Thirty-six states have adopted some variation of the Uniform Trust Code (UTC). The UTC’s general goal is to provide uniformity and a set of default rules among the states in the regulation of trusts, as well as the rules to be followed in trust-related litigation.  But practitioners must be mindful that each enacting jurisdiction has adopted its own version of the UTC, and there are differences—in some cases material differences—between each jurisdiction’s adaptation.

A recent opinion from the Minnesota Court of Appeals highlights one unique aspect of the Minnesota Trust Code (the Code) (an adaption of the UTC passed in 2015) that requires parties in trust litigation under the Code to decide whether to invoke the court’s jurisdiction in rem, in personam or both.

In Rem vs. In Personam?

Before discussing this opinion and its impact on cases under the Minnesota Code, a brief primer on the differences between in personam and in rem jurisdiction is in order.

In personam jurisdiction (or personal jurisdiction) generally refers to a court’s power to exercise control over the parties who have an interest in a trust. When a court exercises in personam jurisdiction over the parties in trust litigation, the outcome of the case typically binds all parties who were properly served with notice of the proceedings and had an opportunity to appear and be heard (even if the party elected not to appear).

In contrast, rem jurisdiction (in Latin, in rem literally means “against or about a thing”) refers to a court’s power to exercise control over a trust or trust property. When parties in trust litigation invoke a court’s in rem jurisdiction, the outcome of the case typically binds the trust itself and will resolve all claims or interests of any person with respect to the trust or trust property.

Beneficiary Seeks Removal of Trustee

With the basic understanding that in personam jurisdiction relates to the court’s ability to bind people and in rem jurisdiction relates to its ability to bind property, we turn to the Minnesota Court of Appeals’ recent decision in Swanson v Wolf, 2023 WL 1094140 (Jan. 30, 2023). In this case, Swanson filed a petition in the trial court seeking various forms of relief, including an order removing her sister (Wolf) as the trustee of a trust that was established for their mutual benefit. In her pleadings, Swanson failed to specify whether she was invoking the court’s jurisdiction in rem over the trust, in personam over Wolf, or both. The record also demonstrated that Swanson failed to personally serve her petition on Wolf, a necessary prerequisite to invoking the court’s in personam jurisdiction under the Code. Accordingly, under default rules established under the Code, the appellate court ruled that Swanson invoked the court’s in rem jurisdiction over the trust but failed to invoke it’s in personam jurisdiction over Wolf herself.

After concluding the court’s jurisdiction was limited to in rem jurisdiction over the trust, the appellate court turned to whether the trial court had the power to order Wolf’s removal as trustee. Although Wolf had actual notice of Swanson’s claims and participated in the trial court proceedings below, the appellate court held the trial court was powerless to enter an order removing Wolf as trustee because it was acting solely in rem. In the relevant part, the appellate court held that in order “to issue an order granting a petition to remove a trustee, the district court must exercise in personam jurisdiction” over the trustee.

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Legislative History Relevant

Given the trustee’s active participation in the trial court proceedings in Swanson v. Wolf, the appellate court’s conclusion seemingly elevates form over substance. But in its reasoning, the court cited legislative history relevant to Minnesota’s adoption of the UTC. In particular, the court noted that before Minnesota adopted the UTC in 2015, in rem jurisdiction was the only way to invoke the court’s jurisdiction in trust proceedings under Minnesota law. The court also found that in adopting its version of the UTC, the drafters of the Code intended to establish a “dual track for trust litigation.” Under this dual track, the court concluded that parties in trust litigation under the Code must choose whether to proceed in rem, in personam, or both and that by failing to make a choice, the court must default to proceeding exclusively in rem (Minnesota’s only form of the jurisdiction in trust proceedings before its adoption of the UTC).

Effect of Decision

From a practical perspective, in rem decisions generally produce a more comprehensive result on the merits, because they bind the trust itself and all future claimants with an interest in the trust, including remainder beneficiaries and those not yet in existence. However, when the desired outcome and remedies sought are personal to an individual (for example, trustee appointments, removals, surcharges, etc.), Swanson v. Wolf now dictates that petitioners under the Code must invoke the court’s in personam jurisdiction over any person the petitioner seeks to bind so that the court has the authority it needs to bind the individual targets of the action.

The additional nuances and particularities of Swanson v. Wolf are beyond the scope of this article.  However, the opinion highlights a unique aspect of the Code and serves as an important reminder that even in UTC states, the laws governing trust litigation often vary from jurisdiction to jurisdiction, and decisions about where and how to proceed with these types of cases should be made thoughtfully.

Brian Dillon is the Partner in Charge of the Minneapolis office for Lathrop GPM. He is an experienced litigator who specializes in trusts and estates litigation, complex business and shareholder disputes, and responding to government investigations and enforcement actions.  


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