Trust Under Jurisdiction Of One State Despite Ties To Another


With the growing popularity of living trusts and the mobility of the American public, the question often arises: which state court has jurisdiction over a trust dispute? Before trusts were common, disputes after the death of a property owner were handled in the courts of the state where the decedent had lived and died—and, usually, where the property was located. That is not always the case today.

Alexander L. Levine lived in New Jersey, and owned several shopping centers there. By the time he retired, in fact, he owned shopping centers in New York, Pennsylvania and North Carolina.

Mr. Levine retired to Florida, and in 1980 he signed a revocable living trust so that his estate could avoid the probate process. All his shopping centers in four states (but not including Florida, where he owned no property) were transferred to the trust.

In 1994 Mr. Levine died in Florida. His successor trustees, Carole Ann Steiger and Anthony R. Ullmann, continued to operate Mr. Levine’s shopping centers from the trust’s offices in New Jersey, and one of the trustees even lived in that state.

Three years later two of the trust beneficiaries became unhappy with its administration, and brought a lawsuit in New Jersey seeking to force an accounting. The New Jersey court decided that the trust was created under (and would be controlled by) Florida law, and that Mr. Levine had intended that it be run as a Florida trust. Consequently, the New Jersey action was dismissed, with the unusual additional ruling that the court would reconsider if Florida courts declined to take any action.

The trustees then filed an accounting in the Florida courts, and asked for approval of their administration of the trust. The beneficiaries objected, arguing that New Jersey really had control over the trust’s administration and interpretation. The Florida court disagreed, and the beneficiaries appealed.

The Florida Court of Appeals upheld the decision to manage the trust in Florida courts. According to the Court of Appeals, either Florida or New Jersey could have jurisdiction over the trust, and the Florida trial court’s decision to exercise that jurisdiction was not wrong—particularly in light of the New Jersey court’s refusal to act. Levine v. Steiger, August 7, 2000.

Florida may have sufficient connections to the Levine trust to direct its administration, but usually trusts are held to be under the jurisdiction of the state where trustees live and the trust is administered. That is also where the trust usually will file state income taxes, and state law may even require that the trust register in that state. Simply by choosing an out-of-state trustee, the person establishing a trust can accidentally or intentionally cause it to be subjected to another state’s laws and taxes.

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