William and Meredith Zutavern had four children: Shawn, Shayne, Kelly and Maria. They owned 22,000 acres of Sandhills real estate where they had a cattle ranch.
William created a revocable trust in 2008. He died in 2011. Meredith was the successor trustee. At the time of William’s death, two trusts were created. One trust (the Family Trust) would be funded in the maximum tax free amount under the federal estate tax. The other trust was solely for the benefit of his wife and was her property absolutely. The Family Trust would pay Meredith income for her life.
Although not exactly clear from the opinion, the real estate and cattle were owned by a corporation consisting of Shawn and Shayne and their parents. It also appears to me that Shayne is the younger brother of Shawn. The parents’ shares of the cattle operation were a part of the trust estate. After William’s death, the Family Trust owned 68 percent of the corporation. The important thing here was that upon the death of Meredith, only those children or grandchildren who were “actively involved in the management of the ranch” would receive the cattle ranch corporation’s shares. The two daughters were to receive other property.
Things began to go south when Meredith sold about one quarter of the ranch in 2015 and 2016. Things came to a head when Shawn was fired by the cattle corporation in 2017; where he had worked for 37 years. Russell is Shawn’s son. He also worked at the ranch and he was fired too.
Shawn and Russell went to court to remove Meredith as trustee. They feared that the rest of the ranch and cattle would be sold and the money divided equally amongst all the children. This course of action would obviously be significant because putting together a large Sandhills ranch is not an easy task. Every piece of real estate is unique and once the existing ranch is sold, it’s gone.
The trial court judge held that Shawn and Russell had no standing to sue Meredith because they were not beneficiaries of the trust. The reasoning was that since Shawn and Russell had been fired by the cattle corporation, they were no longer actively in the operation of the cattle operation. They were thus no longer beneficiaries of the Family Trust. The Supreme Court reversed.
It was held that Shawn and Russell had a contingent future beneficial interest in the Family Trust and thus had standing to sue.
Source: In re William R. Zutavern Revocable Trust, 309 Neb. 542 (June 25, 2021).