springs Cablevision, Inc. v. Lively, 579
F.Supp. 252, 254 (D.Colo.1984); Powers
v. Ashton, 45 Cal.App.3d 783, 119 Cal.
Rptr. 729, 732 (1975); Morrison v.
Lennett, 415 Mass. 857, 616 N.E.2d 92,
94 (1993); Western Life Trust v. State, 536
N.W.2d 709, 712 (1995); see also Bogert,
Trusts & Trustees § 712 (rev.2d ed.1982);
IV Scott, Trusts § 280 (1989).
The trustee, as the legal title holder
of the trust's property or corpus, is
generally the real party in interest
with the power to prosecute or defend
actions in the name of the trust under
Fed.R.Civ.P. 17(a). See Coverdell, 335
F.2d at 13; Colorado Springs Cablevision,
579 F.Supp. at 254; Limouze, 397
F.Supp. at 789-90; White, 57 F.R.D. at
130; Powers, 119 Cal.Rptr. at 732; IV
Scott, Trusts at § 280. Attorneys seeking
to affect a trust through litigation should
name the individual trustees as parties
in their capacity as "trustee on behalf of"
the name of the subject trust.
Ensuring personal jurisdiction
exists over a trustee presents its own
considerations. Article 2-202 of the
Uniform Trust Code, adopted by 31
states and the District of Columbia,
appropriate jurisdiction. Subsections
(a) and (b) of Article 2-202 state that
the place of administration of the trust
is the place with personal jurisdiction
over the trustee and beneficiaries of that
Libowitz, P.A. with over 15 years of experience
representing a diverse client base, including
multi-national corporations, executives, real
estate developers and the victims of mass torts
both nationally and in the Baltimore-Washington
Metropolitan Area. He has been featured on
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