Court Opinion

ID: 7873444
Source: CourtListenerOpinion
Date Created: 2022-09-08 20:56:29.490301+00
Date Added: 2024-06-11T16:31:19.405045
License: Public Domain

YETKA, Justice
(concurring in part and dissenting in part).
I concur in that portion of the majority opinion that remands for trial and reverses the district court decision with respect to the 1972 trust.
I dissent in that portion of the opinion that affirms the district court’s decision to reverse the county court’s finding that the bank’s trust department was responsible to the trust beneficiaries for self-dealing as to the 1969 trust.
Whenever an attorney or trustee drafts a trust instrument in which an existing or potential conflict of interest is acknowledged and in which the settlor purports to waive that conflict, there should be clear and convincing evidence that the settlor clearly understands what that conflict could mean not only in terms of the risk of investment, but also in terms of cost.
The language of the waiver provision in Article X of the trust may well be legally accurate in delineating what the settlor was purporting to waive in this case. I do not believe, however, that the language of Article X constitutes a waiver in “clear and unmistakable language” as required by the Anneke decision cited by the majority. 229 Minn. at 72, 38 N.W.2d at 183. The language of Article X does not, in my opinion, meet that standard because it did not go far enough in informing the settlor of some of the important consequences that resulted from his waiver.
With antenuptial agreements, both spouses must clearly understand the nature and extent of all rights they purport to waive in the contract before such waiver will be given effect. See Gartner v. Gartner, 246 Minn. 319, 74 N.W.2d 809 (1956); Minn. *764Stat. § 519.11 (1980). The requirement that wills be witnessed and acknowledged also illustrates the public interest in assuring that a party does not dispose of property without full knowledge of how such property will be distributed. See Minn.Stat. § 524.2-502 (1980). The same kind of public interest is evidenced in dispositions of property made through the establishment of trusts. The same kind of assurances that such dispositions be made only with the full knowledge of the party establishing the trust should, therefore, also be present.
When there is an existing or potential conflict of interest, it is not too much to require that the trustee draft an instrument that clearly explains the nature and extent of the conflict and the financial benefit that may accrue to the trustee as a result of the conflict. In this case, it would have been possible, even by separate letter signed and acknowledged by the settlor, to identify briefly and clearly the potential conflicts, to give an indication of how the trustee would benefit from investments with affiliated entities, and to indicate the anticipated extent to which trust funds would be invested with affiliated entities. I do not think that such a disclosure would be unreasonable or unduly burdensome to the trustee or the drafting attorney.
The financial benefits to the trustee from the two trusts, whether arising directly from the administration of the trust or indirectly from investments with affiliated concerns, must have been significant. Given such benefits, this case is particularly illustrative of the need for a full and clear disclosure of a trustee’s existing or potential conflicts.
I would remand for a new trial with respect to the 1972 trust and affirm the county court’s finding that a surcharge was appropriate with respect to the 1969 trust.