KENNETH SMITH v. KAYLON GALE SMITH ET AL (2025)

Kaylon Smith, the trustee of the Living Trust of David and Kaylon Smith, appeals a judgment that granted her stepson, Kenneth D. Smith's, request for an accounting on the trust and for the trust documents to be produced. Kaylon also alleges the trial court erred in denying her exceptions related to the production and accounting of the trust, including exceptions of prematurity, no cause of action, and no right of action. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY:

On November 27, 2012, David and Kaylon Smith executed an irrevocable trust named the Living Trust Agreement of David and Kaylon Smith (the “Living Trust”), wherein they were the settlors, trustees, and beneficiaries of the Living Trust. According to the Affidavit of Trust, “the Smiths created the Trust Agreement with the intent that the assets transferred to the trust be held for the benefit of the trust beneficiaries on the terms and conditions set forth in the Trust Agreement.” The statement of intent further states, as follows:

The Settlors’ objectives in creating the trust include, but are not limited to, the following:

(1) The trust is established for the purpose of avoiding probate and estate administration.

(2) The trust estate serves as a means to manage the Settlors’ assets contained herewith, ensuring that any assets in this trust are not subject to the claims of any creditors of the Settlor or any beneficiary named herein to the maximum extent permitted by law.

(3) Any contribution made to this trust is to be treated as an incomplete gift for federal and stated gift tax purposes and included in the Settlor's taxable estate at death, subject to the provisions contained therein.

(4) The assets of the trust estate, including, but not limited to, any life insurance proceeds, are to be excluded for federal estate tax purposes from the gross estate of the trust beneficiaries.

On March 14, 2020, Kaylon's biological son, Christopher Clark, died, and on March 18, 2020, her husband, David, died. On February 23, 2021, Kaylon executed an Affidavit of Restatement of Trust to “replace and supersede the original trust dated November 27, 2012” with the February 23, 2021 revised Living Trust agreement. According to the February 23, 2021 affidavit, the beneficiaries of the lifetime trust created by the Living Trust “dated November 27, 2012, as restated on February 23, 2021, are The Separate Share Trust of Kenneth D. Smith, The Separate Share Trust of Lisa L. Jawahar,  ¹ and the Separate Share Trust of Jennifer Leigh Greene.”² In her brief, Kaylon states that “[t]he Separate Share Trusts are not purely the beneficiaries of the Trust; they are the Lifetime Trust Principal Beneficiaries and Lifetime Trust Residuary Beneficiaries.” Although the 2012 and 2021 Living Trust Documents are filed as exhibits with this court, the motion to seal the documents was granted on May 8, 2024. However, upon reviewing the 2012 and 2021 Living Trust Documents, we note that the two trust documents were consistent in stating that the Settlors, Mr. and Mrs. Smith, were each the income beneficiaries of the Living Trust, and that under the Separate Share Trust of Kenneth D. Smith, Kenneth had a one-fourth interest in the Lifetime Trust as a principal beneficiary, a one-fourth interest in the Lifetime Trust as a residuary trust principal beneficiary, and was the income beneficiary of the Kenneth D. Smith Separate Share Trust. It is also worth noting that the 2012 Living Trust, which included the Separate Share Trust of Kenneth D. Smith, evidenced that the Smiths transferred three immovable properties, a life insurance policy, a savings account, and two brokerage accounts, which became known as the “trust estate” for the Living Trust.

On March 20, 2024, Kenneth filed a petition to compel Kaylon, as trustee of the Living Trust, to provide a copy of the trust documents and for an accounting. Specifically, the petition stated as follows, in pertinent part:

11.

Furthermore, Petitioner presumes that, at the least, he is a beneficiary of the Separate Share Trust of Kenneth D. Smith, since it contains his name. However, KAYLON will not communicate with Petitioner regarding his status as a beneficiary.

12.

In addition, Kaylon has represented that she is no longer the Trustee, but that Edward Jones Trust Company is the Trustee.

13.

Petitioner reached out to Edward Jones Trust Company, who was able to confirm that they did not have records of them serving as the trustee.

14.

La[.] R.S. 9:2088 requires a trustee to render to a beneficiary at least once a year, a clear and accurate account covering his administration of the trust. Each annual account must show in detail all receipts and disbursements and deliveries of other trust property during the year, and shall set forth a list of all items of trust property at the end of the year.

15.

As further evidenced in Exhibit C [an August 3, 2023 formal demand for an accounting of Living Trust and documents] attached hereto and made a part hereof, Petitioner has requested an accounting from KAYLON, but she has refused to provide him with any documents or information as to the assets or financial transactions of the David and Kaylon Trust, Restated Trust, or the Separate Share Trusts.

16.

La. R.S. 9:2089 requires a trustee to give to a beneficiary upon his request complete and accurate information as to the nature and amount of trust property, and permit him to inspect the subject matter of the trust and other documents relating to the trust.

17.

As further evidenced in Exhibit C attached hereto and made a part hereof, Petitioner has requested that KAYLON provide him with a copy of the David and Kaylon Trust, and Restated Trust, which she has refused to provide.

18.

Petitioner has not been provided with any other information other than Exhibits A [the November 27, 2012 Affidavit of Trust] and B, [the February 23, 2021 Affidavit of Restatement of Trust] which are a public record.

19.

Petitioner was told by KAYLON's attorney that the David and Kaylon Trust contained a no contest clause which precluded any challenges to the decisions of the trustee and the settlor.

20.

This warning further supports his conclusion that he is a beneficiary of the David and Kaylon Trust and/or the Separate Share for Kenneth D. Smith, because if he was not a beneficiary, then there would be no reason to warn of the existence of a no contest clause.

21.

To the extent a no contest clause exists, Petitioner avers that any such clause that purports to limit a beneficiary's ability to seek information from a trustee that is expressly permitted by law is against public policy and should be declared null.

22.

Petitioner further avers that KAYLON'S repeated refusal to provide the most basic of information to a beneficiary constitutes a breach of her fiduciary duty and that all costs of these proceedings, as well as her attorney fees, should be cast against KAYLON personally.

On May 6, 2024, Kaylon filed exceptions of no cause of action and no right of action, alleging that “the Separate Share Trust of Kenneth D. Smith is not the same under Louisiana law as Kenneth D. Smith” and that “The Petition fails to state a cause of action because it does not and cannot allege that Kenneth D. Smith is the actual beneficiary of the David and Kaylon Smith Trust.” Kaylon also argues that Kenneth has no right of action because the “Edward Jones Company is the trustee of the Separate Share Trust of Kenneth D. Smith.” Further, Kaylon argues that there is no legal requirement to produce the trust documents.

On May 13, 2024, Kaylon filed an exception of nonjoinder of a party, arguing that Kenneth “is required to sue both the trustee and the obligor pursuant to Louisiana Revised Statute 9:2222” and that the Edward Jones Trust Company is the trustee for the Separate Share Trust of Kenneth D. Smith. On that same date, a hearing was held whereby the trial court granted the exception of nonjoinder for the Edward Jones Trust Company to be joined as a party. A signed judgment was rendered on May 28, 2024, and ordered Kenneth to “amend the Petition to name Edward Jones Trust Company as a Defendant within fifteen (15) days of the execution of this Judgment in the above captioned matter.”

On May 20, 2024, Kenneth filed a motion for new trial, arguing that the trial court's ruling “based on the argument of [Kaylon] that a written acceptance [by the Edward Jones Trust Company] is not necessary is clearly contrary to the law requiring an express written acceptance by the trustee.” In support of the motion for new trial, Kenneth cites to La.R.S. 9:1824, which states, “If the trustee was not a party to the trust instrument, he must accept the trust in writing within a reasonable time after its creation, or the proper court shall appoint a trustee.” Thus, Kenneth requested that the exception of nonjoinder of a party be set aside and vacated, and that Kaylon be ordered to provide a copy of all trust documents and a complete accounting of her tenure as trustee of all trusts to Kenneth D. Smith.

On May 28, 2024, Kenneth filed a first amended petition to compel Kaylon to provide a copy of the trust documents and for an accounting, which named Edward Jones Trust Company as a Defendant pursuant to the trial court's order.

On June 17, 2024, a hearing was held on the motion for a new trial. Because Kaylon was unable to produce a signed document from Edward Jones Trust Company that accepted the position as Trustee of the Separate Share Trust of Kenneth D. Smith, the trial court granted the motion for new trial upon finding that “there is no Trustee of the Separate Share Trust of Kenneth Smith” and that “Kenneth Smith [should] move forward as a beneficiary, because there is no named Trustee right now.” The signed judgment was rendered on July 1, 2024, and ordered: (1) the motion for new trial be granted; (2) the exceptions of nonjoinder, prematurity, no cause of action, no right of action and lack of procedural capacity be overruled; (3) the Edward Jones Trust Company be dismissed as a defendant without prejudice; and (4) the petition to compel trustee to provide a copy of trust documents and for an accounting be granted, and for Kaylon to “provide a copy of the Living Trust” and “the Separate Share Trust of Kenneth D. Smith, and any amendments or restatements, and provide a full accounting of her tenure as trustee, to Kenneth D. Smith upon expiration of the time delay for filing a suspensive appeal.”

On June 27, 2024, Kaylon filed a motion for a new trial, which the trial court denied. Kaylon now appeals, alleging the following two assignments of error:

1) The trial court erred in granting the Motion to Compel Production of the David and Kaylon Smith Living Trust documents to Kenneth Smith.

2) The trial court erred in compelling production of an accounting to Kenneth Smith, who is not the Trustee of the Separate Share Trust of Kenneth D. Smith nor is he a beneficiary of the David and Kaylon Smith Trust.

STANDARD OF REVIEW:

“In all civil cases, the appropriate standard for appellate review of factual determinations is the manifest error-clearly wrong standard, which precludes the setting aside of a trial court's finding of fact unless that finding is clearly wrong in light of the record reviewed in its entirety.” Hayes Fund for First United Methodist Church of Welsh, LLC v. Kerr-McGee Rocky Mountain, LLC, 14-2592, p. 8 (La. 12/8/15), 193 So.3d 1110, 1115. However, “Questions of law, such as the proper interpretation of a statute, are reviewed by appellate courts under the de novo standard of review, and the appellate court is not required to give deference to the lower court in interpreting a statute.” Zillow, Inc. v. Taylor, 21-739, p.4 (La.App. 3 Cir. 3/30/22), 350 So.3d 550, 554. Because an application of the statutes in the Louisiana Trust Code is necessary to review the issues presented, we will review this matter under a de novo standard of review.

DISCUSSION:

The Louisiana Trust Code defines a trust as “the relationship resulting from the transfer of title to property to a person to be administered by him as a fiduciary for the benefit of another.” La.R.S. 9:1731. “A trust beneficiary does not have ownership of the corpus of the trust, but has an interest in the trust.” McCaffery v. Lindner, 18-163, p. 8 (La.App. 5 Cir. 12/27/18), 263 So.3d 1205, 1213, writ denied, 19-0140 (La. 3/18/19), 267 So.3d 89. “A trustee shall administer the trust solely in the interest of the beneficiary.” La.R.S. 9:2082(A). “A trustee shall administer the trust as a prudent person would administer it. In satisfying this standard, the trustee shall exercise reasonable care and skill, considering the purposes, terms, distribution requirements, and other circumstances of the trust.” La.R.S. 9:2090(A). “A trustee is under a duty to a beneficiary to take reasonable steps to take, keep control of, and preserve the trust property.” La.R.S. 9:2091. “These provisions of the Trust Code evidence the intention by the Legislature to place the very highest possible fiduciary responsibility on the trustee towards the beneficiaries.” Succession of Dunham, 408 So.2d 888, 901 (La.1981).

The Louisiana Trust Code further states that “A trustee is under a duty to a beneficiary to keep and render clear and accurate accounts of the administration of the trust. If the trust is revocable, the trustee has a duty to account to the settlor only.” La.R.S. 9:2088(A). Specifically, “a trustee shall render to a beneficiary ․ at least once a year a clear and accurate account covering his administration for the preceding year.” La.R.S. 9:2088(B). “Each annual account shall show in detail all receipts and disbursements of cash and all receipts and deliveries of other trust property during the year, and shall set forth a list of all items of trust property at the end of the year.” Id. Additionally, “[a] trustee shall give to a beneficiary upon his request at reasonable times complete and accurate information as to the nature and amount of the trust property” and to permit the beneficiary “to inspect the subject matter of the trust, and the accounts, vouchers, and other documents relating to the trust.” La.R.S. 9:2089.

In Boyd v. Boyd, 10-1369, p. 12 (La.App. 1 Cir. 2/11/11) 57 So.3d 1169, 1177 (emphasis in original), the first circuit found that a trustee had no duty to account to a beneficiary for a period during which the trust was revocable, but that the beneficiary had “a right to reasonably request complete and accurate information as to the nature and amount of the trust property ․ without regard for the revocability of those trusts.” As the court further stated, “The trustee's duty to furnish information to the beneficiary is mandatory” and “Section 2089 states no limitations—both income and principal beneficiaries are entitled to request and receive information from the trustee.” Id. (emphasis in original).

While a trustee is generally the proper party to sue on behalf of a trust, La.R.S. 9:2222 gives a beneficiary the right to sue:

[I]n order to protect his own interest, in an action against:

(1) A trustee and an obligor, if the trustee improperly refuses, neglects, or is unable for any reason, to bring an action against the obligor; or

(2) An obligor, if there is no trustee or the trustee cannot be subjected to the jurisdiction of the proper court.

Kaylon's first assignment of error alleges the trial court erred in granting the motion to compel the production of the Living Trust documents to Kenneth. Specifically, Kaylon argues that the petition “failed to state a cause of action because it does not and cannot allege that Kenneth D. Smith, in his individual capacity, is the actual beneficiary of the David and Kaylon Smith Trust.” Additionally, Kaylon argues that the Edward Jones Company is the trustee of the Separate Share Trust of Kenneth D. Smith; thus, Kenneth is not a trustee and “does not have a right to bring an action against the David and Kaylon Smith Living Trust.” Accordingly, Kaylon argues that “there is no legal requirement to produce the David and Kaylon Smith Living Trust and Kenneth D. Smith has no standing as beneficiary, trustee, or settlor of the David and Kaylon Living Trust[.]” For the following reasons, we find no merit to this argument.

Kaylon admits that she is serving as the trustee of the Living Trust, that the Living Trust has property, and that the Separate Share Trusts are principal beneficiaries of the Living Trust. Kaylon also admits in the 2012 Affidavit of Trust that the “Living Trust Agreement ․ was created ․ [as an] irrevocable trust ․in full force and effect and, additionally, is a valid trust under the laws of the State of Louisiana.” Thus, under La.R.S. 9:2088(A), Kaylon, as trustee of the irrevocable trust, is under a duty to the beneficiaries “to keep and render clear and accurate accounts of the administration of the trust.” Additionally, because Kaylon has failed to provide proof of anyone accepting the position as trustee of the Separate Share Trust of Kenneth D. Smith, La.R.S. 9:2222(2) permits Kenneth, as a beneficiary of the Separate Share Trust, to enforce obligations that are owed to the Separate Share Trust. Further, under La.R.S. 9:2091, Kaylon owes a duty to administer the Living Trust solely for the benefit of the beneficiaries, one of which is the Separate Share Trust of Kenneth. Under La.R.S. 9:2088 and La.R.S. 9:2089, Kaylon shall furnish Kenneth, as a beneficiary of the Living Trust, with accurate information and an annual accounting of the irrevocable Living Trust and permit him an inspection of the Living Trust documents. When applying the legal principles applicable to trusts, we find no error in the trial court's order compelling Kaylon to “provide a copy of the Living Trust of David and Kaylon Smith, the Separate Share Trust of Kenneth D. Smith, and any amendments or restatements, and provide a full accounting of her tenure as trustee, to Kenneth.”

Kaylon's second assignment of error alleges “[t]he trial court erred in compelling production of an accounting to Kenneth Smith, who is not the Trustee of the Separate Share Trust of Kenneth D. Smith nor is he a beneficiary of the David and Kaylon Smith Trust.” Kaylon argues, again, that the Edward Jones Trust Company is the trustee of the Separate Share Trust of Kenneth D. Smith even though the trial court found “the office of trustee for the Separate Share Trust is vacant” since Kaylon failed to produce evidence of an acceptance of that position. Kaylon also argues that the trial court erred in naming Kenneth as trustee of the Separate Share Trust of Kenneth D. Smith because “he is clearly and unambiguously disqualified from being the Trustee under the terms and conditions of the Trust.” For the following reasons, we also find no merit to this argument.

Louisiana Revised Statutes 9:1824 requires that “If the trustee was not a party to the trust instrument, he must accept the trust in writing within a reasonable time after its creation, or the proper court shall appoint a trustee.” Again, since the record presents no written evidence of acceptance of the trusteeship of the Separate Share Trust of Kenneth D. Smith, then La.R.S. 9:2222(2) permits Kenneth, as the beneficiary, to enforce obligations that are owed to the Separate Share Trust. Kaylon, as the trustee of the Living Trust, is the obligor who is bound to render an accounting of the Living Trust and to produce the Living Trust documents to the beneficiaries of the Living Trust. Although Kaylon argues the trial court appointed Kenneth to be trustee of the Separate Share Trust, there is nothing in the record supporting this statement; rather, the trial court merely relied upon La.R.S. 9:2222(2) to have Kenneth step into the shoes of a trustee to enforce the rights of the Separate Share Trust, which, as stated previously, include the rights to inspect the Living Trust documents and to compel the trustee of the Living Trust to provide the accounting of the Living Trust to the Separate Share Trust.

After conducting a de novo review of the record and considering the provisions in the Louisiana Trust Code, we hereby affirm the trial court's judgment ordering Kaylon to provide Kenneth with “a copy of the Living Trust of David and Kaylon Smith, the Separate Share Trust of Kenneth D. Smith, and any amendments or restatements, and [to] provide a full accounting of her tenure as trustee, to Kenneth D. Smith[.]” All costs of this appeal are assessed to Appellant, Kaylon Smith.

AFFIRMED.

FOOTNOTES

1.   Kenneth and Lisa are the biological children of David and the stepchildren of Kaylon.

2.   According to her brief, in February 2021, Kaylon placed her deceased biological son, Christopher Clark's, interest with the interest of her biological daughter, Jennifer.

CANDYCE G. PERRET JUDGE