The New Jersey Uniform Trust Code – Part 14: Jurisdiction and Venue
A. NJ UTC
N.J.S.A. § 3B:31-8 of the NJ UTC initially states that a designation of the principal place of administration in the terms of the trust will be upheld so long as “(1) a trustee maintains a place of business located in or a trustee is a resident of the designated jurisdiction; or (2) all or part of the administration occurs in the designated jurisdiction.” Id. at 8(a). However, the NJ UTC permits the transfer of a trust’s principal place of administration if no designation is made in the trust:
the initial principal place of administration of a nontestamentary trust shall be this State if the trust is governed by the law of this State, and the principal place of administration of a testamentary trust shall be the jurisdiction in which the decedent was domiciled at the time of death.
Id. A trustee may transfer the principal place of administration of a trust, without judicial approval, so long as he or she notifies all qualified beneficiaries at least 60 days before initiating the transfer. Id. at 8(d). If a qualified beneficiary notifies the trustee of an objection to the transfer, the trustee must then “secure judicial approval for the transfer.” Id. at 8(e).
Within this authority to transfer the principal place of administration of a trust, the NJ UTC places a continuing duty on the trustee “to administer the trust at a place appropriate to its purposes, its administration, and the interests of the beneficiaries.” Id. at 8(b).
Further, the NJ UTC contains a governing law provision:
The meaning and effect of the terms of a trust are determined by:
- the law of the jurisdiction designated in the terms unless the designation of that jurisdiction’s law is contrary to a strong public policy of the jurisdiction having the most significant relationship to the matter at issue; or
- in the absence of a controlling designation in the terms of the trust, the law of the jurisdiction having the most significant relationship to the matter at issue.
Id. at 7.
Under the NJ UTC, it is not clear if a trustee could change the principal place of administration of the testamentary trust. A trustee would not need judicial approval so long as the qualified beneficiaries, a distributee or permissible distributee (§ 3B:31-2) do not notify the trustee of an objection. The NJ UTC only designates the initial place of administration for an inter vivos trust; this same distinction is not made for testamentary trusts.
B. New Jersey Common Law and Court Rules
In general, the New Jersey Superior Court has authority over all controversies respecting trusts, N.J.S.A. § 3B:2-2, and the Chancery Division has “inherent jurisdiction” over these controversies. United Towns Bldg. & Loan Ass’n v. Schmid, 23 N.J. Super. 239, 246 (Ch. Div. 1952).
A court must have jurisdiction over either the trustee or the trust property to exercise its “power” over the trust. 76 Am. Jur. 2d Trusts § 601. Compare Stern v. Stern, 196 N.J. Super. 540, 544-45 (App. Div. 1984) (court asserted jurisdiction over a trustee who had an interest in real property in New Jersey finding that the trustee voluntarily employed the trust funds to purchase realty in the state and that action arises out of the interest in that property); and Edelman v. Merrill Lynch Bank & Trust Co. (Cayman) Ltd., No. A-4529-06T3, 2009 WL 425906, at *6-7 (N.J. Super. Ct. App. Div. Feb. 24, 2009) (while trust was established in the Cayman Islands and the trustee was domiciled in the Cayman Islands, investment management was conducted in New Jersey; therefore the action of managing in New Jersey could amount to purposeful availment of the forum state creating sufficient minimum contacts); with Hanson v. Denckla, 357 U.S. 235, 249 (1958) (ruling that a settlor’s domicile is “unavailing as a basis for jurisdiction over . . . trust assets”); and Lerman v. Lerman, No. A-1953-07T3, 2009 WL 2365973 (N.J. Sup. Ct. App. Div. Aug. 4, 2009) (finding that trial court did not have jurisdiction to order payment of discretionary trust funds for beneficiary’s child support arrearages when the trust was created in Florida, the funds belonged to the trust, and the trustees had sole discretion to determine the payment of funds to beneficiary).
The Appellate Division, in In re A.N., 430 N.J. Super. 235 (App. Div. 2013), clarified the jurisdiction of the Chancery Division, Probate Part in special needs trusts. The beneficiary’s parents sought instructions pertaining to the trust’s proposed purchase of the family home and approval of prior and future payments related to the maintenance of the home for the beneficiary’s care as well as instructions regarding the impact of the changes on the trust beneficiary’s Medicaid eligibility. The Appellate Division concluded that the Chancery Court could review current Medicaid statutes and regulations in order to provide advice that the proposed transaction was unlikely to adversely affect Medicaid eligibility; however, the court cannot bind the Division of Medical Assistance and Health Services (“DMAHS”) to a Medicaid eligibility determination without allowing the agency to conduct its own comprehensive analysis. Id. at 245-46.
Once New Jersey jurisdiction is established over a trust controversy, the proper venue must be determined. R. 4:3-2(a) provides that in a probate action, venue is laid according to R. 4:83-4. R. 4:83-4 includes five sections, each establishing venue for specific types of cases.
For testamentary trusts, venue must be laid where the decedent was domiciled at death. R. 4:80-1(c); R. 4:83-4(c). If the decedent was not domiciled in New Jersey, then venue is laid in any county in which the decedent left property. R. 4:80-1(c).
For inter vivos trusts, the relevant standards are at times unclear or applied without uniformity, but R. 4:83-4 is the starting point. For example, in actions brought by or against a trustee (or any fiduciary) who received letters of appointment in New Jersey, “to account for the estate, real or personal for which the fiduciary is chargeable,” or “for directions by the court as to fiduciary’s authority or duties,” venue is laid in the county in which the fiduciary received the letters of appointment. R. 4:83-4(c). In an action for the appointment of a trustee or substitute trustee, venue is laid in the county where there is “any property of the trust estate at the commencement of the action or in the county in which a trustee is domiciled at the time the action is commenced.” R. 4:83-4(d). All subsequent proceedings which affect the trust, including the appointment of an additional or substituted trustee, are generally to be brought in the original venue. Id.
It appears that, under R. 4:83-4(e), in other contexts, for inter vivos trusts venue is laid in accordance with R. 4:3-2(a). Under that latter Rule, in turn, for “actions affecting title to real property or a possessory or other interest therein,” venue is laid “in the county in which any affected property is situate, ….” R. 4:3-2(a)(1). Except in other specified instances – including those governed by R. 4:83-4(a)-(d) (probate actions as discussed above) – “the venue in all other actions in the Superior Court shall be laid in the county in which the cause of action arose, or in which any party to the action resides at the time of its commencement, or in which the summons was served on a nonresident defendant ….” R. 4:3-2(a)(3). Under R. 4:3-2(b), a corporation “shall be deemed to reside in the county in which its registered office is located or in any county in which it is actually doing business.”
Under these standards, for instance, if a corporate trustee is the trustee of an inter vivos trust, and no prior proceedings have occurred, then in most situations the trustee can bring an application where that trustee is domiciled at the commencement of the action. Again, under R. 4:3-2(b), a corporation is considered to reside in the county in which its registered office is located or in any county in which it is actually doing business. Therefore, for most corporate trustees a number of counties would be an appropriate venue.
Finally, R. 4:3 provides that a request for a change of venue must be made by motion. In a summary action, this motion may be made on or before the return date. R. 4:3-1(b), 3(b).