Can Utah courts order the State to pay trustee fees when trust assets are tied up in litigation? Shurtleff v. In re United Effort Plan Trust Explained

In Shurtleff v. In re United Effort Plan Trust, the Utah Supreme Court addressed whether a probate court can order the State to pay interim trustee fees when trust assets are unavailable due to ongoing litigation. The case arose from the complex administration of the United Effort Plan Trust, a religious trust associated with the FLDS Church valued at over $100 million.

Background and Facts

The Utah Attorney General petitioned the probate court in 2005 to appoint a Special Fiduciary to administer the UEP Trust after concerns about mismanagement by FLDS trustees. Bruce Wisan was appointed and successfully reformed the trust into a nonreligious charitable trust. For three years, the Special Fiduciary paid administration expenses through asset liquidation and occupancy fees. However, in 2008, FLDS beneficiaries began challenging the reformation, tying up trust assets in litigation and stopping occupancy fee payments. By 2011, the Special Fiduciary had accumulated over $5.7 million in unpaid fees with no access to trust funds for payment.

Key Legal Issues

The central issue was whether Utah Code section 75-7-1004(1) authorized the probate court to order the State to pay interim trustee fees. This statute permits courts to award costs and expenses “as justice and equity may require” to be paid “by another party or from the trust.” The State argued that ordering payment from a non-trust source violated the general rule that trustees are paid from trust assets and raised constitutional challenges under separation of powers and credit extension provisions.

Court’s Analysis and Holding

The Utah Supreme Court affirmed the probate court’s order requiring interim State payment. The court emphasized that section 75-7-1004(1) provides an alternative payment mechanism in unusual circumstances where justice and equity require it. Three factors supported the award: (1) requiring the Special Fiduciary to bear expenses personally would be unjust; (2) the State’s actions had “substantially altered” its position and “undercut the Special Fiduciary’s ability to obtain payments,” including withholding occupancy fees and proposing settlements that favored FLDS interests; and (3) the probate court was best positioned to assess equity after seven years of close supervision. The court rejected the State’s constitutional challenges as unpreserved and lacking merit.

Practice Implications

This decision establishes important precedent for equitable fee allocation in trust administration. Courts have broad discretion under section 75-7-1004(1) to order alternative payment sources when traditional trust funding is unavailable. The ruling also demonstrates that parties who seek appointment of fiduciaries may bear financial responsibility if their subsequent actions undermine the fiduciary’s compensation. Practitioners should carefully consider fee payment mechanisms at the outset of special fiduciary appointments and preserve arguments about equitable allocation early rather than raising them after adverse orders.