Asking a Minnesota Court to Interpret a Trust

How does a Minnesota court decide what a trust means?

A Minnesota court reads a trust to carry out the settlor’s intent, and it looks first at the trust’s own words. To interpret the trust, the court uses outside evidence of what the settlor meant only if it first finds the language ambiguous. In In re Trust of Moreland, 993 N.W.2d 80 (Minn. 2023), the Minnesota Supreme Court stated: “Extrinsic evidence is used to interpret a trust only after a finding of ambiguity.”

The court’s earlier decisions supply the rest of the method:

1. The words come first. The Minnesota Supreme Court applied this rule in In re Trust Created Under Agreement with McLaughlin, 361 N.W.2d 43 (Minn. 1985). It held: “Where the language of the trust instrument is not ambiguous, the intent of the settlor must be ascertained from the four corners of the agreement.” The trustees there had asked whether a granddaughter adopted by her stepfather was among the settlor’s “then living issue.” The trust’s own definition of “issue” included her, so she took a share.
2. Technical words keep their technical meaning. The court returned to the rule in In re Pamela Andreas Stisser Grantor Trust, 818 N.W.2d 495 (Minn. 2012). It stated: “When the trust agreement is unambiguous, we will ascertain the grantor’s intent from the language of the agreement, without resort to extrinsic evidence.” It read a direction to pay the settlor’s “legal debts” by that phrase’s settled legal meaning and held that it did not require the trustee to pay off debts secured by her property. Stisser was decided under the trust statute that chapter 501C later replaced, and Moreland applies its intent rule under chapter 501C.
3. Will rules apply too. Under Minn. Stat. § 501C.0112, “The rules of construction that apply in this state to the interpretation of and disposition of property by will also apply as appropriate to the interpretation of the terms of a trust and the disposition of the trust property.”

The statute defines what counts as the trust’s terms. Under Minn. Stat. § 501C.0103, paragraph (r), “Terms of a trust” means “the manifestation of the settlor’s intent regarding a trust’s provisions as expressed in the trust instrument or as may be established by other evidence that would be admissible in a judicial proceeding.” Evidence from outside the document can therefore matter, but under Moreland it is used to interpret a trust only after the court finds the words ambiguous.

Who can ask a Minnesota court to interpret a trust?

Any “interested person” can petition a Minnesota district court about a trust, which includes the trustee, a named successor trustee, any beneficiary, and a creditor. Under Minn. Stat. § 501C.0201, paragraph (a), “An interested person may petition the district court and invoke its jurisdiction as provided in sections 501C.0201 to 501C.0208 for those matters specified in section 501C.0202.”

Paragraph (b) provides that “interested person” “includes an acting trustee, any person named as successor trustee under the trust instrument, any person seeking court appointment as trustee whether or not named in the trust instrument, a beneficiary, a creditor, and any other person having a property or other right in or claim against the assets of the trust.” The same paragraph says the meaning “may vary from time to time” and depends on the purpose of the particular petition. A remote beneficiary may therefore qualify for one petition and not another.

A trust cannot take the court’s power away. Minn. Stat. § 501C.0105, paragraph (b), provides: “The terms of a trust prevail over any provision of this chapter except” a list that includes, in clause (12), “the subject-matter jurisdiction of the court as provided in section 501C.0202 and venue for commencing a proceeding as provided in section 501C.0207, except as provided in section 501C.0102.” A trust’s terms therefore cannot remove the court’s power to hear a petition on the matters § 501C.0202 lists or change where the petition is filed.

How does a petition to interpret a trust work in a Minnesota district court?

A petition to interpret a Minnesota trust is filed in the district court for the proper county, names the type of proceeding, and asks for specific relief; the court then sets a hearing and the petitioner gives notice. Under § 501C.0202, clause (4), a petition may ask the court “to construe, interpret, or reform the terms of a trust, or authorize a deviation from the terms of a trust.” Clause (24) allows a petition “to instruct the trustee regarding any matter involving the trust’s administration or the discharge of the trustee’s duties, including a request for instructions and an action to declare rights.”

The steps follow the statute:

1. Choose the county. For a living trust, Minn. Stat. § 501C.0207, paragraph (a)(2), sets venue “in the district court for (i) the county of this state where a trustee having custody of part or all of the trust assets resides or has a trust office, or (ii) the county of this state in which the trust’s principal place of administration is or will be located upon approval by the court.” For a trust created by a will, paragraph (a)(1) adds “the county of this state where the will was probated.” For a trust holding real property, paragraph (a)(3) also allows filing “in the district court for any county in which the real estate is situated” as the venue. Under paragraph (b), if a Minnesota court has already handled the trust, the petition “must be filed in the court in which the prior proceedings were held, absent approval from the prior court.”
2. Designate the type of proceeding. Under § 501C.0201, paragraph (c), “The petition shall specify whether the interested person is invoking the jurisdiction of the district court as an in rem proceeding or as an in personam proceeding.” An in rem proceeding is aimed at the trust itself; an in personam proceeding is aimed at the people served. Without a designation, “the district court’s in rem jurisdiction is invoked.” In rem jurisdiction continues until transferred or ended by court order, while “If the district court’s in personam jurisdiction is invoked, the trust is not subject to continuing jurisdiction unless otherwise ordered by the court.”
3. Give notice. Under Minn. Stat. § 501C.0203, subdivision 1, “Upon the filing of a petition under the district court’s in rem jurisdiction by an interested person, the court shall, by order, fix a time and place for a hearing.” Notice in rem is given “by publishing, at least 20 days before the date of the hearing, a copy of the order for hearing one time in a legal newspaper for the county in which the petition is filed,” and “by mailing, at least 15 days before the date of the hearing, a copy of the order for hearing to those current trustees and qualified beneficiaries of the trust whose identity is known and whose location is known or reasonably ascertainable to the petitioner after making reasonable efforts to locate such persons.” In personam, under subdivision 2, “Notice of the judicial proceeding must be given by an interested person to the current trustees and the qualified beneficiaries in the same manner as set forth under Rule 4 of the Rules of Civil Procedure by serving a copy of the order for hearing and the petition at least 15 days prior to the hearing unless waived in writing by the current trustees and the qualified beneficiaries.” Both subdivisions add: “In the case of a qualified beneficiary who is a minor or an incapacitated person as defined in section 524.5-102, notice of the judicial proceeding shall also be given to any representative person acting on behalf of the qualified beneficiary in accordance with the provisions of sections 501C.0301 to 501C.0305 who is known to the petitioner.” A trustee who files has one more notice duty, under Minn. Stat. § 501C.0110, paragraph (a). It provides: “Whenever notice to qualified beneficiaries of a trust is required under this chapter, the trustee must also give notice to any other beneficiary who has sent the trustee a request for notice.” If the trust has a charitable share, Minn. Stat. § 501B.41, subdivision 2, provides: “The attorney general must be notified of, and has the right to participate as a party in, all court proceedings” “to construe the provisions of an instrument with respect to a charitable trust.” Subdivision 3 exempts some gifts, such as one naming “an organization that is then in existence” as the charitable beneficiary. The same subdivision also provides: “This subdivision does not affect any other notice to the attorney general required by this chapter or chapter 501C.” Under § 501C.0110, paragraph (d), “The attorney general of this state has the rights of a qualified beneficiary with respect to a charitable trust having its principal place of administration in this state.” Under § 501B.41, subdivision 4, “If proceedings are commenced without service of process and service of the pleadings upon the attorney general, a judgment or order rendered in the proceedings is voidable, unenforceable, and, upon the attorney general’s motion seeking relief, may be set aside,” and no settlement agreement in the proceedings “is valid unless the attorney general was made a party to the proceedings and joined any agreement or the attorney general, in writing, waived the right to participate.” Subdivision 5 provides: “Any service upon the attorney general under this section must be made personally or by registered or certified mail, return receipt requested.”
4. Know who the order binds. Under Minn. Stat. § 501C.0204, subdivision 1, an in rem order “is binding in rem upon the trust estate and all interested persons, including without limitation all beneficiaries, vested or contingent, even though unascertained or not in being.” Under subdivision 2, an in personam order “is binding on (1) a party who is served with notice of the judicial proceeding, (2) a party who appears in the judicial proceeding, and (3) any other party who may be bound by such parties as described in sections 501C.0301 to 501C.0305.”
5. Track the appeal period. Subdivision 1 provides: “An appeal from an order which, in effect, determines the petition may be taken by any party after service by any party of written notice of its filing as provided under the Rules of Appellate Procedure or, if no notice is served, within six months after the filing of the order.” I suggest checking the current text of that section and the appellate rules on the day an order is filed, because the date notice is served controls the period.

Because an in rem order binds beneficiaries who are not yet born or identified, it reaches more people than an in personam order. Section 501C.0202 allows a proceeding to “relate to one or more of the following matters,” so the same petition can also ask for an accounting or a trustee’s removal. For the removal process, see removing a trustee in Minnesota.

What can a court do when a trustee refuses a discretionary distribution?

When a Minnesota trust leaves a distribution to the trustee’s discretion, a court can decide what the trust’s standard covers and can review whether the trustee acted in good faith. The court generally reviews the trustee’s choice rather than making its own. Under Minn. Stat. § 501C.0814, paragraph (a), the trustee must exercise a discretionary power “in good faith, in accordance with the terms and purposes of the trust and, in the best interests of the beneficiaries.” That rule applies even when the trust calls the trustee’s discretion “absolute,” “sole,” or “uncontrolled.”

Two other rules limit what a beneficiary can demand:

1. A discretionary interest is not an enforceable right. Paragraph (f) provides: “If a distribution to a beneficiary is subject to the exercise of the trustee’s discretion, whether or not the terms of a trust include a standard to guide the trustee in making distributions, then the interest is neither a property interest nor an enforceable right, but a mere expectancy.”
2. Courts generally interfere with discretion only to prevent abuse. In Stisser, the Minnesota Supreme Court stated: “When a trustee’s exercise of power is discretionary, a court will generally interfere with the trustee’s decisions only to prevent an abuse of discretion.” The court added: “If a trust’s terms require mandatory action, there is no deferential review.”

One example is a trust that provides money for a grandchild’s “education,” with a trustee who refuses to pay for a welding program because the trustee reads the word to mean college. Whether “education” reaches a trade program is a question of what the words mean, and a court can answer it under § 501C.0202, clause (4). “Education” is also one of the words in the code’s “ascertainable standard,” which Minn. Stat. § 501C.0103, paragraph (b), defines as “a standard relating to an individual’s health, education, support, or maintenance.” If the trust says the trustee “shall” pay for education, the deferential review described in Stisser does not apply. If it says the trustee “may,” the question becomes whether the refusal was made “in good faith, in accordance with the terms and purposes of the trust and, in the best interests of the beneficiaries” under § 501C.0814.

For the trustee’s other duties, see the rights of beneficiaries in a Minnesota trust.

How is interpreting a trust different from reforming or modifying it?

Interpreting a Minnesota trust decides what its existing words mean, reforming it rewrites the words to match what the settlor actually intended when a mistake affected them, and modifying it changes the terms. Each remedy has its own proof. Under Minn. Stat. § 501C.0415, “The court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s intention if it is proved by clear and convincing evidence what the settlor’s intention was and that the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement.”

Moreland drew the line between reformation and resolving unclear language. A late amendment left most of the trust to one son and gave each other child 1%, but only “if they start acting [like] family again” toward that son, and $5,000 otherwise. The district court struck that condition as too vague to enforce and kept the rest of the amendment. The Minnesota Supreme Court affirmed, but not under § 501C.0415: “Equating an ambiguous trust provision to a mistake of law is not supported by pertinent precedent or statute.” It upheld the result under the court’s equitable powers, which Minn. Stat. § 501C.0106 preserves: “The common law of trusts and principles of equity supplement this chapter, except to the extent modified by this chapter or another law of this state.”

Modification is a separate set of rules. Under Minn. Stat. § 501C.0410, paragraph (b), a proceeding to approve or disapprove a modification “may be commenced by a trustee or beneficiary.” The main grounds are:

1. Consent. Under Minn. Stat. § 501C.0411, paragraph (a), “A noncharitable irrevocable trust may be modified or terminated upon consent of the settlor and all beneficiaries, even if the modification or termination is inconsistent with a material purpose of the trust.” Without the settlor, paragraph (b) provides: “A noncharitable irrevocable trust may be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.” If some beneficiaries refuse, paragraph (e) lets the court approve the change only if, among other findings, “the interests of a beneficiary who does not consent will be adequately protected.”
2. Unanticipated circumstances. Under Minn. Stat. § 501C.0412, paragraph (a), “The court may modify the administrative or dispositive terms of a trust or terminate the trust if, because of circumstances not anticipated by the settlor, modification or termination will further the purposes of the trust.”
3. Tax objectives. Under Minn. Stat. § 501C.0416, “To achieve settlor’s tax objectives, the court may modify the terms of a trust in a manner that is not contrary to the settlor’s probable intention.”

A trust cannot remove these powers: § 501C.0105, paragraph (b)(4), keeps “the power of the court to modify or terminate a trust under sections 501C.0410 to 501C.0416” beyond the trust’s terms. When the dispute is whether an amendment is valid at all, see challenging a trust amendment.

How does a nonjudicial settlement agreement resolve what a trust means?

Minnesota lets the people whose consent a court would need sign a binding agreement on what a trust means, without filing a lawsuit, as long as the agreement does not violate a material purpose of the trust and could have been approved by a court. Under Minn. Stat. § 501C.0111, paragraph (b), interested persons “may enter into a binding nonjudicial settlement agreement with respect to any matter involving a trust,” and clause (1) lists “the interpretation or construction of the terms of the trust.”

Four parts of the section shape the agreement:

1. Who must sign. Paragraph (a) defines “interested persons” as “persons whose consent would be required in order to achieve a binding settlement were the settlement to be approved by the court.”
2. What it cannot do. Under paragraph (c), “A nonjudicial settlement agreement is valid only to the extent it does not violate a material purpose of the trust and includes terms and conditions that could be properly approved by the court under this chapter or other applicable law.”
3. Who can sign for others. Sections 501C.0301 to 501C.0305 let parents, fiduciaries, and others represent minor, unborn, or unknown beneficiaries. Under Minn. Stat. § 501C.0301, paragraph (b), a representative’s agreement “is binding on the person represented unless the person represented objects to the representation before the consent, agreement, or waiver would otherwise have been effective.”
4. Optional court approval. Under paragraph (d), “Any interested person may request that the court approve a nonjudicial settlement agreement, to determine whether the representation as provided in sections 501C.0301 to 501C.0305 was adequate, and to determine whether the agreement contains terms and conditions the court could have properly approved.” Section 501C.0202, clause (22), lists a petition “to approve a nonjudicial settlement as provided in section 501C.0111.” If the trust has a charitable share, also check § 501B.41 on the attorney general.

An agreement avoids the hearing order, published notice, and service steps a petition requires. I suggest asking for court approval when a minor or unborn beneficiary is bound through a representative, because the court then decides whether that representation was adequate instead of leaving the question open. An agreement can also settle related issues, such as a trustee’s compensation or “the approval of a trustee’s report or accounting.”

Who pays the attorney fees when a court interprets a trust?

In a Minnesota trust case, the court may order the trust to pay a beneficiary’s or third party’s reasonable attorney fees and costs, but that award is discretionary rather than automatic. A trustee is instead entitled to reimbursement from the trust for expenses properly incurred in administering it. Under Minn. Stat. § 501C.1004, “In a judicial proceeding involving the administration of a trust, the court, as justice and equity may require, may award costs and expenses, including reasonable attorney fees, to any party from the trust that is the subject of the judicial proceeding.”

Two Court of Appeals decisions set the rules:

1. Beneficiaries. In In re Jorgenson Family Trust, 10 N.W.3d 502 (Minn. App. 2024), the court held: “We now expressly hold that section 501C.1004, not the common law, governs a beneficiary’s ability to recover attorney fees from trust assets.” Under the older common-law rule, among other requirements, a beneficiary could recover fees from the trust only in disputes over ambiguous trust language. The court explained that under the statute “any party may be entitled to attorney fees in trust disputes without limit by subject matter, based only on whether the district court concludes that justice and equity require the award.”
2. Trustees. In Lund v. Lund, 924 N.W.2d 274 (Minn. App. 2019), the court held that a trustee’s own fees are measured differently. Under Minn. Stat. § 501C.0709, paragraph (a), “A trustee is entitled to be reimbursed out of the trust property, with interest as appropriate, for” “expenses that were properly incurred in the administration of the trust.” Lund held that this section, supplemented by the common law, governs a trustee’s own fees, and that the common law “focuses on whether the fees are reasonable and incurred in good faith.”

An award of costs and reasonable attorney fees under § 501C.1004 is paid “from the trust that is the subject of the judicial proceeding,” which is the same property the beneficiaries share. In Stisser, the trustee made several settlement offers that went unanswered, and the court recorded that “The failure of the parties to settle Stisser’s demand for payment resulted in over 7 years of litigation in three states.” I suggest weighing a negotiated reading against the cost of a contested hearing before filing, because both sides’ fees may come out of the trust.

What should you check before filing a trust petition?

Before asking a Minnesota court to interpret a trust, I suggest four checks, because each one can change the answer or the risk of filing:

1. Which state’s law governs the trust’s meaning. Under Minn. Stat. § 501C.0107, paragraph (a)(1), the meaning and legal effect of the terms are determined by “the law of the jurisdiction designated in the terms of the trust unless the application of that jurisdiction’s law is contrary to a strong public policy of the jurisdiction having the most significant relationship to the matter at issue.” A trust signed in another state may name that state’s law, and a Minnesota court may then apply it.
2. Whether the trust has a no-contest clause. Some trusts penalize a beneficiary who asks a court to rule on a provision. The clause’s exact words decide what triggers it, so read it before filing. For how these clauses work, see no-contest clauses in Minnesota wills and trusts.
3. What records you have. A trustee’s reports and accountings can show how the trustee has read the disputed term in the past. For what a trustee must provide, see a trustee’s reporting and record-keeping duties.
4. Whether the dispute is really a breach claim. If the trustee has already acted against the trust’s terms, the petition may also ask the court “to redress a breach of trust” under § 501C.0202, clause (19). Breach claims have their own time limits; see deadlines to contest a trust or sue a trustee. A beneficiary who disputes who takes when a trust ends faces a separate limit if the trustee sends a proposal for distribution, because under Minn. Stat. § 501C.0817, paragraph (a), “The right of any beneficiary to object to the proposed distribution terminates if the beneficiary does not notify the trustee of an objection within 30 days after the proposal was sent but only if the proposal informed the beneficiary of the right to object and of the time allowed for objection.” I suggest checking the current text of that section the day a proposal arrives.

A trustee facing a disputed term has its own reason to file. In McLaughlin, the Minnesota Supreme Court stated: “Where, as here, it is difficult to ascertain the intended beneficiaries, the trustees are entitled to have the court pass upon the trust accounts and make a decree of distribution before the trustees make a final distribution of trust property.”

Next Steps When a Minnesota Trust’s Meaning Is Disputed

When the trustee and beneficiaries read a Minnesota trust differently, the first choice is whether everyone needed can sign a nonjudicial settlement agreement under § 501C.0111, which is valid only if it does not violate a material purpose of the trust, or whether the court must decide under § 501C.0202. If the dispute goes to court, the court will read the trust’s own words first and will consider outside evidence to interpret them only if it finds the language ambiguous. Reformation under § 501C.0415 is a separate request that needs clear and convincing proof of both the settlor’s intent and a mistake. The statutes quoted above are current as of this article’s date, and I suggest reading the current text before relying on any of them.

If you are a beneficiary or trustee facing a disputed trust term, email [email protected] with a brief description of the trust and the term in dispute. I start with an intake and conflict check before you send confidential documents. I can then analyze the trust instrument and tell you how a Minnesota court is likely to approach the question and which path fits. More on how I handle these cases is on my trust and estate litigation page.