Petition for instructions and complaints for declaratory judgment in the Probate Court

Issue March 2014 By Patricia L. Davidson

Tools to determine intent and keep the peace

Fiduciaries have a lot of authority; the proverbial buck stops with them. And with all that discretion, not to mention all that fiduciary duty, fiduciaries must have all the answers, right? Aren't they the omniscient wizards of wills and trusts?

Believe it or not, trustees and personal representatives do not have all the answers. Neither do their wise counsel. Sometimes an instrument is clear as mud. Or it is internally inconsistent. Or the beneficiaries have different opinions about what a fiduciary should or should not do.

When questions about the interpretation of an instrument persist, petitions (or sometimes complaints) for instructions and complaints for declaratory judgment utilize the probate court's equity jurisdiction to solve issues that may or may not be adversarial. While a petition for instructions takes a neutral position, a complaint for a declaratory judgment defines a controversy and then advocates for a specific resolution.

A petition for instructions asks the court, "what do we do?" A fiduciary typically files the petition, seeking specific direction from the court in the form of a judgment. The judgment resolves the legal question and provides guidance to the fiduciary, successor fiduciaries and beneficiaries.

The judgment also should insulate a fiduciary from liability for actions the fiduciary takes in accordance with the judgment. A petition for instructions and the resulting judgment take some of the guesswork out of fulfilling fiduciary obligations and thus should help avoid, or at least minimize, conflicts with beneficiaries and the potential claims for breach of fiduciary duty that can arise from those conflicts.

In addition to how to interpret an ambiguous instrument, questions asked by a petition for instructions can include how to make distributions, how to value assets, whether or not there is authority to take action, how to apply or interpret relevant law, and whether adopted issue have the same rights as biological issue. A petition for instructions must address a present issue. It cannot request direction on a future duty, hypothetical action or ratification of the fiduciary's past conduct. 

A petition for instructions is specifically permitted by the Massachusetts Uniform Trust Code (MUTC). G.L.c. 203E, §§ 302-04. It must be served upon all interested parties. A citation may also direct publication of the proceedings. In many cases, the fiduciary may seek and/or the court may require the appointment of a guardian ad litem to represent the interests of minors, incapacitated or unascertained beneficiaries. Virtual representation under the MUTC may minimize the need for a guardian ad litem in some circumstances.

A petition for instructions can provide a context for interested parties, usually differing beneficiaries or factions of beneficiaries, to litigate if they seek to take a position on the issues. Often, once the petition tees up the issues, a fiduciary can watch from the sidelines as beneficiaries with opposing legal positions litigate.

For example, a will may be ambiguous about the distribution of a share of a beneficiary who predeceased the testator. A literal reading of one sentence seems to indicate the share passes to the testator's surviving siblings and a literal reading of another sentence seems to indicate the share passes to the issue of the surviving siblings. Everyone agrees that the drafting is poor and ambiguous. Rather than make a distribution that may or may not be consistent with the testator's intent or that may or may not anger the siblings or the issue of the siblings, the personal representative should file a petition for instructions. The siblings or issue of the siblings' can then decide whether or not to advocate in a favor of one interpretation and potentially litigate against those who have a different interpretation.

Litigation of the issues raised by a petition for instructions is governed by the interplay of the Supplemental Rules of the Probate and Family Court and the Massachusetts Rules of Civil Procedure. Interested parties often choose not to appear, agreeing that an instrument is ambiguous and willing to let the court decide whatever the court decides. Or interested parties may file an appearance, answer and engage in discovery, particularly if the issue concerns a settlor's or testator's intent. Interested parties may file counterclaim or cross-claim for a declaratory judgment asserting his/her/their view of the appropriate outcome.

The petitioner is typically eager to obtain a judgment as soon as possible. The petitioner often must coordinate the advancement of the case since the fiduciary is often most interested in an expeditious resolution. If no interested parties appear, the petitioner should request a status or pretrial conference to ascertain how the court wishes to advance and adjudicate the matter. A court may request legal memorandum from the petitioner on the issues. While the petitioner will not take a position on the matter, the petitioner can explain the pending issues and relevant law. The petition should try to ensure that a judgment is comprehensive, answering the questions raised and providing sufficient analysis so that the judgment is defensible to interested parties and successor fiduciaries.

If interested parties appear in the action, they may file cross-motions for judgment on the pleadings or cross-motions for summary judgment. If material facts are in dispute, as is often the case in matters of intent, an evidentiary hearing may be necessary in order for the court to issue the requested instructions.

Like other cases, settlement may be appropriate in order to minimize fees and achieve a modicum of harmony among interested parties. A fiduciary will almost always seek to have the settlement agreement entered as a judgment to minimize liability and to provide explanation to others, known and unknown, who have an interest in the matter. Any settlement should be consistent with the settlor's or testator's likely intent, agreeable to a sufficient number of interested parties, particularly those who have appeared, and within the scope of the fiduciary's discretion.

A petitioner's fee may be paid from the estate or the trust. Respondent's fees are with the court's discretion as "justice and equity" permit under G.L.c. 215, §45. An award of fees to a respondent is unlikely given that although respondents in a petition for instruction may disagree on the outcome, they generally agree of the necessity of the proceedings.

Unlike a petition for instructions, complaint for a declaratory judgment provides a context for a fiduciary or another interested party to take a definitive position on a matter concerning interpretation of a trust or will. Under G.L. c. 234, §1, a declaratory judgment seeks a binding declaration of a "right, duty, status and other legal relations thereby, either before or after a breach or violation thereof has occurred." A complaint for declaratory judgment in the probate court may address similar issues as a petition for instructions, but the complaint for declaratory judgment defines a present or anticipated controversy and advocates for a specific resolution.

A fiduciary may file a complaint for declaratory judgment in order to preempt more adversarial litigation, such as a potential breach of fiduciary duty claim that may be brewing among unhappy beneficiaries. The declaration would settle the controversy and remove uncertainty for all interested parties. If the fiduciary acts in accordance with the declaration, the fiduciary would be insulated from liability.

While a complaint for declaratory judgment is an adversarial proceeding, it is often considered the least adversarial type of lawsuit. Nevertheless, it may create conflicts between fiduciaries and beneficiaries or between factions of beneficiaries. The complaint provides a context for differing parties to litigate, sometimes very assertively. Defendants typically file a counterclaim seeking a declaration consistent with their view of the issues. The litigation may require discovery and a trial, particularly if intent is at issue. A declaratory judgment action certainly can be settled if a sufficient number of interested parties assent. The parties will typical seek to memorialize the settlement as a judgment in order to settle the controversy now and in the future.

In probate matters, rightly so, courts are most concerned with honoring the intent of settlors and testators. Wills and trusts typically provide the window into that intent. But when they don't, petitions for instructions and complaints for declaratory judgment provide fiduciaries and beneficiaries tools that help ensure precise interpretation of instruments and, perhaps more importantly, help all interested parties, particularly trustees and personal representatives, sleep a little better at night.