A Strong Offense
A Stronger Defense
Fiduciaries should always be thinking of ways to get the statute of limitations started. Why have a claim hanging over your head for many years, when you can take actions that shorten the time in which a claim may be brought against you? Typically, we think of getting that time running in terms of sending regular account statements to the trust beneficiaries. In Domino v. Braswell, the Court of Appeals of Mississippi got us thinking about another way to start the clock running: by publicly recording documents.
A grantor, the trustees, and the beneficiaries of a trust modified the trust to correct a clerical error. The trust modification was filed as a public record in 1997. After the grantor died, in 2013, a complaint was filed challenging the modification. In Mississippi there is a ten-year statute of limitations for this type of trust claim. The court found that the ten-year statute of limitations began to run when the trust modification was filed as a public record. The reason being that the filing of a document affecting real estate with the Clerk of the Chancery Court of the county in which the real estate is situated is notice to the world of the instrument. Therefore, an action based on that instrument begins running from the filing date.
Fiduciaries may want to give extra thought to the type of instruments they should be publicly recording in order to get the statute of limitations running. Of course, a trustee shouldn’t just run off and publicly file every trust instrument in their vault. There are other factors, such as privacy, and fiduciary duties to consider. However, there are going to be circumstances in which the public filing of documents will work in everyone’s favor and may be in furtherance of a trustee’s fiduciary duties because of the protection the public record can provide the beneficiaries, too.
As an addendum, the court left open a question of law in Mississippi: while Mississippi case law prohibits solely a grantor and beneficiaries from modifying a trust, there is not yet Mississippi case law that deals with modification of a trust when the grantor, trustees, and beneficiaries all agree. Non-judicial modification in Mississippi under these circumstances and how the Uniform Trust Code’s non-judicial modification provision comes into play are matters for another day.