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In re Trust Created by Fenske

Supreme Court of Nebraska

June 28, 2019

In re Trust Created by Jack Fenske, also known as Jack B. Fenske and John B. Fenske, deceased.
v.
Elkhorn Valley Bank & Trust, Trustee of the Jack Fenske, also known as Jack B. Fenske and John B. Fenske, Revocable Trust, appellee. Jennifer Lea Wheeler and Laura Jean Grace, now known as Laura Jean Wilson, appellants,

         1. Decedents' Estates: Trusts: Equity: Appeal and Error. The removal of a trustee is a question of equity, and therefore an appellate court reviews the issue de novo on the record.

         2. Appeal and Error. In a review de novo on the record, an appellate court reappraises the evidence as presented by the record and reaches its own independent conclusions concerning the matters at issue.

         3. Statutes. Statutory interpretation presents a question of law.

         4. Judgments: Appeal and Error. An appellate court independently review questions of law decided by a lower court.

          Appeal from the County Court for Madison County: Donna F. Taylor, Judge.

          David P. Wilson and Jonathan M. Brown, of Walentine O'Toole, L.L.P., for appellants.

          Mark D. Fitzgerald, of Fitzgerald, Vetter, Temple & Bartell, for appellee.

          Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

         [303 Neb. 431]PAPIK, J.

         Nebraska has adopted a section of the Uniform Trust Code which allows a court to remove a trustee if removal is requested by all beneficiaries, removal best serves the interests of all beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable replacement trustee is available to serve. That provision is at issue in this appeal in which trust beneficiaries challenge a county court order denying their petition to remove the trustee. We conclude that the beneficiaries failed to prove that removal of the trustee was not inconsistent with a material purpose of the trust, and therefore we affirm.

         BACKGROUND

         Jack Fenske Trust.

         Jack Fenske, also known as Jack B. Fenske and John B. Fenske, died on December 25, 1998. His last will and testament, executed about a year before his death, devised most of his property to Elkhorn Valley Bank & Trust (the Bank), as trustee, for the benefit of specific family members. Those family members included the appellants in this case, Jennifer Lea Wheeler (Jennifer) and Laura Jean Grace, now known as Laura Jean Wilson (Laura). The trust provided as follows:

b. Ninety-five percent (95%) [of the principal balance] for my niece ... to hold and manage the same until the death of my said niece, with directions to said Trustee to distribute the annual income from the corpus of said trust to [my niece] annually, with the restriction that there be no invasion of the corpus of this trust by my said Trustee except for distribution for educational expenses for my greatnieces [sic], Jennifer . . . and Laura .... I further direct that upon the death of my niece . . . the annual income from the corpus of the trust shall be distributed in equal shares annually to my greatnieces [sic], Jennifer . . . and Laura ..., in equal shares. The Trustee is specifically authorized to invade the corpus at [303 Neb. 432] any time for distribution to Jennifer . . . and Laura . . . for educational expenses.
c. At the death of Jennifer . . . and Laura ..., the Trustee shall distribute all remaining corpus and accumulated income, if any, to the heirs of Jennifer . . . and Laura ... in equal shares.

         Fenske's niece died prior to Fenske, and consequently, Jennifer and Laura began receiving income distributions from the trust upon Fenske's death. Trust assets were also available to them for educational purposes. At all times relevant to these proceedings, Jennifer had two adult children and Laura had one adult child.

         The parties do not dispute that as of September 2017, the trust property consisted of approximately $52, 000 in money market funds, agricultural land assessed at approximately $278, 500, and a nearly $30, 000 debt owed by Jennifer.

         Request for Trustee s Resignation.

         It is undisputed that Jennifer, Laura, and their children all support removing the Bank as trustee and replacing it with David P. Wilson, Laura's husband who is an attorney. According to the record, in 2016, Wilson relayed a request that the Bank voluntarily resign as trustee, citing concerns about trust income and an intent to initiate termination of the trust.

         The Bank refused to resign. It stated in a letter that the request for the Bank's resignation and the plan to terminate the trust were not consistent with the material terms of the trust, noting that a member of the Bank's trust committee knew Fenske personally and had some insight into why he set up the trust as he had. The Bank offered to discuss concerns about the trust income and the pros and cons of liquidating the trust real estate, but received no response.

         "Petition to Modify. "

         On September 22, 2017, Jennifer and Laura filed a "Petition to Modify" the trust to remove the Bank as trustee and approve Wilson as successor trustee. They invoked Neb. Rev. Stat. [303 Neb. 433] § 30-3862(b)(4) ...


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