RESOLUTION PROCEDURES

TO RESOLVE
TRUST BENEFICIARY COMPLAINTS

Robert Whitman*

Editors’ Synopsis: This Article posits that the Anglo-American trust

system should provide a system of resolution procedures to handle
beneficiary complaints in an efficient manner. Efficient handling of these
complaints will lead to less format litigation between beneficiaries and
trustees and will allow the Anglo-American trust system to compete
successfully in the global marketplace. The author also provides some
historical perspective on the development of trusts and provides an
analysis of the current state of the Anglo-American trust system. A
discussion of resolution procedures is also included, as well as an
example of a resolution procedure policy for a trust company.

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830
II. DRAFTING A RESOLUTION PROCEDURE
INTO A GOVERNING INSTRUMENT . . . . . . . . . . . . . . . . . . 832
III. PROPOSED LANGUAGE FOR A CORPORATE
FIDUCIARY POLICY MANUAL . . . . . . . . . . . . . . . . . . . . . 835
IV. ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 837
V. THE BASIC HISTORY SURROUNDING THE
DEVELOPMENT OF THE TRUST MODEL . . . . . . . . . . . . . 841
VI. IMPORTANT IDEAS TO BEAR IN MIND REGARDING
TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 845
VII. ENFORCEMENT OF TRUSTS . . . . . . . . . . . . . . . . . . . . . . . 850
VIII. TOWARD A PROPER RESOLUTION PROCEDURE . . . . . . . 855
IX. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 865
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 866

*
Professor of Law, University of Connecticut School of Law.
The substance of this Article was delivered in a talk on October 11, 2003, in Maui,
Hawaii, to the Hawaii Estate Planning Counsel, the Probate and Estate Planning Section, and
the Elder Law Section of the Hawaii State Bar Association. The Hawaii Bar organized the
conference as a tribute to, and in memory of, Leighton Wong, Esquire, of the Hawaii Bar.
Professor Whitman welcomes any comments and may be reached via email at
rwhitman@law.uconn.edu.
Professor Whitman gratefully acknowledges the assistance of Anthony Cenatiempo in
preparing the footnotes to this Article.
830 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

I. INTRODUCTION
The purpose of this Article is to suggest that both for good business
reasons and to protect against a suit for breach of fiduciary obligation, all
serving fiduciaries should implement proper procedures for resolving
beneficiary complaints.1
This Article focuses on complaints of trust beneficiaries against trustees,
although the same ideas apply to all fiduciaries and their beneficiaries.2 The
premise of this Article is that if the American trust system had more early
resolution of trust beneficiary complaints and less formal litigation,3 we
would have a more effective system better to serve the needs of all parties.4
The Anglo-American trust system is poised to compete globally,5 and it will

1
See Donald P. DiCarlo, Jr., Using Fiduciary Procedures to Build Beneficiary Buy-In,
SK004 ALI-ABA 53, 56 (July 2004) (calling for reforms aimed at increasing the amount of
beneficiary and trustee cooperation by establishing mediation procedures to resolve potential
conflicts and creating a system for the beneficiary to provide the trustee with both negative
and positive feedback on the current administration of the trust); see also Robert Whitman,
Flexible Fiduciary Accounting from the Outset of Administration, PROB. & PROP., May-June
2004, at 45, 45:
In the event that a reasonable plan for accounting cannot be agreed to between the
fiduciary and the beneficiary group, the fiduciary shall offer a proper resolution
plan to decide the matter. Depending on the circumstances, such a plan may
involve an independent resolution officer, mediation, arbitration, or a court deci-
sion.
2
1 AUSTIN WAKEMAN SCOTT & WILLIAM FRANKLIN FRATCHER, THE LAW OF TRUSTS
§ 2.5, at 43 (4th ed. 1987) [hereinafter SCOTT ON TRUSTS] (“A fiduciary relationship involves
a duty on the part of the fiduciary to act for the benefit of the other party to the relation as to
matters within the scope of the relation.”); see also RESTATEMENT (THIRD) OF TRUSTS § 2
cmt. b (2003) (“The duties of a trustee are more rigorous than those of most other fiducia-
ries.”) [hereinafter RESTATEMENT (THIRD)].
3
See Lee S. Hausner & Douglas K. Freeman, How to Achieve the Best Trustee/
Beneficiary Partnership, 30 EST. PLAN. 604, 604 (2003) (explaining that as trustee/
beneficiary litigation increases, promoting open and safe communication between the parties
involved to secure an effective partnership is important).
4
See Robert Whitman & Kumar Paturi, Improving Mechanisms for Resolving Com-
plaints of Powerless Trust Beneficiaries, 16 QUINNIPIAC PROB. L.J. 64, 76-77 (2002)
(explaining that beneficiaries are at a disadvantage when challenging fiduciaries due to a lack
of resources, expertise, and structure of the legal system).
5
As the trust is used more commonly on a global basis, one can expect U.S. corporate
fiduciaries to compete with foreign companies for trust business around the world. See Gerry
O’Beirne, The Expanded European Union: Growth and Global Implications, HORIZONS,
Summer 2004, at 4 (discussing the possible investment opportunities that may arise in new
member nations of the European Union because of membership advantages such as increased
trade and aid).
One example of currently existing global competition is in the area of asset protection
WINTER 2005 Resolution Procedures 831

receive only greater acceptance if trust beneficiary complaints are dealt with
through “proper [resolution] procedures.”6 Without making reasonable
adjustments now to protect the interests of complaining trust beneficiaries,
some other form of trust system may overtake ours in the global market-
place.7
While achieving reform and change in our trust system historically has
been a slow process,8 the advantages gained from implementing proper

trusts. Asset protection trusts allow an individual to self-settle a trust to protect assets from
creditors while still retaining a beneficial interest in the trust. Until 1997, this type of trust
only existed in foreign countries, but in 1997, both Delaware and Alaska enacted laws
allowing asset protection trusts. See Douglas J. Blattmachr & Richard W. Hompesch, II,
Alaska vs. Delaware: Heavyweight Competition in New Trust Laws, PROB. & PROP., Jan.-Feb.
1998, at 32, 32 (explaining that competition to lead the domestic trust industry is increasing as
more states realize the benefits of attracting trust business through the development of trusts
favoring the settlor).
While trusts have been synonymous with wealth and privilege in America, many
trust beneficiaries are persons with modest means and the modern trust serves many
functions for beneficiaries that are far from wealthy. See Jackie Cohen, Myths vs.
Realities Of Trust Funds, CBS MARKETWATCH.COM WEEKEND INVESTOR (Dec. 30, 2004),
at https://secure.marketwatch.com/news/newfinder. The larger and more diverse population
of trust beneficiaries today necessitates better and more innovative procedures to resolve trust
beneficiary complaints.
6
DiCarlo, supra note 1, at 56. DiCarlo offers an example of a beneficiary dispute res-
olution procedure. See infra Appendix.
All discussion and inquiry in the resolution and mediation process, including efforts
involving the relationship manager, the manager, and the Resolution Officer shall be consid-
ered a part of “litigation settlement negotiation” and shall be inadmissible as evidence of any
kind, subject to discovery of any kind, or direct or indirect use of any kind. A precondition to
the application of this resolution process beyond step three is the signed statement by all
parties that nothing arising directly or indirectly as a result of the resolution process will be
used for any purpose in any other context. Id. at 57-60.
7
Since the 1970s, the number of offshore trusts in international financial centers, known
as tax havens, has risen because of their high degree of confidentiality and lack of taxes on
trusts held for non-residents. To combat language barriers and a general distrust of financial
institutions, offshore trust proponents created a trust protector to resolve any conflicts that
may arise between the trustee and the beneficiary. See John H. Lahey, International and
Offshore Trusts: Resolving Conflicting Beneficiary and Fiduciary Interests, SE87 ALI-ABA
277, 279 (June 2000) (asserting that the concept of a trust protector may be a useful addition
to domestic trust law because it adds flexibility to trust governance structures, especially
when competing with offshore trusts).
The rise in global competition for the delivery of trust services has not gone unnoticed
by the American fiduciary community. While an attitude of resistance to working toward new
techniques for resolving beneficiary complaints often is widely expressed, the author has met
some who acknowledge the long range benefits that could come from reducing the need for
formal litigation.
8
See Barton H. Thompson, Jr., Judicial Takings, 76 VA. L. REV. 1449, 1497 (1990)
832 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

resolution procedures, bearing in mind the concern for the long-term goal of
global leadership, should speed this process.9 Furthermore, the Restatement
(Third) and the Uniform Trust Code (“UTC”) will help expedite the needed
changes.10
II. DRAFTING A RESOLUTION PROCEDURE
INTO A GOVERNING INSTRUMENT
To focus on the idea of proper resolution procedures, the author would
suggest language that could be included in the governing document:
In the event that any beneficiary shall complain to the trustee re-
garding any matter, and that complaint cannot be resolved, the

(“Where a change seems to be a natural step in a slow but continuous evolution in the
common law, one feels relatively assured that the change was not motivated by current
political pressures and has been carefully considered.”). However, in the last part of the
twentieth century, “[T]rust law in the United States has experienced a period of rigorous,
comprehensive reexamination. Some of this reexamination has involved adaptation to the
gradual evolution of trust practice, and of related tax law and planning, over a considerably
longer period of time.” Edward C. Halbach, Jr., Uniform Acts, Restatements, and Trends in
American Trust Law at Century’s End, 88 CAL. L. REV. 1877, 1881 (2000) (stressing modern
trust laws’ concern for finding balanced rules leading to the pursuit of the best interests of the
trust beneficiaries).
9
See Lahey, supra note 7.
10
The UTC requires the trustee to administer the trust in accordance with
its terms and purposes and the interest of the beneficiaries. UTC § 801. It
also requires that a trust and its terms be for the benefit of its beneficia-
ries. UTC § 404. These requirements are mandatory and cannot be
waived by the settlor. UTC § 105.
Joseph Kartiganer & Raymond H. Young, The UTC: Help for Beneficiaries and Their
Attorneys, PROB. & PROP., Mar.-Apr. 2003, at 18, 18-19 (explaining that the UTC aids
beneficiaries by providing for a bill of rights for beneficiaries and requiring trustee educa-
tion). For an example of a beneficiary’s bill of rights, see Robert Whitman, Commentary: A
Law Professor’s Suggestions for Estate and Trust Reform, 12 QUINNIPIAC PROB. L.J. 57, 61-
63 (1997) (citing the need for greater beneficiary protection since the modern corporate
fiduciary has been pressured to become more concerned with profit).
The UTC was drafted in coordination with the revision to the Restatement (Third) in an
effort to intertwine the statutes of the UTC with the background materials of the Restatement.
See David M. English, The Uniform Trust Code (2000), SJ001 ALI-ABA 285, 293-94 (July
2003) (providing a history of the relationship of the UTC to the Restatement). “The Code,
which was prepared in close coordination with the drafting of the Third Restatement, absorbs
this benefit-the-beneficiaries requirement.” John H. Langbein, Mandatory Rules in the Law of
Trusts, 98 NW. U. L. REV. 1105, 1105, 1106-07 (2004) (dividing “the mandatory rules of
[American trust law] into two groups: intent-defeating rules that restrict the settlor’s auton-
omy, and intent-serving rules whose purpose is to discern and implement the settlor’s true
intent”).
WINTER 2005 Resolution Procedures 833

trustee shall provide a reasonable procedure for complaint resolu-

tion.
Notice this language is fairly open-ended,11 yet places the obligation for
providing reasonable complaint resolution procedures with whom it
belongs—the trustee.12 Thus, depending on the particular facts of the matter
involved, a trustee who refuses to offer mediation,13 arbitration,14 or any
other reasonable alternative to formal litigation15 may be breaching a fidu-
ciary duty to the beneficiary16—quite apart from the ultimate determination

11
“The settlor and the drafting attorney can, however, anticipate and minimize the furor
of the disappointed beneficiary. There is, of course, no one solution that will fit each situa-
tion.” Steven M. Fast, Structuring Trusts to Avoid Beneficiary Dissatisfaction, SG012 ALI-
ABA 29, 31 (July 2001) (suggesting that the attorney and the settlor may look to avoid future
conflicts with the beneficiary by creating a clear explanation of the trust’s structure as well as
providing a provision for an ombudsman to resolve disputes).
12
Under the agency theory of trusts, the trustee acts as the agent of both the settlor and
the beneficiary and must balance the needs and rights of each principal. Allowing the trustee
to formulate the resolution procedures allows for a fair process that should balance both the
needs of the settlor and beneficiary—as the trustee is uniquely in tune to both parties’
preferences and wishes. In such a situation, the conflict can be exploited to produce a positive
result. See Robert H. Sitkoff, An Agency Costs Theory of Trust Law, 89 CORNELL L. REV.
621, 626 (2004) (“[A] further benefit of the agency costs approach is that it provides a
framework for evaluating the competing Anglo-American views.”); see also Robert Whit-
man, Fiduciary Accounting After Arthur Andersen and Enron, 16 QUINNIPIAC PROB. L.J. 289,
295 (2003) (regarding resolution procedures: “Corporate fiduciaries must organize trust
departments to insure that this will happen and they must advertise their understanding that
this is a necessary part of the proper execution of their fiduciary duties”).
13
See Robert Whitman, Invitation to Discussion, SJ001 ALI-ABA 1, 4 (July 2003)
(suggesting that to ensure that the trustee maintains his fiduciary duty in time of conflict with
the beneficiary, the trustee should offer the beneficiary choices in dispute resolution).
14
The American Arbitration Association has created rules for wills and trusts to provide
for dispute resolution between fiduciaries and beneficiaries. See Fast, supra note 11, at 36.
See also Whitman, supra note 13.
15
See Whitman, supra note 13.
16
See 4 SCOTT ON TRUSTS, supra note 2 § 282.1, at 31. “Effective risk management
requires a trustee to focus on carrying out his, her or its fiduciary duties with great diligence
and integrity. The result of these efforts will be that the trustee will effectively serve the
beneficiaries. . . . Proper risk management should make for happier beneficiaries and . . .
minimize fiduciary litigation.” William C. Weinsheimer, Risk Management for Trustees:
Happy Beneficiaries Equal Empty Court Rooms (Part 1), SJ001 ALI-ABA 155, 157 (July
2003) (asserting that proper education, qualification, and preparation by the trustee will
ensure proper administration of the trust and best serve the needs of the beneficiary).
834 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

regarding the merits of the claim.17 For so-called “powerless beneficiaries,”18

including the suggested language in the governing instrument would provide
a mechanism for dispute resolution that would take into account the inability
of a beneficiary to retain a lawyer at large expense19 or to attract a lawyer
who would serve on a contingent fee basis.20 One would hope that appropri-
ate resolution procedures in a governing document would reduce substan-
tially the need for costly formal litigation21 (which, win or lose, will include
ill will toward the fiduciary on the part of the beneficiary).22 Even when the
claim is found to be without merit (and this might occur in a substantial

17
“Just because a complaint is lodged, does not mean that the fiduciary is free to relax
her obligation to act in good faith and in the best interest of the beneficiary.” Whitman, supra
note 13, at 3.
18
A powerless beneficiary is a beneficiary that lacks adequate resources to resolve a
complaint through formal litigation. See Whitman & Paturi, supra note 4, at 70. See also
Robert Whitman, Disclosure Strategies to Settle Complaints and Avoid Formal Litigation,
CK089 ALI-ABA (forthcoming 2005) (stating that powerless beneficiaries literally have no
opportunity to be heard).
19
See id.
20
A “contingent fee” is
[a] fee charged for a lawyer’s services only if the lawsuit is successful or is favor-
ably settled out of court. Contingent fees are usu[ally] calculated as a percentage of
the client’s net recovery (such as 25% of the recovery if the case is settled, and
33% if the case is won at trial).
BLACK’S LAW DICTIONARY 315 (7th ed. 1999); see also supra note 18 and accompanying
text.
21
Often, after a decision has been reached through the litigation process, the relationship
between the beneficiary and the trustee has been irreparably damaged. In many cases, the
next step may be an application for trustee removal. If removal is granted, the trustee is
usually replaced by a successor, as provided for by the terms of the governing instrument or
by court appointment. This successor now has the responsibility to understand the terms of
trust, as well as to establish a productive relationship with the beneficiary. While a trustee
may be brought up to speed on the trust rather quickly, establishing a relationship with the
beneficiary takes time. If a proper resolution procedure had been in place, this valuable time,
as well as any extra fees involved, may have been saved. See Jo Ann Engelhardt & Robert W.
Whitman, Administration with Attitude: When to Talk, When to Walk, PROB. & PROP., May-
June 2002, at 12, 16 (“Sometimes, knowing when to walk is as important as knowing how to
talk. If the trustee has made its best efforts to ensure good communication and effective
administration without meeting the beneficiaries’ requirements, the best course may be to
resign.”); see also DiCarlo, supra note 1.
22
See Englehardt & Whitman, supra note 21. Often, another unfavorable byproduct of
trust litigation is family conflict. When family members have conflicts concerning a trust,
family discord because of the strain of litigation is another cost to factor. See also Daniel
Bent, My Bequest to My Heirs: Years of Contentious, Family Splitting Litigation . . ., HAW.
B.J., Feb. 2004, at 28, 28-31 (asserting that alternative dispute resolution procedures provide
a vehicle to settle disputes without damaging the family dynamic).
WINTER 2005 Resolution Procedures 835

number of cases),23 the beneficiary still could feel that the claim had been
fairly heard and fairly decided.24
III. PROPOSED LANGUAGE FOR A CORPORATE
FIDUCIARY POLICY MANUAL
Assuming that the corporate fiduciary’s policy manual already has a
reasonable process for resolving trust beneficiary complaints,25 the following
additional language is suggested for the policy manual to handle a situation
in which the trust department has been unable to resolve a beneficiary com-
plaint:
In the event that the issue remains unresolved,26 the beneficiary
(or beneficiaries) shall be informed of the opportunity to refer the
matter to a resolution officer who shall either be a neutral party or,
if employed by the corporate fiduciary,27 a party charged with the
duty of acting as a neutral officer. The trust department may refer
the matter to the resolution officer as well.28 The resolution officer,

23
See Whitman, supra note 13.
24
Mediation involves a neutral third party working with all parties individually in an
effort to find a common ground on which a resolution can be achieved. The mediator also has
a responsibility to maintain positive and non-aggressive negotiations. Arbitration is also
beneficial because the proceedings can be private, so the public record does not contain a
decision. See Bent, supra note 22.
25
See Whitman, supra note 12. It makes sense that a corporate fiduciary would have
alternate dispute resolution procedures in its manual. When a
corporate fiduciary establishes an independent evaluation department . . . with the
duty to examine the complaint and make an independent finding, that corporate
fiduciary has gone further in meeting the duty than another that simply provides
that complaints are to be sent to and adjudged by the same folks being complained
about.
Whitman, supra note 13, at 3.
26
As a rule of thumb, an effective trustee should attempt to resolve complaints early via
prompt oral or written communication. In the correspondence, the trustee should explore the
cause of the conflict and, if it is related to the administration of the trust, accept and discuss
suggestions from the beneficiary. If the correspondence is not effective, the trustee should
schedule a face to face meeting. The ultimate responsibility of the trustee is to exhaust every
possible method of resolving the conflict in-house before sending the matter to a third party.
See Mary Clements Pajak, Counseling Fiduciaries on How to Avoid Beneficiary Complaints
and Quickly and Fairly Settle Complaints, SC85 ALI-ABA 21 (June 1998) (explaining that
effective communication with the beneficiary not only reduces the amount of conflict, but
also can serve to resolve the conflict in a timely manner without referring the matter to a third
party).
27
See supra text accompanying note 25.
28
See DiCarlo, supra note 1.
836 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

charged to carry out the duties of a neutral party, shall meet with the
respective parties in order to attempt to reach an agreed upon reso-
lution29 or a proper resolution procedure.30
“Depending on the circumstances of the case, the Resolution
Officer can suggest a number of procedures for resolving the matter,
including mediation, arbitration, a decision by the resolution officer,
or any other reasonable procedure, short of formal litigation.”31 All
suggestions and decisions made by the resolution officer shall be in
writing and made available to the trust department and the benefi-
ciary (or beneficiaries) within a reasonable amount of time.32
“Questions such as (but not limited to) who bears the expense
of the resolution procedure, which parties are to be involved in the
process, and the finality of the decisions reached, shall be subject to
good faith negotiation between the trust department, the . . . benefi-
ciary [(or beneficiaries)], and the Resolution Officer.”33
Under this policy statement, the resolution officer would be the equiva-
lent of an ombudsman.34 At the choice of the trustee, the resolution officer
could be a completely independent person35 or, with a corporate trustee, a
specifically designated employee. Although the resolution officer might be

29
Resolution by a resolution officer provides a cost effective and private solution. See
Whitman, supra note 1, at 45.
30
See DiCarlo, supra note 1; see also infra Appendix.
31
DiCarlo, supra note 1, at 59. Litigation, mediation, and arbitration are all possible
avenues that a beneficiary can choose, and each has its own strengths and weaknesses.
Mediation provides a less formal approach because of the lack of formal rules or hearings, but
unless the mediation is binding, it may not resolve the issue quickly. Binding arbitration is
more formal, but it does not rise to the level of formal civil litigation. Litigation provides a
structured proceeding but is costly and all decisions are a matter of the public record. See
Bent, supra note 22. Because each dispute is unique, the resolution officer should have some
freedom to decide which resolution procedure best fits the particular case.
32
See supra note 2 and accompanying text.
33
DiCarlo, supra note 1, at 59.
34
“An ombudsman serves as an alternative to the adversary system for resolving
disputes . . . [and is usually] independent and nonpartisan.” BLACK’S LAW DICTIONARY 1115
(7th ed. 1999). Designation of an ombudsman may be the simplest way to resolve a conflict,
especially if the person chosen is a trusted family friend or relative who has the respect of the
beneficiaries. See Fast, supra note 11, at 35.
35
In an effort to assuage a beneficiary’s fear of impropriety on the part of the resolution
officer, it may be better to have an independent person fill the position. If a beneficiary lacks
faith in the resolution officer, the officer merely serves as a speed bump on the road to
litigation.
WINTER 2005 Resolution Procedures 837

an employee of the corporate fiduciary, the desired results likely could still
be achieved.36 If a resolution officer appeared to be blatantly partial to the
corporate fiduciary, the resolution officer’s actions would be subject to court
scrutiny in connection with a case alleging breach of fiduciary duty to
provide a proper resolution procedure.37 The trust of a beneficiary and a
corporate trustee may be placed in a resolution officer,38 even if the resolu-
tion officer is an employee of the corporate fiduciary, because of the factor
that the author considers to be the most important one in this entire area: it is
good business to have a proper resolution procedure.39
IV. ANALYSIS
The four main complaints by trust beneficiaries against trustees are:
1. The payments are too small.40
2. The fees are too high.41
3. The investment performance is not good enough.42
4. Putting the money into a trust was stupid, because if I, the benefi-
ciary, had it outright, I could do a lot better with it.43

36
While I like your idea of a resolution officer, I think that it is important
that the beneficiary have some input as to the selection of that officer. If
it is simply an employee of the corporate fiduciary, then I think the
beneficiary may have the impression (rightly or wrongly) that the resolu-
tion officer is biased in favor of the fiduciary and, as a result, your goal
of giving your beneficiary their “day in court” without the expense will
not be accomplished. I think having a panel of officers (not affiliated
with the fiduciary) from which the beneficiary can choose is more
appropriate and serves the interests of both the fiduciary and the benefi-
ciary.
E-mail from Rhonda Griswold, Esquire to Robert Whitman, Professor of Law, University of
Connecticut School of Law (Oct. 20, 2003) (copy on file with author).
37
See supra note 2 and accompanying text; see also Whitman, supra note 13.
38
See DiCarlo, supra note 1, at 57.
39
See Whitman, supra note 13.
40
Telephone Interview by Anthony Cenatiempo with Standish Smith, Founder, Heirs,
Inc., Villanova, Pa. (June 16, 2004).
41
Id.; see also Susan S. Locke, Counseling Fiduciaries on How to Avoid Beneficiary
Complaints and Quickly Settle Complaints, SE87 ALI-ABA 139, 148 (June 2000) (outlining
the internal decision-making structure as well as the common complaints and resolutions
employed by a bank organization).
42
See Telephone Interview with Standish Smith, supra note 40; see also Locke, supra
note 41, at 145.
43
See Telephone Interview with Standish Smith, supra note 40; see also Locke, supra
note 41, at 147.
838 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

Also, another complaint is that the attorney who drafted the trust instrument
should be shot because no one ever thought things would work this
way—and so on.44
Believing that trustees do not have difficulty dealing with some trust
beneficiaries is unrealistic.45 Imagine being a trust officer for the plaintiff in
United States v. Satan and His Staff.46 In that case, the plaintiff alleged “that
Satan ha[d] on numerous occasions caused [the] plaintiff misery and unwar-
ranted threats, against the will of plaintiff, that Satan has placed deliberate
obstacles in his path and ha[d] caused plaintiff’s downfall.”47
However, believing that all trust beneficiary complaints lack merit
would be equally foolish.48 Those who doubt that wrongdoing can, and does,
occur in the trust system and that injustices can, and do, occur are in denial.49
For example, consider the plight of RK, a trust beneficiary who sought an
accounting from her out-of-state trustees. RK believed she was entitled to
approximately $30,000. After consistent stonewalling, RK sent the trustees a
letter in which, because of her total frustration, she accused them of being
“crooks” (which they may well have been). The trustees counterclaimed for
defamation and received a default judgment against RK in their home state.
RK could not afford to travel to court to defend herself. The judgment, by an
allegedly “friendly” judge, was for $2,000,000.50

44
See Telephone Interview with Standish Smith, supra note 40.
45
See Engelhardt & Whitman, supra note 21, at 16.
46
54 F.R.D. 282, 283 (W.D. Pa. 1971).
47
Id. at 283.
48
See Whitman & Paturi, supra note 4, at 67-68.
49
For example, accountant Gary Mallows of Longmeadow, Massachusetts, was the
trustee for the estate of Judge Vine Parmelee of Connecticut. Obviously, he was appointed
because people believed he was honest and well-qualified. However, appearances may be
deceiving. State investigators found that Mr. Mallows had drained the trust’s assets
($163,000) by investing them in his personal business ventures. The probate court required
him to post bond for the assets upon his appointment, but he failed to do so. Today the trust
holds $108.00 and some costume jewelry. See Kim Martineau, Handling of Judges’ Estates
Probed, HARTFORD COURANT, July 14, 2004, at A1. In a system that involves a good deal of
money, a lack of formal policing, and a good amount of self-discipline, wrongdoing likely
occurs.
50
This presents a clear example of a powerless trust beneficiary who, because of a lack
of funding and expertise, is unable to have her complaint addressed effectively by the legal
system. See Whitman & Paturi, supra note 4, at 77-79. See generally Raymond H. Young,
The Trustee’s Right to Defend Itself: Is There Restraint on Alienation?, SK004 ALI-ABA
345, 347-48 (July 2004) (outlining situations in which excessive litigation may have occurred
between the trustee and beneficiary).
WINTER 2005 Resolution Procedures 839

Beneficiaries raise many types of complaints.51 These include:

1. My trustee has run away with my money.52
2. My trustee’s actions are motivated by self-interest.53
3. My trustee does not give a straight answer to any question I
ask.54
4. My trustee never returns my phone calls.55
5. When I get an accounting, I cannot understand it.56
6. My local bank has merged with an impersonal giant institution
with offices far away.57
7. The trust company keeps putting in a new trust officer every
three months and each new officer is younger and knows less
than the one before.58
Further, all that is needed to create tensions in the system is a discretionary
distribution power among a class of beneficiaries and an unanticipated
second marriage after the death of the settlor.59
No matter how trust administration is improved, the same basic rules
still apply:

51
See Telephone Interview with Standish Smith, supra note 40.
52
Id.
53
Id.
54
Id.
55
Id.
56
“An accounting is far too complex for the average beneficiary to understand.” Joel C.
Dobris, Ethical Problems for Lawyers upon Trust Terminations: Conflicts of Interest, 38 U.
MIAMI L. REV. 1, 39 (1983) (stating that full disclosures to the beneficiary often are not
sufficient to meet the fiduciary requirements when the beneficiary cannot understand the
disclosure).
57
See Telephone Interview with Standish Smith, supra note 40.
58
See id.
59
See Patrick J. Collins et al., Financial Consequences of Distribution Elections From
Total Return Trusts, 35 REAL PROP. PROB. & TR. J. 243, 268 (2000) (“[T]he wholly discre-
tionary trust not only fails to alleviate the conflicting claims to the trust estate of the two
beneficiary classes, but also may place the trustee squarely in the middle of the distribution
tug-of-war.”); see also Philip H. Suter & Susan L. Repetti, Trustee Authority to Divide Trusts,
PROB. & PROP., Nov.-Dec. 1992, at 54, 55:
In many instances the settlor should leave some discretion in the trustees as to
whether and when to divide a trust. The decision may rest on some future event,
such as an accident rendering a beneficiary incapable of earning, a beneficiary’s
marriage to a wealthy person or a spendthrift, unexpected exposure of an intended
beneficiary to creditors, changes in the domicile of beneficiaries, changes in the tax
law (e.g., throwback rules for accumulation trusts), and other unanticipated future
events.
840 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

1. Those who question the basic soundness of the system and its
overall satisfactory performance are overacting and are not
realistic.60
2. Determining whether the complaint has merit is an impossible
task at the outset.61
3. No matter how we better the system, some people will abuse it
and subvert it.62 There will always be cases that need formal
court litigation.63
Given the above, if a complaining beneficiary cannot be satisfied by the
trustee, a proper resolution procedure is required to get a handle on whether
a trust beneficiary’s claim has merit.64 If the claim does have merit, the
complaint needs to be resolved quickly, cheaply, and properly.65 Yelling and
screaming between beneficiaries and trustees does nothing to improve the
system.66
The focus of this Article is not on the merits of any particular complaint.
Instead, the author puts forward a suggestion regarding the process that
needs to take place when a trust beneficiary complains to a
trustee—specifically, the importance of the fiduciary’s having a proper
resolution procedure in place. A reasonable modification is needed in the
present system to allow beneficiaries to assert more easily the merits of their
complaints and allow fiduciaries the chance to evaluate these complaints in
an efficient manner and, if appropriate, to satisfy the complainant without
costly drawn-out proceedings.
If that change does not come voluntarily, the Restatement (Third) and
the UTC allow an equity court to require an appropriate change.67 Proper

60
Today, most trusts are administered fairly and by competent, hard-working fiducia-
ries. See generally Whitman, supra note 12.
61
See Whitman & Paturi, supra note 4, at 67-68.
62
See supra text accompanying note 49.
63
Only in a very rare case should it be necessary for a trust beneficiary to
formally litigate with a corporate fiduciary. Even when that litigation is
required, there should be a concern on the part of a corporate fiduciary
that counsel for the fiduciary does not act in an overzealous manner.
Whitman, supra note 12, at 295; see also Young, supra note 50.
64
See DiCarlo, supra note 1; see also Whitman, supra note 13, at 3.
65
See Whitman, supra note 13, at 4.
66
See Pajak, supra note 26, at 31.
67
UTC section 105(b)(2) (Supp. 2004) states: “The terms of a trust prevail over any
provision of this [Code] except: . . . the duty of a trustee to act in good faith and in accordance
with the purposes of the trust.” (alteration in original) If the trust authorizes bad faith
trusteeship, the trust would be deemed illusory. See Langbein, supra note 10, at 1123-24; see
WINTER 2005 Resolution Procedures 841

resolution procedures are not only good for the trust business, but they also
will place the American system of trust administration in a better position to
compete for trust business on a global scale.68
V. THE BASIC HISTORY SURROUNDING THE DEVELOPMENT
OF THE TRUST MODEL
Those who deal with trusts are proud of the flexibility that trusts
provide.69 Sir Frederic Maitland said: “Of all the exploits of Equity the
largest and the most important is the invention and development of the
Trust.”70 “If we were asked what is the greatest and most distinctive achieve-
ment performed by Englishmen in the field of jurisprudence I cannot think
that we should have any better answer to give than this, namely, the develop-
ment from century to century of the trust idea.”71 Actually, some questions
exist as to whether the groundwork for the trust was laid by Englishmen at
all (but that is a topic for another day).72
The modern trust grew out of the common law’s feoffment to uses.73 In

also McNeil v. McNeil, 798 A.2d 503 (Del. 2002) (holding invalid a provision of the trust
closing off court review of trustee decisions).
One commentator has suggested that settlors could form a “quiet trust” if they wanted to
keep their intentions secret. See Donald D. Kozusko, In Defense of Quiet Trusts, TR. & EST.,
Mar. 2004, at 20, 20-21. This trust restricts the beneficiary from obtaining information on the
trust, but the commentator believed that by appointing a “watchman,” the beneficiary will be
protected from malfeasance on the part of the trustee. Id. at 22. It seems, however, that if the
trustee rejects the beneficiary’s request for information, the rejection would constitute bad
faith on the part of the trustee and the trust might be considered illusory. See Robert Whit-
man, Full Trust Disclosure is Best, TR. & EST., July 2004, at 59, 60.
68
See supra note 7 and accompanying text.
69
See Jeffrey N. Pennell, Flexible Trusts, SC75 ALI-ABA 263, 267 (June 1998)
(discussing the importance of the flexibility of trusts as an aid for practitioners in satisfying
their clients).
70
F.W. MAITLAND, EQUITY: A COURSE OF LECTURES 23, 23 (A.H. Chaytor & W.J.
Whittaker eds., 1936).
71
WILLIAM MAITLAND, The Unincorporate Body, in SELECTED ESSAYS 128, 129 (H..D.
Hazeltine et al. eds., 1936).
72
The dominant view is that the English trust was modeled after the German treuhand or
salman. See GEORGE T. BOGERT, TRUSTS § 2, at 6-7 (6th ed. 1987) [hereinafter BOGERT ON
TRUSTS].
73
The term “use” in English law derives from the Latin “opus,” which
means a benefit or “on behalf of.” One person could give land or chattels
to another for the use or benefit of a third person. Uses were employed
by knights embarking on crusades, by persons wishing to confer the
benefit of land on a religious order not authorized to hold land, and by
villeins who could convey their land only by yielding it to the lord “for
842 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

the thirteenth century, shortly after the Norman Conquest, people (nearly
always men) began to enfeoff land to another “to the use” of a third (A to B
to the use of C).74 A was called the “feoffor.”75 In the modern trust, A is now
called the “settlor,” or the “grantor,” “trustor,” “founder,” “donor,” or “cre-
ator.”76 The one to whom the land was enfeoffed, B, was called the “feoffee
to uses.”77 Today, B is known as the “trustee.”78 The one for whose benefit
the land was held, C, was called the “cestui que uses.”79 Today, C is known
as the “beneficiary,” or, less commonly, the “cestui que trust.”80

the use of” the intended grantee.

David A. Thomas, Anglo-American Land Law: Diverging Developments from a Shared
History—Part I: The Shared History, 34 REAL PROP. PROB. & TR. J. 143, 178 (1999).
74
The modern trust is an outgrowth of the ancient use. There have been four more or
less clearly defined stages in its development. The first period began when uses were first
employed not long after the Norman Conquest. Although it had become increasingly common
to convey land to a feoffee to the use of a third person, or more frequently to the use of the
feoffor, these uses were not enforced by the courts until the fifteenth century. See SCOTT ON
TRUSTS, supra note 2, §§ 1.2-1.4, at 12-14.
75
A “feoffor” is “[t]he transferor of an estate in fee simple.” BLACK’S LAW DICTIONARY
634 (7th ed. 1999).
76
“The settlor of a trust is the person who intentionally causes it to come into existence.
He is often called the trustor, grantor, founder, donor, or creator of the trust.” GEORGE G.
BOGERT & GEORGE T. BOGERT, THE LAW OF TRUSTS & TRUSTEES § 1, at 4 (rev. 2d ed. 1984)
(footnote omitted) [hereinafter BOGERT ON TRUSTS AND TRUSTEES].
77
In the middle ages in England conveyancers of land invented the “use”
which is the ancestor of the modern trust. The owner of land enfeoffed
another to the use of the feoffor or another. The transferee was called a
“feoffee to uses” and the intended beneficiary of the use a “cestui que
use.”
Id. § 2, at 13-14 (footnote omitted).
The feoffee to uses of the early English law corresponds point by point
to the salman of the early German law, as described by Beseler fifty
years ago. The salman, like the feoffee, was a person to whom land was
transferred in order that he might make a conveyance according to his
grantor’s directions.
Oliver Wendel Holmes, Early English Equity, in COLLECTED LEGAL PAPERS 1, 4 (1920)
(footnotes omitted); see also BOGERT ON TRUSTS, supra note 72, § 2, at 7.
78
“The trustee is the individual or entity (often an artificial person such as a corporation)
which holds the trust property for the benefit of another.” BOGERT ON TRUSTS AND TRUSTEES,
supra note 76, at 4-5. See also RESTATEMENT (THIRD) § 2 cmt. f (2003).
79
“Cestui que use” refers to the person a use was created for and is similar to what we
would call a “cestui que trust” or “beneficiary.” See SCOTT ON TRUSTS, supra note 2, § 3.2, at
52.
80
“The beneficiary or cestui que trust is the person for whose benefit the trust property
is held by the trustee.” BOGERT ON TRUSTS AND TRUSTEES, supra note 76, § 1, at 5; see also
RESTATEMENT (THIRD) § 2 cmt. f (2003).
WINTER 2005 Resolution Procedures 843

For a modern definition of an express, or intentional, trust, we can turn

to the Restatement (Third):
A trust . . . is a fiduciary relationship with respect to property,
arising from a manifestation of an intention to create that relation-
ship and subjecting the person who holds title to the property to
duties to deal with it for the benefit of a charity or for one or more
persons, at least one of whom is not the sole trustee.81
The Restatement (Third) also outlines purposes for creating a trust, including
that “[trust] administration must be for the benefit of its beneficiaries. . . .”82
Trust instruments commonly provide that the trustee hold the trust
“property for the benefit of” the beneficiary.83 The obligation of the trustee is
to benefit the beneficiary.84 What does this mean? Does it include more than
the obligation to deal properly with and to protect the trust property?85
The need to place the protection of the beneficiary and the beneficiary’s
interests above the interests of the trustee grows out of the medieval idea of
chivalry.86 Originally, trustees could not accept payment for their good

81
RESTATEMENT (THIRD) § 2 (2003) (emphasis added).
82
Id. § 27(2) (emphasis added).
83
BOGERT ON TRUSTS, supra note 72, § 2, at 4 (emphasis added). A long-standing rule,
though recently reformulated, is that a trust must be for the benefit of the beneficiary. See
Langbein, supra note 10, at 1105; see also BOGERT ON TRUST AND TRUSTEES, supra note 76,
§ 1, at 7.
84
“It does not matter how the benefits are to come to the beneficiary. The important
trust concept is that he has the right to obtain them.” BOGERT ON TRUSTS AND TRUSTEES,
supra note 76, § 1, at 7.
85
The trustee holds the property “for the benefit of” the beneficiary. It is
unnecessary at this point to consider how the beneficiary may obtain that
benefit. The methods vary greatly, according to the terms of the particu-
lar trust. In one case the trustee may have no duty other than to hold the
property, and the beneficiary may take the benefits directly. In another
instance the trustee may be charged with detailed management of the
trust assets and the beneficiary may receive the benefits indirectly.
BOGERT ON TRUSTS, supra note 72, § 2, at 4.
86
“Tenure held by knight-service” was a “tenure in which a person held land in
exchange for military service.” BLACK’S LAW DICTIONARY 234 (7th ed. 1999).
Under the tenures system, the landed classes did not own their estates, but in fact
held them as tenants of the Crown and of the few select lords to whom the Crown
had originally conveyed its land. . . . The most prestigious estates were held as
tenures in chivalry. When a tenant in chivalry died leaving an heir under the age of
maturity, the guardianship of that heir fell to the lord of the estate, regardless of
whether the heir’s mother was still alive. The guardian in chivalry could control
both the lands and the person of the ward until the infant reached the age of twenty-
844 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

deeds87 and only individuals could serve as trustees.88 The only protection
for the beneficiaries was the trustee’s solemn oath to act properly to protect
the beneficiary and the interests of the beneficiary in accordance with the
instructions given by the settlor.
In the nineteenth century, statutes permitted corporate fiduciaries to
serve and to charge fees.89 The statutes brought with them a movement to
turn trust administration into a profit center for the major banking interests.90

one, if male, and sixteen, if female. This control included the right to arrange the
ward’s marriage, which, since the ward stood to inherit a considerable estate, was
of significant value.
Sarah Abramowicz, English Child Custody Law, 1660-1839: The Origins of Judicial
Intervention in Paternal Custody, 99 COLUM. L. REV. 1344, 1366-67 (1999) (discussing the
importance of the Tenures Abolition Act of 1660, which empowered English judges to
remove children from the fathers).
87
“Originally uses and trusts were not enforceable in any court but were purely honor-
ary. The performance of his duties was voluntary on the part of the feoffee to uses and could
not be enforced.” BOGERT ON TRUSTS, supra note 72, § 3, at 9; see also SCOTT ON TRUSTS,
supra note 2, § 1.3, at 13.
88
“At early common law, a corporation could not serve as trustee. This is no longer the
case. A corporation may act as trustee in furtherance of and as an adjunct to its corporate
purpose.” CHARLES E. ROUNDS, JR., LORING: A TRUSTEE’S HANDBOOK § 3.1, at 33 (2003)
[hereinafter LORING].
89
As a general rule, however, a corporation now needs statutory authority
to have as its purpose the administration of trusts. Thus, absent trust
powers conferred by statute, an automobile manufacturing company, for
example, may act as trustee of its own employee benefit plan but not as
trustee of the plans of other corporations.
LORING, supra note 88, § 3.1, at 33.
90
The great contribution made by America to the development of the trust
is in the employment of the corporate trustee. In England as late as 1743
the Attorney-General argued that a corporation could not be a trustee.
Lord Chancellor Hardwicke, however, told the Attorney- General that
nothing was clearer than that corporations might be trustees. The earliest
instance in the United States of a specific grant to a corporation of the
power to act as trustee seems to have been that of the Farmers’ Fire
Insurance & Loan Company, chartered in New York in 1822. Since that
time the creation of corporations with power to administer trusts has
become increasingly common. The Congress finally found it necessary
to permit national banks to enjoy similar powers. Although the corporate
trustee is primarily an American institution, the institution is spreading to
other countries, and even in the more conservative mother country the
corporate trustee is becoming common. . . . In England the individual
trustee receives no compensation for his work, unless it is otherwise
provided by the trust instrument. In the United States, however, he
receives compensation.
SCOTT ON TRUSTS, supra note 2, § 1.8, at 27-28.
WINTER 2005 Resolution Procedures 845

The statutes also brought about the lobbying of legislators by banking

interests to enact statutes that were helpful to corporate fiduciaries. These
statutes emphasized the relationship between the settlor and the trustee and
downgraded the position of the beneficiary.91 For example, because of
statutory enactments, removal of a trustee became extremely difficult unless
trustee conduct was tantamount to intentional wrongdoing.92 Trustee duties
were narrowed to the duty of loyalty and the duty of prudent investment.
The goal became a purely business-type relationship between trustees and
beneficiaries.93
VI. IMPORTANT IDEAS TO BEAR IN MIND REGARDING TRUSTS
The ancestor of the modern trust was the “use.”94 Legal historians trace
the use back to the middle of the thirteenth century, when the Franciscan

91
See Broadway Nat’l Bank v. Adams, 133 Mass. 170 (1882) (favoring the right of the
settlor to restrain alienation of property by the beneficiary).
92
Removal may be ordered because of hostility between the trustee and a
beneficiary but only in rare cases. “[R]emoval . . . [, for example,] . . .
might be justified if a communications breakdown is caused by the
trustee or appears to be incurable.” On the other hand, relief has been
denied if the trustee’s duties are essentially ministerial or if the proper
administration of the trust is not jeopardized by the hostility.
LORING, supra note 88, § 7.2.3.6, at 361 (alterations in original) (quoting UNIF. TRUST CODE
§ 706 cmt.).
93
One of the hallmarks of the trust relationship is the trustee’s duty of
absolute loyalty to the trust. One should not accept the office of trustee if
there are any doubts about one’s ability to carry out the duty of loyalty.
This does not mean that trust administration should be something other
than a business. It is a business, and it should be. Compensation provides
a trustee with the incentive to keep trust matters high on his list of
priorities.
Id. § 3.2, at 35.
Today there is growing tension between those who want to attempt to continue to limit
fiduciary law to 19th century norms, and those seek to recognize the overriding duty of
fiduciaries to protect beneficiaries and to recognize that purpose of the trust is to benefit the
beneficiary. Compare John Langbein, Rise of the Management Trust, TR. & EST, Oct. 2004,
at 52 (stating that fiduciary law rests on only two core principles, the care norm and the
loyalty norm), with Robert Whitman, A Comment on Professor Langbein’s Description of the
Rise of the Management Trust, TR. & EST., Jan. 2005, at 16 (stating that historically fiduciary
duty required broader protection efforts, that trust law does not exist in a vacuum, and that
flexibility is needed in applying fiduciary law to the present environment).
94
In the Middle Ages in England, conveyancers of land invented the use, which is the
ancestor of the modern trust. As to the history of uses and the enactment of the Statute of
Uses, see 1 SIR WILLIAM HOLDSWORTH, A HISTORY OF ENGLISH LAW 455 (A.L. Goodhart &
H.G. Hanbury eds., rev. 7th ed. 1956).
846 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

friars came to England.95 The friars, belonging to the mendicant order, were
forbidden from owning any sort of property, so their pious benefactors
began to convey land to suitable persons in the neighborhood to hold to the
use of the friars. Thus, A the owner of Blackacre, would enfeoff B and B’s
heirs to hold Blackacre to the use of the friars. The legal fee simple passed
by transfer to B, the feoffee to uses, who was to hold title for the mendicant
order, the cestui que use. The mendicant order then possessed Blackacre,
with B holding legal title for the benefit of the mendicant order. Although
some evidence suggests that ecclesiastical courts enforced early uses,96 in the
beginning uses were not enforceable in the civil courts.97 No common-law
form of action existed whereby C, the cestui, could bring an action against
B, the feoffee.98 The law courts, paralyzed by the rigidity of their procedures,
offered no relief.99 As alleged breaches of fiduciary duty to beneficiaries
became commonplace,100 this state of affairs appeared to be unconscionable
to the chancellor, the keeper of the king’s conscience.101 Early in the fif

95
The Mortmain Acts prohibited alienation of land to religious orders, and that, coupled
with the vow of poverty taken by mendicant orders, provided the framework for the introduc-
tion of the use. See Avisheh Avini, The Origins of the Modern English Trust Revisited, 70
TUL. L. REV. 1139, 1143-44 (1996) (addressing the influence of Roman, English, German,
and Middle Eastern influences in the creation of the modern trust).
96
When the holder of the legal title proved faithless to his trust, as was
sometimes the case, the Church itself imposed sanctions of penance,
public condemnation or even excommunication. These remedies were
sometimes applied also to private uses which were occasionally set up.
With the development of Chancery as a court, legal remedies superseded
the ecclesiastical ones.
RALPH A. NEWMAN, LAW OF TRUSTS 14 (1949).
97
English uses existed long before a court of chancery existed to enforce them. The
earliest expression of the word “use” was employed in the seventh century, yet the earliest
mention of a court of chancery is in the fourteenth century. See id. at 12-13.
98
“[F]or many years uses and trusts existed as honorary obligations but had no legal
standing. If the [feoffee to uses] saw fit to deny that he held the property [of another], and to
appropriate it to his own use, he might do so with impunity.” BOGERT ON TRUSTS AND
TRUSTEES, supra note 76, § 3, at 9.
99
Common-law courts lacked the procedures to examine the parties, and as a result, the
courts refused to take the cases involving breach of trust. See NEWMAN, supra note 96, at 16.
100
The lack of common-law court intervention bred an environment ripe for fraud. See
id.
101
As keeper of the king’s conscience, the rules of the equity courts were different from
the rules of the common-law courts.
It was comparatively speedy—the Chancery was not tied down to the law terms,
nor was there any undue delay in getting the defendant before the court. This in
itself meant that it was less expensive. Moreover, the chancellor always professed
to have a special regard for the interests of the poor. It was the reverse of technical,
WINTER 2005 Resolution Procedures 847

teenth century, the chancellor, on application by the trust beneficiary, began

to compel feoffees to uses to perform as they had promised they would.102
Once the chancellor enforced uses and the obligation to protect the benefi-
ciary and the beneficiary’s interests (thus removing some of the risk of
faithless feoffees), the employment of uses grew rapidly.103
Landowners found that putting legal title in a feoffee to uses created all
sorts of benefits.104 For example, prior to the Statute of Wills in 1540, land
could not be devised by will; it descended to the eldest son.105 Landowners
seeking relief from the forced primogeniture rule turned to the use and found
the desired flexibility.106 A could enfeoff B and B’s heirs to the use of A

and it was eminently calculated to get at the real facts by the most direct meth-
ods. . . . Finally, the fact that the chancellor, by reason of his close connection with
the Council, could act with the whole force of the executive government, enforcing
his orders in the last resort by a commission of rebellion, prevented abuses of the
machinery of the Chancery, similar to those abuses of the machinery of the com-
mon law courts, which were facilitated both by the weakness of their executive
power and the technicality of their procedure.
5 SIR WILLIAM S. HOLDSWORTH, A HISTORY OF ENGLISH LAW 286 (3d ed. 1945).
102
Originally the only pledge for the due execution of the trust was the faith
and integrity of the trustee; but the mere feeling of honour proving, as
was likely, when opposed to self-interest, an extremely precarious
security, John Waltham, Bishop of Salisbury, who was Lord Keeper in
the reign of Richard the Second, originated the writ of subpoena, by
which the trustee was liable to be summoned into Chancery, and com-
pellable to answer upon oath the allegations of his cestui que trust. No
sooner was this protection extended, than half the lands in the kingdom
became vested in feoffees to uses, as trusts were then called. Thus, in the
words of an old counsellor, the parents of the trust were Fraud and Fear,
and a Court of Conscience was the Nurse.
THOMAS LEWIN, A PRACTICAL TREATISE ON THE LAW OF TRUSTS AND TRUSTEES *1-*2
(James H. Flint ed., 8th ed. 1888).
103
Id.
104
Examples of the benefits provided by uses included avoiding dower, avoiding
creditors (because at common law the creditors only could attack the legal title holder),
avoiding forfeiture of title due to criminal acts, and helping the mortmain acts, which
prevented alienation of land to religious organizations. See BOGERT ON TRUSTS, supra note
72, § 3, at 7-8.
105
Primogeniture began sometime in the early thirteenth century; it treats the eldest son
as the sole heir. The assumption was that the eldest male was the best candidate to perform
the services necessary to satisfy feudal obligations. See Mark A. Senn, English Life and the
Law in the Time of the Black Death, 38 REAL PROP. PROB. & TR. J. 507, 558-59 (2003)
(stressing the importance of the Black Death in the development of English property law).
106
For example, a settlor would use powers of appointment to give the first remainder to
a son more capable than the oldest child. See David A. Thomas, Anglo-American Land Law:
Diverging Developments from a Shared History—Part II: How Anglo-American Land Law
848 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

during A’s lifetime and then to the use of such persons as A might appoint by
will. The chancellor enforced the use in favor of A’s devisees. Particularly
because of its success in evading feudal death taxes,107 the use became a
popular planning device in England.108 The employment of the use to avoid
taxes brought on the Statute of Uses.109
Searching for a way to restore his feudal revenue and replenish his
treasury, Henry VIII set out to abolish the use.110 Henry interested himself
personally in a lawsuit in the courts, which resulted in a decision that put the
legality of the use into doubt.111 Fearing that uses might become unenforce-
able112 (with drastic consequences for the cestuis), Parliament, at Henry’s
urging, reluctantly enacted the Statute of Uses in 1535, which became
effective in 1536.113 By this Statute, uses were not made illegal.114 On the
contrary, legal title was taken away from B, the feoffee to uses, and given to
C, the cestui que use.115 In the words of that time, the use was exe-
cuted—that is, converted into a full legal interest.116 C, the former
cestuis—now clothed with full legal title—could breathe easy in terms of
having proper title to the property,117 but C was required to pay the king’s

Diverged after American Colonization and Independence, 34 REAL PROP. PROB. & TR. J. 295,
315 (1999) (tracing the development of land law in England and in the original thirteen
colonies).
107
Uses were used by tenants to avoid claims made by the feudal lords. The lord was
entitled to relief when the tenant died, and if no heir existed, the land escheated back to the
lord. If the land was conveyed to feoffees to the use of the tenant, many of the incidents could
be avoided. “The cestui que use owed homage or fealty to no overlord.” SCOTT ON TRUSTS,
supra note 2, § 1.4, at 16.
108
See LEWIN, supra note 102.
109
“Widespread evasion of feudal dues by conveyance to uses had swept over the
majority of English land by the sixteenth century, prompting passage of the Statute of Uses.”
See Thomas, supra note 73, at 188.
110
See NEWMAN, supra note 96, at 23.
111
Henry largely backed the Statute of Uses because as a land owner, his feudal rights
were being deflected by uses. See id. at 24.
112
Many land-owning members and lawyers in the House of Commons valued the
benefits of uses and were reluctant to endorse the King’s proposal. However, the King was
persistent and used his royal authority to threaten the land claims of the land owners and
began to hear claims regarding attorney malpractice. See 4 SIR WILLIAM HOLDSWORTH, A
HISTORY OF ENGLISH LAW 454 (3d ed. 1945).
113
See SCOTT ON TRUSTS, supra note 2, § 1.5, at 18-19.
114
See id. § 1.5, at 19.
115
See id. § 1.5, at 19-20.
116
See id. § 1.5, at 19.
117
As holder of legal title, the former cestui now no longer had to worry about fraud on
the part of the trustee, which ran rampant when many trustees disregarded their pledge to act
WINTER 2005 Resolution Procedures 849

death duties.118
Although the purpose of the Statute of Uses was to abolish uses by
executing them, imaginative common-law lawyers and judges found holes in
the Statute.119 Courts responded to the public’s desires by holding that the
Statute did not operate if B, the feoffee to uses (trustee), was given active
duties to perform.120 An active trust—imposing duties on the trustee to deal
with the property in a special manner—was regarded as quite different from
the use in which the feoffee ordinarily was passive by merely holding legal
title and allowing the cestui que use to manage the property and take the
profits.121
Active uses became known as trusts.122 Because courts did not apply the
Statute of Uses to active trusts, the chancery could meet the public’s wishes
by reasserting its jurisdiction over uses (under the name of trusts). The
chancery developed the modern trust in which B, the trustee, has legal title
and C, the beneficiary, has the benefit flowing from the trustee’s proper
management.123

loyal to the trust. See generally supra note 102 and accompanying text.
118
See NEWMAN, supra note 96, at 24.
119
Courts strictly construed the Statute of Uses and only applied it to real property.
Therefore, the Statute did not affect gifts of money or chattels. The Statute only applied to
passive trusts, not active trusts, and it did not affect a use upon a use. See BOGERT ON TRUSTS,
supra note 72, § 5, at 12-13.
120
Duties of administration required the legal title in the trustee. Thus, if
land was conveyed to A for life, to collect the profits thereof and pay
them to B and his heirs, the trust would be active, and the Statute would
not execute the use but leave the legal estate in A and the equitable
interest in B, separately.
Id. § 5, at 13.
121
A passive trust is one in which legal title is transferred to one person for the benefit
of another, and the trustee has no duties. This type of trust was more prevalent than the active
trust before the passage of the Statute of Uses. See BOGERT ON TRUSTS, supra note 72, § 2, at
6.
122
See id. (giving a history of uses and trusts).
123
The Statute of Uses also was held inapplicable to a use on a use. If A conveyed to B
to the use of C to the use of D, the statute executed the first use, so that C got legal title, but
did not execute the second use, even though both uses were passive. See Sambach v. Dalston,
21 Eng. Rep. 164 (1634). Lord Chancellor Hardwicke remarked in a later case that this
doctrine reduced the Statute’s effect to “add[ing] at most, three words to a conveyance.”
Hopkins v. Hopkins, 26 Eng. Rep. 368, 372 (Ch. 1738). Clearly from the statutory language,
the Statute did not apply to personal property but only to a case in which the feoffee was
“seized of land.” In current American law, exemptions from the Statute of Uses, especially
the exemptions for active trusts and for trusts of personal property, still are recognized. See
RESTATEMENT (THIRD) § 6 cmt. a (2003).
850 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

Today, a trust is seen as a property arrangement under which ownership

of the property is divided: the trust property’s legal title goes to the trustee
and its equitable, or beneficial, title goes to the beneficiary or beneficiaries.
Beneficiaries may be divided into income beneficiaries and beneficiaries
with future interests or remainders.124 A trust may be totally discretionary,125
an annuity trust,126 or a unitrust.127 In any event, a class of persons, desig-
nated as beneficiaries, will be entitled to protection by the trustee.128
VII. ENFORCEMENT OF TRUSTS
American case law and English case law are very different.129 In Amer

124
The term “beneficiary” includes not only beneficiaries who received
their interests under the terms of the trust but also beneficiaries who
received their interests by other means, including by assignment, exer-
cise of a power of appointment, resulting trust upon the failure of an
interest, gap in a disposition, operation of an antilapse statute upon the
predecease of a named beneficiary, or upon termination of the trust.
UNIF. TRUST CODE § 103 cmt., 7C U.L.A. 154 (Supp. 2004).
125
A “discretionary trust” is “[a] trust in which the trustee alone decides whether or how
to distribute the trust property or its income to the beneficiary. The beneficiary, in other
words, has no say in the matter.” BLACK’S LAW DICTIONARY 1515 (7th ed. 1999).
Discretionary powers to sprinkle, spray, and accumulate income and to invade
principal are governed by standards set forth in the governing instrument. A
standard can be broadly drafted (e.g., the power to invade principal for C’s “bene-
fit”) or narrowly drafted (e.g., the power to invade principal to pay C’s “medical
bills”). A typical standard found in many trusts permits payment for the “mainte-
nance and support” of the beneficiary.
LORING, supra note 88, § 3.5.3.2, at 89.
126
An “annuity trust” is one
from which the trustee must pay a sum certain annually to one or more beneficia-
ries for their respective lives or for a term of years, and must then either transfer the
remainder to or for the use of a qualified charity or retain the remainder for such a
use. The sum certain must not be less than 5% of the initial fair market value of the
property transferred to the trust by the donor. A qualified annuity trust must comply
with the requirements of IRC (26 USCA) § 664.
BLACK’S LAW DICTIONARY 1514 (7th ed. 1999).
127
A “unitrust” is “[a] trust from which a fixed percentage of the fair market value of
the trust’s assets, valued annually, is paid each year to the beneficiary.” Id. at 1535.
128
One of the essential elements of a trust is that there must be at least one beneficiary
who has the trust administered to him via the trustee. A court may appoint a trustee when one
is not named in the governing instrument. See BOGERT ON TRUST AND TRUSTEES, supra note
76, § 1, at 6.
129
The English conception is more formal: precedents bind because of their
source, because they are decisions of higher courts, irrespective of their
content. In America the authority of precedents is less exclusively
source-oriented. Precedents tend to bind because the principles they
WINTER 2005 Resolution Procedures 851

ica, if the highest court decides that its previous decision is wrong, the court
overrules itself.130 So, if over time a previous decision appears to society to
create unjust results, the highest court may overrule itself and establish a
new rule that is seen as more just.131 In England, until 1966 (when it gave
itself the right to do so),132 the House of Lords, the highest court,133 could not
overrule itself. Since 1966, the House of Lords rarely has overruled itself,
although older cases are distinguished and rulings are narrowed.134
In England, the law still is seen as coming from the sovereign and from
God.135 In the United States, courts, especially an equity court, are more
concerned with reaching a just result.136 Yet, that will not always be the

embody are widely thought to be right and good, and if they are not right
and good, they are less likely to be treated as binding.
P.S. ATIYAH & ROBERT S. SUMMERS, FORM AND SUBSTANCE IN ANGLO-AMERICAN LAW: A
COMPARATIVE STUDY OF LEGAL REASONING, LEGAL THEORY, AND LEGAL INSTITUTIONS 417
(1987).
130
Id.
131
Id.
132
In 1966, the House of Lords decided that it was free to depart from prior precedent
when it was deemed correct to do so. Lord Gardiner, L.C., speaking for the Lords, said:
Their lordships nevertheless recognise that too rigid adherence to precedent may
lead to injustice in a particular case and also unduly restrict the proper development
of the law. They propose therefore to modify their present practice and, while
treating former decisions of this House as normally binding, to depart from a
previous decision when it appears right to do so.
Re Dawson’s Settlement, 3 All E.R. 68, 77 (H.L. 1966).
133
In England, the House of Lords is the only court of last resort, while in America,
each state and territory has a court of last resort, along with the federal Supreme Court. See
ATIYAH & SUMMERS, supra note 129, at 267.
134
Both today and prior to the 1966 practice statement, a case commonly will be
distinguished from case law to avoid the precedent that is still rigidly adhered to in compari-
son to American case law. See R.J. WALKER & RICHARD WARD, WALKER & WALKER’S
ENGLISH LEGAL SYSTEM 70-72 (7th ed. 1994).
135
Upon these two foundations, the law of nature and the law of revelation,
depend all human laws; that is to say, no human laws should be suffered
to contradict these. There are, it is true a great number of indifferent
points, in which both the divine law and the natural leave a man at his
own liberty; but which are found necessary for the benefit of society to
be restrained within certain limits. And herein it is that human laws have
their greatest force and efficacy; for, with regard to such points as are not
indifferent, human laws are only declaratory of, and act in subordination,
to the former.
1 ST. GEORGE TUCKER, BLACKSTONE’S COMMENTARIES 42 (Augustus M. Kelley 1969)
(1803).
136
“[C]ommon law principles of equity leaven the law, softening its rigors so that the
law’s aim of administering justice fairly is not lost.” Cleveland v. Beltman N. Am. Co., 30
852 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

result.137 In some cases, broad, overriding policies may prevent a just result.
But, even if the matter is not directly addressed in the court’s opinion, it is
not unusual for an American judge to want to do the just thing in a case, if
possible.138
The tendency of the American equity court to seek a just result can be
seen in early American jurisprudence.139 In Rice v. Polly & Kitty,140 the crew
of the ship alleged that they had been beaten cruelly by the captain and the
mate. Accordingly, the crew left the ship in a foreign port in the midst of the
voyage, returned to Philadelphia on another ship, and instituted suit for lost
wages against the ship owners. By way of defense, the ship owners asserted
that by signing the articles for the voyage, the crew had put themselves out
of protection of the law.141 The court, sitting with the equivalent of equity
powers,142 recognized that the law vested the master or the captain with a

F.3d 373, 374 (2d Cir. 1994). “Equity requires doing justice to all parties in the action.”
Folkers v. S.W. Leasing, 431 N.W.2d 177, 182 (Iowa Ct. App. 1988) (citing McGaffee v.
McGaffee, 58 N.W.2d 357, 360 (1953)). “To do justice between the parties is the object of a
court of equity.” Rainer v. Holmes, 75 N.W.2d 290, 292 (Wis. 1956).
137
“[T]his court’s powers in equity are intended to enable it to give full effect to the
requirements of justice. This tenet should not be misinterpreted to condone the circumvention
of fundamental legal methods in order to achieve desired results.” Timken Co. v. United
States, 777 F. Supp. 20, 27 (Ct. Int’l Trade 1991). An equity court may not ignore statutes and
case law to help someone in trouble. See First Federated Sav. Bank v. McDonah, 422 N.W.2d
113, 115 (Wis. Ct. App. 1988).
138
See David R. Barnhizer, Prophets, Priests, and Power Blockers: Three Fundamental
Roles of Judges and Legal Scholars in America, 50 U. PITT. L. REV. 127, 160 (1988) (“To the
extent that cases before them reveal substantial deviations from the content of the practical
visions of justice they have attained, judges are obligated to decide those cases in accordance
with what will do justice.”).
139
“Equity was transplanted to the American Colonies along with the common law. By
the time of the Constitutional Convention in 1787, all thirteen states had, at one time or
another, granted their courts or governors equity powers.” John R. Kroger, Supreme Court
Equity, 1789-1835, And the History of American Judging, 34 HOUS. L. REV. 1425, 1438
(1998) (citing the history of the Supreme Court’s use of equity in its first forty-five years as a
resource for the court in modern times).
140
20 F. Cas. 666 (D. Pa. 1789) (No. 11,754).
141
“When mariners enter into articles for a voyage, they do not thereby put themselves
out of the protection of the laws, or subject their limbs and lives to the capricious passions of
a master or his mate.” Id. at 667.
142
The judicial Power shall extend to all Cases, in Law and Equity, arising
under this Constitution, the Laws of the United States, and Treaties
made, or which shall be made, under their Authority;—to all Cases
affecting Ambassadors, other public Ministers and Consuls;—to all
Cases of admiralty and maritime Jurisdiction. . . .
U.S. CONST. art. III, § 2.
WINTER 2005 Resolution Procedures 853

great degree of discretionary power.143 Nonetheless, the court explained that

“the law [the equity court] always watches the exercise of discretionary
power with a jealous eye.”144 The court awarded the crew wages and ordered
the ship owners to pay the costs of the suit.145
Regarding the continuing importance of the common law,146 the text of
UTC section 106 provides: “The common law of trusts and principles of
equity supplement this [Code], except to the extent modified by this [Code]
or another statute of this State.”147 The comment to section 106 of the UTC
also states:
The Uniform Trust Code codifies those portions of the law of
express trusts that are most amenable to codification. The Code is
supplemented by the common law of trusts, including principles of
equity, particularly as articulated in the Restatement of Trusts,
Restatement (Third) of Property: Wills and Other Donative Trans-
fers, and the Restatement of Restitution. The common law of trusts
is not static but includes the contemporary and evolving rules of
decision developed by the courts in exercise of their power to adapt
the law to new situations and changing conditions.148
UTC section 404 discusses trust purposes and provides: “A trust may be
created only to the extent its purposes are lawful, not contrary to public
policy, and possible to achieve. A trust and its terms must be for the benefit
of its beneficiaries.”149
Based on UTC sections 106 and 404, and backed up by the Restatement
(Third), it appears that American courts will continue to work to create a
well-balanced system of trust administration that will work equally well for
settlors; trustees, both individual and corporate; and beneficiaries, both
present and future. The name of the game today is working hard to achieve a
balanced trust administration system that will avoid the costs of formal
litigation whenever possible by informally solving problems and creating

143
Rice, 20 F. Cas. at 667.
144
Id.
145
Id.
146
“The law of trusts is to be found for the most part in the decisions of the courts and
not in the statutes.” SCOTT ON TRUSTS, supra note 2, § 1.10, at 31. The UTC is itself a
codification of the common law of trusts and in no way restricts the ability of an equity court
to exercise its discretion and adapt the law to new situations. See UNIF. TRUST CODE § 106
cmt., 7C U.L.A. 162 (Supp. 2004).
147
UNIF. TRUST CODE § 106, 7C U.L.A. 169 (Supp. 2004).
148
Id. § 601 cmt., at 162.
149
Id. § 404, at 183 (emphasis added).
854 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

workable solutions.150
Despite the general merging of law and equity,151 we still speak of legal
and equitable obligations because all the underlying distinctions between
law and equity remain important.152 In most states today, where law and
equity have merged and are enforced by the same court, the equity judge is
still (1) applying equitable procedures and remedies and (2) seeking the just
result.153
Despite questions raised about the nature of the beneficiary’s interest,154
one point is clear: trusts are for the benefit of beneficiaries.155 Unless the
settlor is also a beneficiary, the settlor has no standing to enforce the trust.156
While the law traditionally has not treated trusts as contracts,157 leading

150
See Whitman, supra note 12, at 294-95.
151
Although a uniform separation between the courts of law and courts of
equity existed in England at the time of the American Revolution, the
governments of the United States used various methods to administer
equity. In most states, remedies both at common law and at equity were
administered by a single court. In the federal realm, the courts had equity
jurisdiction equivalent to that of the English chancery court. Today, a
distinction between actions at law and actions at equity no longer exists
in the majority of states, such actions having been replaced by a “civil
action” in which all legal remedies are received.
Joseph Hendel, Equity in the American Courts and in the World Court: Does the End Justify
the Means?, 6 IND. INT’L & COMP. L. REV. 637, 643 (1996) (arguing that the American
means-based equity system is more morally acceptable than the international ends-based
equity system); see also BOGERT ON TRUSTS & TRUSTEES, supra note 76, § 1, at 7-8.
152
“The civil action procedurally eliminates the distinction between law and equity, but
the substantive distinction still remains: in both the state and federal courts, remedies at law
and remedies at equity are recognized as separate.” Hendel, supra note 151, at 643.
153
Id.
154
See Bohac v. Graham, 424 N.W.2d 144 (N.D. 1988) (holding that the settlor’s intent
is crucial in determining the beneficiary’s interest in the trust); see also Hays v. Harmon, 809
N.E.2d 460, 469 (Ind. Ct. App. 2004):
As to the beneficiaries’ interest, the nature of this interest is to be determined from
the terms of the trust. . . . In the case of a charitable trust, however, an otherwise
indefinite devise is sufficiently ascertained if the trustee is empowered to devote
the fund in such manner as he deems just and the purpose is not unlawful or against
public policy.
(internal citation omitted).
155
See infra note 156; see also RESTATEMENT OF TRUSTS § 3 (1935); BOGERT ON
TRUSTS AND TRUSTEES, supra note 76, § 1, at 6; SCOTT ON TRUSTS, supra note 2, § 3.2, at 52.
156
See RESTATEMENT (SECOND) OF TRUSTS § 200 cmt. b (1959).
157
See id. § 197 cmt. b:
A trustee who fails to perform his duties as trustee is not liable to the beneficiary
for breach of contract in the common-law actions of special assumpsit or covenant
or in a similar action at law in States in which the common-law forms of action
WINTER 2005 Resolution Procedures 855

legal scholars158 have acknowledged that trusts have a contractual aspect.159

The Restatement points out, however, that “[t]his ‘contractual approach’ . . .
was certainly a limited one. . . .”160 Yet recently, Professor Langbein161
advocated extending the contract approach, arguing that “[t]rusts are con-
tracts.”162 This suggestion should be evaluated against the practical changes
that would come about if trusts generally were considered simply to be
contracts between the settlor and the trustee.163 Today, action against a
trustee for breach of duties essentially is not by contract or at law.164 Except
in very limited circumstances, the jurisdiction of equity remains exclusive.165
The remedy against the trustee remains in the hands of the beneficiary.166
Conceivably, equity courts may embrace an allegation that a trustee has
failed to establish a proper resolution procedure or has failed to implement it
in good faith.167
VIII. TOWARD A PROPER RESOLUTION PROCEDURE
Some years ago, the author founded and chaired a Law Professor

have been abolished. The creation of a trust is conceived of as a conveyance of the

beneficial interest in the trust property rather than as a contract.
158
Professor Austin Scott served as the reporter for the Restatement (First) of Trusts.
RESTATEMENT (FIRST) OF TRUSTS Introduction, at x (1935). Professor Scott also was the
Dane Professor of Law at Harvard University. SCOTT ON TRUSTS, supra note 2, at title page.
159
See id. § 1, at 2.
160
RESTATEMENT (THIRD) Reporter’s Notes on § 2, at 33 (2003).
161
Professor Langbein has been the Chancellor Kent Professor of Law and Legal
History at Yale Law School since 1990. Professor Langbein is an adviser to the American
Law Institute’s Restatement of the Law of Trusts (Third) and a member of the drafting
committee on the UTC. Professor Langbein’s impressive Curriculum Vitae can be found at
http://www.law.yale.edu/outside/html/faculty/langbein/cv-langbein.pdf (last visited Jan. 1,
2005).
162
See John H. Langbein, The Contractarian Basis of the Law of Trusts, 105 YALE L.J.
625, 627 (1995) (suggesting that the settlor is free to make any deal with the trustee) (empha-
sis added).
163
See id.
164
See RESTATEMENT (SECOND) OF TRUSTS § 197, at 433 (1959).
165
See BOGERT ON TRUSTS, supra note 72, § 157, at 559 (stating that a court of law can
give relief when the amount requested is certain or easily ascertainable); see also RESTATE-
MENT (SECOND) OF TRUSTS § 198 at 434 (1959).
166
See RESTATEMENT (SECOND) OF TRUSTS § 200, cmt. b (1959).
167
See John Gibeaut, Stock Responses–Shareholders Ask For Changes in Corporate
Governance, and the Courts are Starting to See it Their Way, A.B.A. J., Sept. 2003, at 38, 40
(“‘It’s the same chancellor; it’s the same law,’ Veasey says. ‘But we use the common law.
The common law is always evolving. As so, the expectations of directors are evolving.’”)
(quoting Chief Justice E. Norman Veasey).
856 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

Advisory Group for Trusts and Estates (“Advisory Group”).168 Thirty law
professors banded together to suggest improvements in the system that
would be in the public’s interest. The Advisory Group believed that power-
ful forces were shaping trust and estate law to meet their own short- sighted
ends.169 For example, the Advisory Group was aware that, historically,
Charles Dickens had exposed corruption in the English probate system170
and that in America, politicians like those in Tammany Hall in New York
City171 dispensed patronage from the New York Surrogates Court.172 The
Advisory Group wanted to find identifiable areas of present practice that
appeared to invite suggestions for improvement.
When the Advisory Group opened for business, it received a wide
variety of complaints from trust beneficiaries. Common concerns expressed
included: (1) unwillingness of trustees to cooperate with requests for infor-

168
The Advisory Group was composed of some thirty law professors and additional
members of collateral boards who all pledged to attempt to improve the administration of
trusts. The most recent chair of the Advisory Group was Professor Ronald Chester of New
England Law School.
169
The Uniform Trust Act is an example.
The banking industry has always been involved in the evolution of the Uniform
Trust Act. It was first suggested “by the Trust Division of the American Bankers
Association (ABA)[”] in order to, in part, relax a few equity rules regarding trust
administration . . . in order to facilitate convenience in the (corporate) administra-
tion of trusts.” The ABA continues to advise the Commission as to whether its state
banking affiliates (lobbies) will provide the support that can be so critical for its
enactment.
Standish H. Smith, Reforming the Corporate Administration of Personal Trusts–The Problem
and a Plan, 14 QUINNIPIAC PROB. L.J. 563, 564 (2000) (footnote omitted) (calling for reforms
in the corporate fiduciary system that will level the playing field between the trustee and
beneficiary).
170
See CHARLES DICKENS, BLEAK HOUSE (Norman Page ed., Penguin Books 1971)
(1853) (providing a scathing criticism of the drawn-out probate process of the nineteenth
century English Court of Chancery).
171
See Joseph E. Ritch, They’ll Make You an Offer You Can’t Refuse: A Comparative
Analysis of International Organized Crime, 9 TULSA J. COMP. & INT’L L. 569, 593 (2002)
(stating that Tammany Hall is widely recognized as the symbol of political corruption
throughout the world and laid the foundation for organized crime groups to gain protection
from law enforcement activities).
172
“Critics in New York have long contended that the surrogate’s courts power to
appoint guardians has been abused.” Mayor Fiorello H. LaGuardia called the surrogate’s
court “the most expensive undertaking establishment in the world” when, during his anti-
Tammany administration, he found himself unable to cut off that source of patronage to
Tammany lawyers. JESSE DUKEMINIER & STANLEY M. JOHANSON, WILLS, TRUSTS, &
ESTATES 212 n.4 (6th ed. 2000) (quoting Tom Goldstein, Once More, Surrogate Talk, N.Y.
TIMES, Sept. 4, 1977, at E5).
WINTER 2005 Resolution Procedures 857

mation,173 (2) unwillingness to admit any wrongdoing,174 (3) lack of resolu-

tion procedures short of litigation,175 and (4) difficulty accessing the courts
for powerless trust beneficiaries.176
The Advisory Group had no statistical data (and still does not)177 on the
subject of trust beneficiary satisfaction. The Advisory Group assumed (and
the author thinks it likely remains true)178 that the American trust system
worked fairly well overall. The Advisory Group also assumed that most
trustees, individual and corporate, were honest and hard working and that
most trust beneficiaries appreciated the efforts made on their behalf.179 But
cases repeatedly came up in which what appeared to be meritorious com-
plaints were not dealt with in any way other than by forcing formal litiga-
tion.180 The Advisory Group was not concerned so much with the merits, or
lack thereof, of any particular complaint, but rather with the set up for
resolving complaints. The Advisory Group found that resolution procedures
varied dramatically depending on who was the trustee,181 the circumstances
of the case,182 the probate court rules and procedures,183 and the expectations
of the parties.184
Most corporate fiduciaries interviewed by the Advisory Group reported
that the following resolution procedures were available to beneficiaries pre-
senting a complaint:
1. Speaking with the trust officer.
2. Failing resolution, speaking with a senior trust officer.

173
See Telephone Interview with Standish Smith, supra note 40.
174
See Whitman & Paturi, supra note 4, at 70.
175
See DiCarlo, supra note 1.
176
See Whitman & Paturi, supra note 4, at 70.
177
See id. at 68.
178
See Whitman, supra note 13.
179
See Whitman, supra note 12, at 291; see also David A. Baker & Mary K.
McWilliams, Defending the Fiduciary, in ESTATE, TRUST, AND GUARDIANSHIP LITIGATION
Ch. 1 (David A. Baker ed., Illinois Institute for Continuing Legal Education Main Handbook
2002 ed.) (stating that fiduciaries rarely breach the duties of loyalty, care, and impartiality).
180
See Whitman, supra note 13, at 3.
181
“The demands on the trustee often require tremendous skill in teaching, mentoring,
motivating, and problem solving. In the most successful relationship, the trustee views its role
as a partner, not as a custodian.” Hausner & Freeman, supra note 3, at 604.
182
See supra text accompanying note 31.
183
See Whitman & Paturi, supra note 4, at 70-71.
184
Reasonable expectations by both parties involved leads to proper administration of
the trust. See Hausner & Freeman, supra note 3, at 607. “Beneficiaries who have a clearer
understanding regarding trust administration are far less likely to complain.” Whitman, supra
note 12, at 296.
858 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

3. Still failing resolution, speaking to the head of the trust department.

Failure to reach resolution after this three-step process meant that the benefi-
ciary needed either to abandon the complaint or retain a lawyer and move to
formal litigation.185 The obvious weakness in this resolution procedure is
that the person hearing the complaint often is the same person about whom
the beneficiary is complaining.186 When this happens, the conflict of interest
is clear.187 Furthermore, even if the executive department of the bank heard
the complaint, upper management of the bank would be disassociated from
any direct concern for the fiduciary obligation. Management normally is
concerned more with the impact that adverse litigation could have on bank
profits.188 In short, outside of the trust department, banking executives
appear less concerned with fiduciary duty and more concerned with bottom-
line profits.189
Once a complaint passes beyond a certain point, the overriding obliga-
tion of the fiduciary to the beneficiary often disappears.190 In formal litiga-
tion, should all overriding duties to the trust beneficiary be suspended?191
The Advisory Group discovered that when the litigation team arrived, a
distinct shift from reasonableness and flexibility to hard ball litigation often
occurred.192 The shift can be seen in the following example:

185
See generally Young, supra note 50.
186
While trustees owe a fiduciary duty to the beneficiary, imagining how trustees could
be objective in this situation, especially when their reputation is on the line is difficult. A
corporate fiduciary is further constrained because if the fiduciary acquiesces to the need of the
beneficiary, the fiduciary may anger its other master, the employer, who is motivated by
profit margins. Outside of the trust department, profit may trump fiduciary duty.
187
See Smith, supra note 169, at 567.
188
Banks often are more concerned with the negative opinion that comes with litigation.
Compliance units at banks with fiduciary services assess the risk to earnings or capital arising
from negative public opinion. See Locke, supra note 41, at 151.
189
See Whitman, supra note 12; see also Whitman & Paturi, supra note 4, at 69 n.7.
190
Litigation is usually left to the litigators. . . . Litigation is not an enjoy-
able process for most people, except the ones getting paid. There are
lawyers who do it well and who are courteous, efficient and knowledge-
able. However, most of the time, attorneys abuse the process with
threats, intimidation and poor lawyering.
Locke, supra note 41, at 141-42. Also, some litigators file suit before alternative dispute
resolution procedures can be discussed to cut off this avenue of resolution. See id. at 153.
191
Some courts have held that the fiduciary duty should not be suspended. See In re
Trust Created by Hill, 499 N.W.2d 475 (Minn. Ct. App. 1993) (denying the plaintiff’s claim
of hostility on the part of the trustee and finding that the defendant trustee had not breached
his fiduciary duties any time during the three year litigation process).
192
“Whether we like it or not, ‘hard-ball’ tactics, ‘scorched earth’ strategies, and so-
WINTER 2005 Resolution Procedures 859

A Princess Diana memorial fund has stopped giving grants to

charities because of financial problems linked to its bitter legal feud
with the American collectibles maker, the Franklin Mint, the fund’s
top administrator [explained] . . . . Until the court battle is resolved,
the Diana, Princess of Wales Memorial Fund is asking other trusts
to make good on the $16 million in grants it has already pledged to
beneficiaries—including charities working with land mine victims
and AIDS sufferers, said chief executive Andrew Purkis. . . . Fund
trustees decided to freeze the fund’s $89.6 million in assets to
ensure it could pay any legal bills.193
Viewing American-style litigation today, it does not seem coincidental
that our English ancestors, the Normans, decided their disputes by armed
combat.194 Arguably, the key mistake in legal theory today is that once the
litigation stage is reached, the fiduciary, individual or corporate, no longer
recognizes that the fiduciary still has an obligation to continue to protect the
overriding interest of beneficiaries.195 Even before the formal litigation
stage, to what extent should attorneys for the corporate fiduciary be focusing
on protecting the fiduciary in the event of litigation?196 If the fiduciary is

called ‘take no prisoners’ litigation are not only in vogue these days, but often are required of
lawyers in the aggressive pursuit of their clients’ interests.” Paul L. Friedman, Taking the
High Road: Civility, Judicial Independence, and the Rule of Law, 58 N.Y.U. ANN. SURV. AM.
L. 187, 191 (2001) (calling for a restoration of civility in the legal profession to safeguard the
essential independence of the courts and sustain the rule of law).
193
Pat Seremet, Princess Di Fund Woes, HARTFORD COURANT, July 14, 2003, at D2.
194
See Jeffrey Robert White, Important Civil Trials of the Millennium: It’s Been a Long
Road From Trial by Combat to Trial by Jury, TRIAL, Mar. 2000, at 62 (tracing the milestones
in the development of the civil justice system from the Norman Conquest to modern times);
see also Holdsworth, supra note 101, at 308-10.
195
In matters involving fiduciary duties outside of the trustee and beneficiary dynamic,
it has been held that the obligation extends through the litigation. See Eugene R. Anderson et
al., Procedural, Practical, Tactical, and Strategic Issues in Insurance Coverage Disputes
Stemming from Mass Tort Claims, at 207, 232 (PLI Litig. & Admin. Practice Course, Hand-
book Series No. H4-5128, 1992) (“In a practical sense, the insurer occupies a position com-
parable to that of a trustee for the benefit of its insureds. This is the very essence of a
fiduciary obligation. An insurance company’s fiduciary obligation continues even during lit-
igation with its policyholder.”) (internal citation omitted).
196
There are two competing views on the duties an attorney owes a fiduciary. The ma-
jority holds that the fiduciary is the sole client of the attorney—fiduciary duties do not exist
between the attorney and the beneficiaries. The minority holds that an attorney retained by the
fiduciary for the purposes of trust administration actually represents the trust and its beneficia-
ries. In the minority jurisdictions, the attorney-client privilege will not prevent the disclosure
of conversations with the trustee to the beneficiary, even if the two have a dispute. See Steven
M. Fast, Walking the Line Between Protecting the Trustee and Protecting the Beneficiary,
860 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

overly concerned with its own protection, might that in itself be a breach of
its fiduciary obligation?197 How should the trust officers be instructed to
act?198
In nineteenth century American jurisprudence, legal scholars and leg-
islatures (clearly influenced by powerful corporate fiduciary interests)199
made a concerted effort to bury the fact that fiduciaries are continually
obligated to beneficiaries until the fiduciary properly resigns.200 A proper
resignation may be either court-approved, beneficiary-approved, or occur in
connection with the proper termination of the trust.201 The attempt to hide
fiduciary obligation to the beneficiaries was carried out by over-stressing the
need to satisfy the intention of the settlor,202 by viewing a fiduciary’s duties

SG012 ALI-ABA 1, 3-4 (July 2001) (offering guidance to attorneys on how to represent the
interests of the fiduciary properly).
197
The main purpose of the trustee is to administer the trust for the benefit of the ben-
eficiary. See supra note 84 and accompanying text. A trustee may be breaching the fiduciary
duty if in litigation it appears that concern for the trustee’s own survival trumps an obligation
to the beneficiary because it may be construed as not acting in the best interests of the ben-
eficiary. See supra note 2 and accompanying text.
198
See DiCarlo, supra note 1; infra Appendix.
199
In 1870, for example, the Pennsylvania legislature specifically autho-
rized trustees to invest in bonds of the Pennsylvania Railroad Company;
an act of 1872 did the same favor for bonds of the Philadelphia and
Reading Railroad Company. It must have been clear to all where the
impetus for these laws arose. This was not a plain and narrow path but
an invitation to corruption.
Lawrence M. Friedman, The Dynastic Trust, 73 YALE L.J. 547, 562 (1964) (describing trust
law as a reflection of social, psychological, legal, and economic sources).
200
“But if the trustee has once accepted the trust, he cannot relieve himself of his duties
under the trust, unless he is permitted to resign.” 2 SCOTT ON TRUSTS, supra note 2, § 106, at
96. “If the trustee once accepts the appointment as trustee, he is under a duty to administer the
trust as long as he continues to be trustee.” Id. § 169, at 310. “It is the duty of a trustee to
administer the trust solely in the interest of the beneficiaries.” Id. § 170, at 311.
201
See 2 SCOTT ON TRUSTS, supra note 2, §§ 106-106.3, at 96-102,; 4A SCOTT ON
TRUSTS, supra note 2, §§ 344, at 542; see also BOGERT ON TRUSTS AND TRUSTEES, supra
note 76, §§ 511, 1010, at 4, 448.
202
In Claflin v. Claflin, 20 N.E. 454 (Mass. 1889), the Massachusetts Supreme Judicial
Court held that a testator has a right to place restrictions on the property in trusts if the testator
does not contravene public policy.
The Claflin rule therefore vests the power of termination, in trusts of this type, in
the hands of the trustee rather than the beneficiary. The trustee wields that power as
the earthly representative of the dead settlor. The rule has practical significance
only if the trustee out of respect for the dead or some other motive, refuses the
beneficiary’s request. Insofar as Claflin favors the settlor’s wishes over those of the
beneficiary, it reflects the attitude of the dynastic trust.
Friedman, supra note 199, at 586.
WINTER 2005 Resolution Procedures 861

as running to the trust property rather than directly to the beneficiaries,203

and by stressing the right of the fiduciary to protect itself before and while
engaging in litigation.204
The basic nineteenth century approach in trusts (and elsewhere) was to
attempt to obliterate the need for an equitable result by framing theory ex-
clusively in law.205 A good example is the classic Williston and Corbin de-
bate in connection with the Restatement (First) of Contracts.206 The Restate-

203
See generally Friedman, supra note 199.
204
The courts and academics authorized the fiduciary to favor the trust contract more
than the beneficiary by stressing the right of the settlor and enforcing the intent of the settlor
in the trust language. Thus, by de-emphasizing the equitable duties of the fiduciary, the trust-
ee had more protection during litigation. Professor Langbein is seemingly in step with this
nineteenth century approach in his article stressing the importance of contract law in trust
analysis.
When an indignant court follows Cardozo and limits its analysis to sounding off
about fiduciary standards being “stricter than the morals of the market place” and
“the punctilio of an honor the most sensitive,” the court is neglecting to discuss
whether the underlying deal supports the level of fiduciary obligation that the court
invokes.
Langbein, supra note 162, at 658.
The rights of the settlor and the rise of contract led to a suggestion that a settlor could
form a quiet trust if the settlor wanted to keep his intentions secret. This trust restricts the
beneficiary from obtaining information on the trust. By appointing a trust protector, the
beneficiary is protected from malfeasance by the trustee. See Kozusko, supra note 67, at 21-
22 But see Whitman, supra note 67 (arguing that nondisclosure is risky to beneficiaries both
emotionally and financially).
205
See generally Gregory S. Alexander, The Dead Hand and the Law of Trusts in the
Nineteenth Century, 37 STAN. L. REV. 1189, 1213-15 (1985) (stating that the goal of classicist
legal thought in the nineteenth century was synthesizing equity and common law for greater
stability).
206
Samuel Williston, Harvard Law School professor, served as the reporter for the
Restatement (First) of Contracts and was a follower of the conceptual school of thought.
Conceptualists believed that the law was a system of relatively few fixed, general principles.
Professor Arthur Corbin of Yale Law School served as an advisor to the Restatement (First)
of Contracts and was more aligned with the legal realist approach to law. American legal real-
ists believed that the law should not be static and instead should be adaptable to the social and
moral norms of the time. The two legal giants clashed during the Restatement meetings on
what constituted consideration. Williston’s position ultimately prevailed and is found in sec-
tion 75 of the Restatement (First) of Contracts. Corbin’s position, though not included in the
definition of consideration, was included as section 90 of the Restatement (First) of Contracts
and represented a broad definition of what could constitute a contract. However, with the
passage of time, Corbin’s position prevailed. See GRANT GILMORE, THE DEATH OF CON-
TRACT 58-65 (1974). See also Daniel J. Klau, What Price Certainty? Corbin, Williston, and
the Restatement of Contracts, 70 B.U. L. REV. 511, 522-27 (1990) (discussing the conflict
between Corbin, the archetypal legal realist, and Williston, the conceptualist, in forging the
Restatement (First) of Contracts).
862 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

ment (First) of Contracts reporter was Professor Williston from Harvard.207

He proposed the concept of consideration as the sole basis for an enforceable
contract.208 Professor Corbin209 from Yale offered up the doctrine of promis-
sory estoppel as another route to an enforceable contract.210 Those familiar
with the legal history of the 1930s understand that Harvard Law School was
the bastion for the scientific calculation of law,211 and Yale Law School212
was home of Corbin, Llewellyn,213 and Frank,214 who together created the
foundation for the American Legal Realist School.215 Professor Austin
Scott216 was from Harvard and designed the Restatement (First) of Trusts in
a manner that scientifically categorized the legal doctrines.217

207
See GILMORE, supra note 206 and accompanying text.
208
See id. at 62.
209
See id. and accompanying text.
210
See id. at 64.
211
Dean Langdell of Harvard is credited with introducing the scientific study of the law
as early as 1870. His case-based study of the law to extract legal principles is still in use
today. See ALBERT J. HARNO, LEGAL EDUCATION IN THE UNITED STATES 53-59 (1953).
212
“The Yale Law School faculty was congenial, fun-loving, hardworking, and
relentlessly intellectual . . . . [N]ot a person on it did not profess to be a realist.” LAURA
KALMAN, LEGAL REALISM AT YALE 1927-1960 at 119 (2001).
213
Professor Karl Llewellyn was the true mastermind behind the American legal realist
movement, which held as one of its tenets that the meaning of law was derived from its
relation to laymen and not to courts. See N.E.H. HULL, ROSCOE POUND & KARL LLEWELLEYN
171-72 (1997).
214
Jerome Frank argued in his book, LAW AND THE MODERN MIND, that individual
factors often influenced judges when they made a decision. After reaching a decision, a judge
would then rationalize the decision with a discussion of case law. Professor Frank considered
Yale Law School his spiritual home and began his affiliation with the school in 1932. See
KALMAN, supra note 212, at 6-7, 171-72.
215
Legal realism is the theory that law is based not on formal rules or principles but
instead on judicial decisions that should derive from social interests and public policy.
BLACK’S LAW DICTIONARY 907 (7th ed. 1999).
216
See supra text accompanying note 158.
217
Launched in 1923, the restatement project may well have represented the
final effort to realize Langdell’s ideal of a science of law. By restating
the law in a clear and simple fashion, the institute hoped to illuminate its
correct principles. The institute selected Harvard law professors Beale,
Williston, Francis Bohlen, and Warren Seavey as the reporters of its four
restatements. Each was assigned a subject: Williston drew contracts;
Beale, conflicts; Bohlen, torts; and Seavey, agency. Subsequently their
colleague Austin Scott agreed to write the restatement of the law of
trusts. The institute directed its reporters to “make certain much that is
now uncertain and to simplify unnecessary complexities” and “to pro-
mote those changes which will tend better to adapt the laws to the needs
of life.” As work progressed, the institute abandoned the second objec-
WINTER 2005 Resolution Procedures 863

The Restatement (First) of Trusts might have been drafted differently if

Scott had seen the fiduciary relationship to the beneficiaries in the way Jus-
tice Benjamin Cardozo saw it when he announced Meinhard v. Salmon:218
Many forms of conduct permissible in a workaday world for those
acting at arm’s length, are forbidden to those bound by fiduciary
ties. A trustee is held to something stricter than the morals of the
market place. Not honesty alone, but the punctilio of an honor the
most sensitive, is then the standard of behavior. As to this there has
developed a tradition that is unbending and inveterate. Uncompro-
mising rigidity has been the attitude of courts of equity when peti-
tioned to undermine the rule of undivided loyalty by the “disinte-
grating erosion” of particular exceptions. Only thus has the level of
conduct for fiduciaries been kept at a level higher than that trodden
by the crowd. It will not consciously be lowered by any judgment of
this court.219
The introduction to the UTC220 explains that the purpose of the UTC is
to fill in trust law missing from many states.221 Actually, it can be argued
that creating the UTC makes no sense at all unless it helps to create a better
functioning trust system that better balances the rights and needs of settlors,
beneficiaries, and trustees.222 Realistically, however, a forthright statement to
that effect might have doomed the adoption of the UTC, given the power of
the banking lobby over state legislatures.223

tive, telling its reporters to “state clearly and precisely in the light of the
decisions the principles and rules” of existing law. Increasing legal
certainty became the institute’s only objective, a goal underlined by its
decision to print the rules in especially bold black letters.
KALMAN, supra note 212, at 14 (footnotes omitted).
218
164 N.E. 545 (N.Y. 1928).
219
Id. at 546 (internal citation omitted).
220
UNIF. TRUST CODE prefatory note, 7C U.L.A. 143 (Supp. 2004).
221
This greater use of the trust, and consequent rise in the number of day-
to-day questions involving trusts, has led to a recognition that the trust
law in many States is thin. It has also led to a recognition that the exist-
ing Uniform Acts relating to trusts, while numerous, are fragmentary.
The Uniform Trust Code will provide States with precise, comprehen-
sive, and easily accessible guidance on trust law questions. On issues on
which States diverge or on which the law is unclear or unknown, the
Code will for the first time provide a uniform rule.
Id. at 144.
222
See Halbach, supra note 8, at 1908.
223
Drafting the UTC, as well as drafting other uniform acts, is a highly
864 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

The author was privileged to be able to sit on the UTC drafting commit-
tee as an observer and advisor.224 This opportunity was an interesting experi-
ence. In the author’s view, not enough attention was paid to the idea that a
major goal of the new legislation should be to protect the right of a trust ben-
eficiary to complain, because allowing complaints to be properly heard is
good for business.225 Although it may be that most complaints are spur-
ious,226 some are not.227 Further, if a complaint is not fairly heard and if the
beneficiary is given a hard time, the fallout is that the beneficiary walks
away and tells everyone that our trust system is unfair.228
Lest the author be misunderstood, he fully recognizes that many benefi-
ciary complaints lack merit,229 many beneficiaries are unrealistic and hard to
deal with,230 and that trust companies must be profitable.231 The reality is that
if the law now changed course and took away that profitability, trust compa-
nies would close their doors and look for something else to do.232 From the
author’s point of view, a balanced system can protect the settlor’s interests

political process. The Commissioners are anxious to create Acts that will
be broadly passed by the states so that they are quite sensitive to the
lobbying efforts of powerful groups. In the case of the UTC, this would
include the lobbying efforts of major corporate fiduciaries. It is notewor-
thy that the UTC’s stated goals do not emphasize an attempt to fashion a
trust administration system that creates a fairer and more level playing
field for all of the interested parties, or a system that works better than
the systems now in place. Given the checkered and political history of
probate and trust administration, the NCCUSL may have missed an
opportunity to create a uniform act that would be truly groundbreaking.
Whitman & Paturi, supra note 4, at 66 n.2; see also Smith, supra note 169 and accompanying
text.
224
They also invited Standish Smith of the Heirs Group and Professor Ronald Chester
of the New England School of Law as observers and advisers. In a number of cases, formula-
tions worked out during the drafting sessions were later revised without notice to the invitees.
These changes were undoubtedly due to pressure from powerful corporate banking lobbying
groups.
225
See DiCarlo, supra note 1.
226
See Whitman, supra note 13, at 3.
227
See Whitman & Paturi, supra note 4, at 67-68.
228
“It certainly might quiet the constant trust beneficiary complaint that when they
complain, they get no respect from their trustee (individual or corporate).” Whitman, supra
note 13, at 4.
229
See id. at 3.
230
See Engelhardt & Whitman, supra note 21, at 15.
231
Because trust maintenance is a business, corporate fiduciaries are entitled to maintain
a profit. However, time spent on increasing the degree of profit should be subservient to time
spent dealing with concerns arising out of the trust. See Whitman, supra note 13, at 293-94.
232
See generally id.
WINTER 2005 Resolution Procedures 865

(as best as we can know them or think we know them), protect beneficiary
rights, and keep trustees and trust companies operating with a reasonable
amount of earned profits.233
IX. CONCLUSION
Globalization of the trust business is a coming reality.234 If American
trust companies are to retain their leadership role,235 a proper resolution
procedure, short of formal litigation, should be made available by all fiducia-
ries.236 Not only is it beneficial for business because it reduces litigation
costs, but this procedure also is beneficial for all parties involved because it
encourages cooperation. The Restatement (Third) and the UTC have opened
the door for change that will ensure America’s leadership role, but the
fiduciary community must be willing to take up the challenge.

233
See generally id.
234
See supra note 7 and accompanying text; see also Alexander A. Bove, Jr., The Pur-
pose of Purpose Trusts, PROB. & PROP., May-June 2004, at 34 (discussing the rise of purpose
trusts in foreign jurisdictions); Steven M. Fast et al., Drafting to Excess, SJ001 ALI-ABA 109
(July 2003) (“As trust law has evolved, particularly through uniform laws, it has increasingly
restrained the intent of settlors. This has resulted in some settlors choosing to establish their
trusts offshore. . . .”); cf. O’Beirne, supra note 5 (discussing the impact of the European
Union on the global market).
235
See generally Blattmachr & Hompesch, supra note 5.
236
See Whitman, supra note 13, at 3.
866 39 REAL PROPERTY, PROBATE AND TRUST JOURNAL

APPENDIX
Trust Company
Beneficiary Dispute Resolution Procedure
Introduction
TRUST COMPANY believes that good client relations are important to
its future success as a professional administrator of trusts. In its role as a
trustee, TRUST COMPANY recognizes its fiduciary responsibilities to
provide to the client a means of resolving misunderstandings/disagree-
ments/disputes that may arise from time to time between our clients (benefi-
ciaries, settlors) and TRUST COMPANY. In this regard, TRUST COM-
PANY has made a commitment not only to increase its efforts to identify
and deal with client issues in a timely manner but also to improve its poli-
cies/procedures to forestall the need for future remedial action. Clearly,
TRUST COMPANY cannot guarantee that mediation (whether internal or
external) will result in a solution that will fully satisfy any particular client.
Nevertheless, it is believed that by becoming an active partner in the dispute
resolution process, many issues can be resolved amicably as well as cost
effectively. To this end, TRUST COMPANY has designated ____________
to serve as the neutral contact party and resolution officer (“Resolution
Officer”) for clients who wish to offer suggestions or seek resolution of a
complaint pursuant to the attached procedures. TRUST COMPANY sin-
cerely believes that a majority of disputes can be resolved without the need
to resort to litigation if both parties are willing to work together in a spirit of
cooperation. TRUST COMPANY offers the following mediation procedure.
Procedure
1. Every beneficiary concern, whether made formally or informally, in the
form of a casual remark or even in jest, is reported to the relationship
manager’s staff manager, and the staff manager will then, through the
relationship manager, craft a response.
2. The staff manager will determine whether a beneficiary concern should
be classified as a “complaint,” as defined in _________.
3. Every complaint is acknowledged within three days of receipt as direct-
ed by the staff manager.
4. The staff manager will attempt to resolve the complaint in a reasonable
fashion. If the staff manager concludes at any time that the complaining
party is not reasonably satisfied with the response, including any pro-
posed or executed remedy, the complaining party shall be informed of
the opportunity to refer the matter to the Resolution Officer. The staff
manager may directly and immediately refer the matter to the Resolu-
WINTER 2005 Resolution Procedures 867

tion Officer as well in his or her discretion.

5. If all beneficiaries then eligible to receive Trust distributions (“qualified
beneficiaries”) are not aware of the complaint, the relationship manager
will notify them upon referral to the Resolution Officer of the complaint
and the initial suggested resolution to the complaint.
6. The Resolution Officer is designated from time to time by the Trust
Administrative Committee (“TAC”) and is neither a member of TAC
nor connected with the matter generating the complaint.
7. The Resolution Officer will make appropriate inquiry and advise TAC,
with copy to the relationship manager, whether the initial response was
appropriate and, if not, set out a recommended response.
8. In order to reach this recommended response, the Resolution Officer, as
a neutral party, may meet with the respective parties in order to attempt
to reach an agreed upon resolution or a proper resolution procedure.
Depending on the circumstances of the case, the Resolution Officer can
suggest a number of procedures for resolving the matter, including me-
diation, arbitration, a decision by the resolution officer, or any other
reasonable procedure, short of formal litigation.
9. If TAC fails to object within thirty business days to the Resolution Of-
ficer’s proposed response, the Resolution Officer will direct the staff
manager and relationship manager to respond according to the terms of
the proposed response and so advise the qualified beneficiaries.
10. Questions such as (but not limited to) who bears the expense of the res-
olution procedure, which parties are to be involved in the process, and
the finality of the decisions reached, shall be subject to good faith ne-
gotiation between the trust department, the qualified beneficiaries, and
the Resolution Officer.