Warner v. Warner

In Warner v. Warner, 2014 UT App 16, a 15-year long dispute between the trustees of a trust and the trust beneficiaries, the Utah Court of Appeals affirmed the district court’s ruling that the trustees were required to pay a portion of the beneficiaries’ attorney fees from the trustees’ own personal funds.  The district court found that the trustees had in bad faith prepared a proposed order that was “180 degrees different” from what the court had ruled.  The court applied Utah Code §78B-5-825(1), which permits an award of attorney fees to the prevailing party where the other party’s actions were without merit and in bad faith.  The court limited the award to the fees the beneficiaries incurred in response to the trustees’ bad faith conduct.

The Court also prohibited the trustees from reimbursing themselves from trust funds for the payment of their own attorney fees that were incurred in connection with their bad faith conduct.  The Court held that Utah Code §75-7-1004(2) permits reimbursement from trust funds only where the trustees act in good faith.

The Court further rejected the trustees’ request that the beneficiaries (rather than the trust) be required to pay other attorney fees incurred by the trustees in the litigation.  However, the Court declined to address the district court’s ruling that Utah Code §75-7-1004(1) does not apply to trustees seeking reimbursement from trust funds, but rather applies only to persons who don’t have any official status that would otherwise entitle them to reimbursement.

In an amended opinion issued in response to the beneficiaries’ petition for rehearing, the Court of Appeals awarded the beneficiaries attorney fees that they incurred in defending against the trustees’ appeal of the district court’s ruling.

For an in-depth discussion of payment of attorney fees in Utah trust disputes and reimbursement of trustees’ attorney fees from trust funds, see The Utah Law of Trusts & Estates, a comprehensive online legal reference treatise that is available on this website.

Rust Tippett is the author of this blog post.

Copyright 2014 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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