Advancing-the-Trust Test for Attorneys’ Fees: Hawaiʻi Supreme Court Requires Merits Determination and “Assistance to the Court” Showing Before Shifting Fees in Contested Trust Matters

Case: In re: the Elaine Emma Short Revocable Living Trust Agreement, Dated July 17, 1984, as Amended, SCWC-21-0000311 (Haw. Sept. 8, 2025). Opinion by Recktenwald, C.J., joined by McKenna, Eddins, Ginoza, and Devens, JJ.

Introduction

This decision clarifies when and how Hawaiʻi probate courts may award attorneys’ fees to litigants in trust disputes. The case arises from a multi-year controversy over whether trustee First Hawaiian Bank (FHB) may distribute principal (corpus) from the Elaine Emma Short Revocable Living Trust to her son, David Short. The contingent remainder beneficiaries, Elaine’s nieces and nephews (the Cooks), opposed principal distributions and also sought their attorneys’ fees from the trust.

After the Supreme Court’s earlier decision in 2020 (Short Trust II) vacated the probate court’s merits ruling for failure to issue a written order under Hawaiʻi Probate Rules (HPR) Rule 20(a), the probate court on remand again ruled without entering the required Rule 20(a) order and denied the Cooks’ fee request. The Intermediate Court of Appeals (ICA) vacated the merits again for the Rule 20(a) defect but affirmed the denial of fees as “independent” of that error.

In this 2025 opinion, the Hawaiʻi Supreme Court holds that a probate court may award trust litigants attorneys’ fees when their participation assists the court in resolving the dispute—i.e., advances the interests of the trust as a whole by clarifying the trustee’s duties. Crucially, a decision on the merits is necessary before a court can decide whether fees are appropriate. Because the ICA vacated the merits, its affirmance of the probate court’s denial of fees was premature. The Court vacates the ICA’s affirmance of the fee denial and remands.

Summary of the Opinion

Holding: The proper inquiry for awarding attorneys’ fees in trust litigation is whether the litigant’s participation aided the court in resolving the dispute (for example, by clarifying trustee duties in the face of an ambiguity), thereby advancing the interests of the trust as a whole. A merits ruling must precede any fee determination.
Result: The Supreme Court vacates the ICA’s judgment insofar as it affirmed the probate court’s denial of the Cooks’ attorneys’ fees and remands. The ICA’s judgment is otherwise affirmed (including vacatur of the probate court’s merits ruling for failure to enter an HPR Rule 20(a) order).
Guidance: The probate court erred by treating the Cooks’ “contingent” status as a categorical bar to fees and by misapplying the “benefit all” test. On remand, after complying with HPR Rule 20(a) and resolving the merits, the court must assess whether the Cooks’ participation assisted the court in clarifying trustee duties and thereby benefitted the trust and all its beneficiaries.
Doctrinal evolution: The Court charts Hawaiʻi’s progression from early categorical limits on contingent beneficiaries (Von Holt) to a purpose- and benefit-focused approach (Estate of Campbell; Valentin; Evans), and notes the alignment with the Uniform Trust Code (UTC) § 1004(a) adopted in Hawaiʻi in 2021, though not applied retroactively here.

Background and Procedural History

The Trust and Parties

Settlor: Elaine Emma Short; spouse: Clarence Short; sons: David Short and William Short.
Trustee: First Hawaiian Bank (FHB); successor trustees included FHB and the sons.
Key provision: After amendments in 1993, the trust provided for distributions of income (not principal) to Elaine’s sons, with no termination provision for the sons’ subtrusts.
Current posture: William and Clarence predeceased Elaine; Elaine died in 2012. David, unmarried and without issue, is the surviving son. The Cooks (Elaine’s brother’s children) are contingent remainder beneficiaries via an “heirs at law” fallback (often called an “Armageddon clause”).

Initial Petition and Short Trust II (2020)

2015: FHB petitioned to (1) confirm that David’s subtrust terminates at his death, (2) authorize discretionary principal distributions to David, (3) modify the trust accordingly, and (4) award fees and costs.
The Cooks opposed principal distributions; David supported them. The probate court authorized principal distributions and ordered all parties’ fees paid from the trust.
ICA (2019) affirmed the merits but reversed the award of the Cooks’ fees.
Supreme Court (Short Trust II, 2020): Vacated for lack of an HPR Rule 20(a) order and the absence of findings, which impeded meaningful appellate review; held that contingent beneficiaries are entitled to trust information under HRS § 560:7‑303 and § 560:1‑201; remanded. The Court did not reach attorneys’ fees.

Proceedings on Remand and ICA’s 2024 SDO

2020–2021: FHB re-petitioned; the probate court issued findings and conclusions but again did not enter an HPR Rule 20(a) order. It ruled for principal distributions and denied the Cooks’ fees, citing Von Holt’s bar on contingent beneficiaries and finding the Cooks’ position self-serving under Estate of Campbell’s “benefit all” test.
ICA (Oct. 25, 2024): Vacated the merits again because the probate court failed to enter an HPR Rule 20(a) order, calling the failure “structural error” and a departure from the Supreme Court’s mandate. However, it affirmed the fee denial as “independent” of the HPR error.

Detailed Analysis

Precedents and Authorities Shaping the Decision

Short Trust II (Haw. 2020)

Mandates a written HPR Rule 20(a) order in contested probate matters, either retaining the case on the probate calendar or assigning it to the circuit court. If retained, HPR Rule 20(d) allows the court, at the parties’ request, to designate civil rules (such as HRCP Rule 52) to ensure findings and facilitate appellate review.
Recognizes contingent beneficiaries as “beneficiaries” with statutory rights to information (HRS § 560:7‑303; § 560:1‑201).
Significance here: The absence of an HPR Rule 20(a) order again undermined the merits rulings and, consequently, any derivative fee decision.

Von Holt v. Williamson (Haw. Terr. 1916)

Early case widely cited for the proposition that counsel fees for a litigant with a contingent interest cannot be paid from the trust fund.
But even Von Holt anchored fee awards to whether litigation advanced the interests of all beneficiaries and distinguished exceptional cases (e.g., Fitchie v. Brown) where fees from corpus were allowed.
Modern relevance: The Supreme Court shows that later Hawaiʻi cases have moved away from categorical bars and toward a functional “benefit to the trust” test.

In re Estate of Campbell (Haw. 1963)

Articulates the two-step framework still guiding Hawaiʻi courts:
1. Threshold: Was the proceeding for the benefit of the estate and in the interest of all parties concerned? If yes, reasonable attorneys’ fees may be allowed.
2. Allocation: Which part of the estate bears the fees? If corpus is affected, charge corpus; if only income is affected, charge income; if both, apportion accordingly (drawing on Wodehouse v. Robinson).
Limits: When only enjoyment of income is at issue and litigants have no interest in corpus, fees from corpus are not allowed (echoing Von Holt’s allocation logic rather than its categorical bar).

Valentin v. Brunette (Haw. Terr. 1922) and Evans v. Garvie (Haw. Terr. 1919)

Both decisions approve fee awards where beneficiaries’ appearances helped the court resolve unsettled questions about trustee duties or the proper allocation between income and principal, benefiting the estate and all parties.
Valentin’s formulation—awarding fees where the “appearance of these parties, with their conflicting claims, their evidence and their arguments, was of assistance to the court in its determination of the duty of the trustees”—is central to today’s decision.

Wodehouse v. Robinson (Haw. Terr. 1923); Bishop Trust Co. v. Cooke Trust Co. (Haw. Terr. 1953)

Wodehouse provides the allocation principle: fees should be borne by the portion of the estate affected—corpus, income, or both, as appropriate.
Bishop Trust cautions against fee awards from corpus that would reduce a life tenant’s income when the controversy does not involve the life tenant’s interest.

Uniform Trust Code and Restatement (Third) of Trusts

UTC § 1004(a) (adopted in Hawaiʻi in 2021 as HRS § 554D-1004(a)) authorizes courts to award reasonable attorneys’ fees to “any party to the trust who has acted in the best interest of the trust as a whole,” payable by another party or from the trust. Although not applied retroactively here, the Court cites it as persuasive trajectory aligning with Hawaiʻi precedent.
Restatement (Third) of Trusts § 88 cmt. D likewise authorizes fee awards to beneficiaries “in the interest of justice,” especially when participation clarifies significant uncertainties—even to parties who ultimately do not prevail.

Legal Reasoning

Merits-first requirement: Whether a party’s participation advanced the interests of the trust as a whole depends on how the substantive ambiguity is resolved. Without a valid merits determination—here, missing due to the HPR Rule 20(a) defect—any fee decision is premature.
Assistance-to-the-court standard: The dispositive question is not the litigant’s status (contingent vs. vested) but whether their appearance assisted the court in resolving the trustee’s duties amid ambiguity. This mirrors Valentin, Estate of Campbell, and the Restatement’s approach.
Error below: The probate court relied on Von Holt to impose a categorical bar against fees for contingent beneficiaries, and it framed the “benefit all” inquiry as a factual credibility contest about “self-serving” declarations. Both approaches misapprehend the governing standard:
- First, Von Holt’s categorical bar has been overtaken by later Hawaiʻi cases focusing on whether the litigation benefitted the trust and all beneficiaries; contingent status is not disqualifying.
- Second, the “benefit all” inquiry centers on whether the participation aided judicial resolution of trustee duties or clarified trust ambiguities, not on whether a party’s affidavits were self-interested.
Interdependence of fee and merits rulings: Because the ICA properly vacated the merits for lack of an HPR Rule 20(a) order, it could not simultaneously affirm the fee denial; the latter depends on the former. The Supreme Court therefore vacates the ICA’s affirmance of the fee denial.

What Happens on Remand

The probate court must issue a written HPR Rule 20(a) order retaining the contested matter on the probate calendar or assigning it to the civil trials calendar. If retained, and upon request under HPR Rule 20(d), the court should consider adopting relevant civil rules (e.g., HRCP Rule 52) to ensure findings and facilitate review.
Resolve the merits: Decide the core question—whether FHB may make discretionary principal distributions to David—based on an adequate record and appropriate findings.
Only then address attorneys’ fees: Apply the “assistance-to-the-court/benefit-to-all” standard. If participation aided the court in clarifying trustee duties or resolving ambiguity for the benefit of the trust as a whole, fees may be awarded. The court should then allocate fees to the appropriate fund (corpus, income, or apportionment) per Estate of Campbell and Wodehouse.

Impact on Hawaiʻi Trust and Probate Practice

Process discipline under HPR: Contested probate matters now require strict adherence to HPR Rule 20(a). Failure to enter the order can derail merits rulings and any dependent fee decisions. Parties should affirmatively request a Rule 20(a) order and, under Rule 20(d), ask the court to adopt civil rules (like HRCP 52) to ensure findings.
Fee-shifting clarity: Categorical disqualification of contingent remainder beneficiaries from fee awards is inconsistent with modern Hawaiʻi law. Any party—vested or contingent—may obtain fees if their participation advances the interests of the trust as a whole by assisting the court’s resolution of trustee duties.
Merits prerequisite: Courts and counsel should refrain from fee determinations until after the merits are properly resolved. Interim fee rulings risk reversal as premature.
Alignment with UTC and Restatement: For cases governed by Hawaiʻi’s UTC (HRS § 554D-1004(a)), the analysis centers on whether the party acted in the best interest of the trust as a whole. While the Court did not apply UTC retroactively here, it signals that Hawaiʻi’s common-law principles already point in the same direction.
Which fund pays: Litigants and courts must attend to allocation—corpus vs. income—based on the nature of the controversy. Disputes over corpus suggest fee awards from corpus; income-only disputes suggest income bear the expense; mixed cases call for apportionment.
Practical incentives: The opinion encourages beneficiaries to engage constructively in instruction proceedings where trust language is ambiguous or duties are unsettled, but discourages purely adversarial, zero-sum litigation that does not assist the court or advance the trust’s overall interests.

Complex Concepts Simplified

HPR Rule 20(a): In a contested probate matter, the court must issue a written order either retaining the matter on the probate calendar or assigning it to the civil trials calendar. Without this order, parties lose the chance to request civil rules (like HRCP 52) that require findings, and appellate courts may have to vacate for lack of reviewable findings.
Contingent remainder beneficiaries: People who might inherit in the future if certain conditions occur (e.g., “heirs at law” if there are no descendants). In Hawaiʻi, they are “beneficiaries” for many purposes, including information rights (HRS § 560:1-201; § 560:7‑303) and, under this decision, potential fee awards if they aid the court and benefit the trust as a whole.
Corpus vs. income: Corpus is the principal of the trust—its assets. Income is the earnings generated by those assets. Fee awards should be charged to the part of the trust the litigation affects.
“Assistance to the court” standard: Fees are justified when a party’s participation helps the court resolve an ambiguity or clarify trustee duties—benefitting the trust and all beneficiaries, not just the litigant.
American rule and trust exception: Normally, each side pays its own fees. In trust litigation, courts may shift fees to the trust when the litigation advances the interests of all beneficiaries.
Prematurity of fee rulings: Courts should not decide fee-shifting before deciding who is right about the underlying trust question; the merits result often illuminates whether participation benefitted the trust.

Key Takeaways

New organizing principle: In Hawaiʻi trust litigation, the availability of attorneys’ fees turns on whether the party’s participation assisted the court in resolving the dispute and thereby advanced the interests of the trust as a whole—not on whether the party’s interest is vested or contingent.
Merits-first sequencing: A trial court must decide the substantive trust issues (after complying with HPR Rule 20) before it can determine whether a fee award is proper.
Allocation matters: If fees are awarded, courts must charge them to corpus, income, or both, depending on what the controversy actually affected.
Practical guidance: Litigants should frame their participation as aiding judicial decision-making on trustee duties (for example, by illuminating ambiguities), and courts should make explicit findings that connect participation to the benefit of the trust as a whole.
Continuity and evolution: The decision harmonizes Hawaiʻi’s longstanding “benefit to the trust” jurisprudence (Valentin, Estate of Campbell) with modern national authorities (UTC § 1004; Restatement § 88 cmt. D), moving away from categorical prohibitions suggested by older cases (Von Holt).

Conclusion

The Hawaiʻi Supreme Court’s opinion brings needed clarity to fee-shifting in trust litigation. It emphasizes procedural rigor under HPR Rule 20 and confirms that fee awards depend on whether a litigant’s participation truly advances the trust’s overall interests by assisting the court in resolving ambiguities and clarifying trustee duties. The Court rejects a categorical bar on fee awards to contingent remainder beneficiaries and aligns Hawaiʻi practice with the modern, purpose-driven approach reflected in the UTC and Restatement. On remand, the probate court must first decide the merits properly; only then can it evaluate whether the Cooks’ participation benefitted the trust as a whole and, if so, which part of the trust should bear the fees. This decision will shape how trustees and beneficiaries litigate ambiguous trust provisions and will promote constructive participation aimed at clarifying fiduciary duties for the benefit of all beneficiaries.