Nonjudicial settlement agreement

Where the statute uses it: Minn. Stat. § 501C.0111

What it means

Six things a trust’s interested persons can settle without a judge, and the list is expressly not the limit.

Except as otherwise provided in paragraph (c), interested persons may enter into a binding nonjudicial settlement agreement with respect to any matter involving a trust including but not limited to:

(1) the interpretation or construction of the terms of the trust;

(2) the approval of a trustee's report or accounting;

(3) direction to a trustee to refrain from performing a particular act or the grant to a trustee of any necessary or desirable power;

(4) the resignation or appointment of a trustee and the determination of a trustee's compensation;

(5) transfer of a trust's principal place of administration; and

(6) liability of a trustee for an action relating to the trust.

The words “including but not limited to” do the heavy lifting. The subject matter is “any matter involving a trust” and the six clauses are examples of it rather than a menu.

Who counts as an interested person is defined by circularity, deliberately. Paragraph (a) defines them as “persons whose consent would be required in order to achieve a binding settlement were the settlement to be approved by the court.” The question is not who feels involved; it is whose signature the court would have needed.

Paragraph (c) is the constraint that keeps the device from being a private amendment power: “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.”

Where the word shows up

In the trust code’s own plumbing. Section 501C.0808, subdivision 1(f), treats a nonjudicial settlement agreement made under § 501C.0111 as part of the governing instrument of a directed trust, and subdivision 10 — headed “Applicability” — brings within that section a trust modified by such an agreement to appoint or provide for a directing party. Subdivision 10 confers nothing; the power to settle is § 501C.0111 itself.

The agreement is also reviewable on request rather than in the dark. 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.”

That check earns its place. Where a trust has minor or unborn beneficiaries, § 501C.0303(a)(5) lets a parent represent and bind the parent’s minor or unborn child — but only “if a conservator for the child has not been appointed” and only, under paragraph (a)’s chapeau, “[t]o the extent there is no conflict of interest between the representative and the person represented or among those being represented with respect to a particular question or dispute.” Where the parents disagree, paragraph (b) sets a four-step tiebreak that ends in a guardian ad litem.