United Effort Plan Trust v. Jessop

In United Effort Plan Trust v. Jessop, 296 P.3d 742 (Utah 2013), the Utah Supreme Court affirmed the district court’s ruling that the beneficiaries of a charitable trust lacked standing to enforce the trust.

The Court noted the general common law rule that beneficiaries may not bring a suit to enforce a charitable trust.  The Court explained that the rationale for the rule is that a large shifting class of beneficiaries, if permitted to maintain a suit, would produce a flood of litigation that would deplete the trust’s finite resources and cripple its ability to pursue its charitable objectives.

The Court also acknowledged an exception to the rule that is recognized by some other states.  The exception takes into account two factors:  First, whether the class of beneficiaries is clearly defined and limited in number.  Second, whether the beneficiaries’ challenge relates to enforcement of a fundamental fiduciary duty or merely to an ordinary exercise of the trustee’s discretion.

The Court held that the district court could have reasonably found that the trust’s class of beneficiaries was so large and indefinite that vexatious litigation could overwhelm the fulfillment of the trust’s charitable purposes and that the sale of the property in question was an ordinary exercise of the trustee’s discretion.

Rust Tippett is the author of this blog post.

Copyright 2013 UNLEPI, LLC, a Utah limited liability company.  All Rights Reserved.

This blog post in no way creates an attorney-client relationship between the reader and either Robert S. (Rust) Tippett or Bennett Tueller Johnson & Deere, LLC.  The reader should consult with his or her own estate planning attorney regarding his or her particular circumstances.

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