Jackson v. Jackson: Deference to Trial-Court Fact-Finding and a Flexible “Justice & Equity” Test for Fee-Shifting under 14A V.S.A. § 1004

Introduction

On 6 June 2025 the Supreme Court of Vermont handed down Anne Jackson & Jeffrey Jackson v. Willard Jackson, 2025 VT 29 (“Jackson”). The dispute arose from a multigenerational family wealth-management structure established in 1939 and 1941. Anne and Jeffrey, remainder beneficiaries of two trusts, sought to oust their nonagenarian father Willard as trustee, unwind the trusts, and obtain $10 million in restitution, alleging that Willard’s decision to develop a California coastal property into the “Inn at Newport Ranch” violated fiduciary duties.

After winning removal and fees in probate, petitioners lost in a de-novo bench trial before the Civil Division, which ruled entirely for Willard and then shifted his litigation costs to the petitioners. The Supreme Court affirmed on all points.

The opinion is noteworthy for three new clarifications:

  1. It definitively states that appellate review of fact-intensive trust disputes is deferential, overruling dicta in Kuhling v. Glaze, 2018 VT 75 that hinted at de novo review.
  2. It endorses the five Atwood factors as the operative “justice and equity” test for attorney-fee awards under 14A V.S.A. § 1004, and confirms that bad faith is not required.
  3. It signals that investing in minority, illiquid or pooled interests—when consistent with a prudent overall portfolio strategy—does not, by itself, breach fiduciary duties to remainder beneficiaries.

Summary of the Judgment

  • The trial court’s extensive findings—crediting Willard’s testimony, investment record, and professional accounting—were not clearly erroneous (¶¶ 2-21, 26-28).
  • Willard’s investment strategy, including the development of the Inn, complied with the Prudent Investor Rule under both Vermont and New York versions of the Uniform Prudent Investor Act (¶¶ 13-20).
  • Petitioners failed to prove any breach of trust, grounds for removal, termination, or restitution.
  • Appellate review of such mixed factual-legal determinations is limited to clear error; contrary language in Kuhling is overruled (¶ 23).
  • Applying 14A V.S.A. § 1004 and the Atwood factors, the Court affirmed an award of $212,508.50 in attorney’s fees against the petitioners personally (¶¶ 31-43).

Analysis

1. Precedents Cited

The Court weaves together three principal lines of authority:

  • Uniform Prudent Investor Act (UPIA) – Vermont (14A V.S.A. §§ 901-908) and New York (EPTL § 11-2.3). The Court stresses the “portfolio theory” of prudence, evaluating risk-return in aggregate (¶¶ 13, 20).
  • Lofts Essex, LLC v. Strategis Floor & Décor Inc., 2019 VT 82 – establishes a highly deferential clear-error review of factual findings. Jackson re-asserts this standard for trust cases and expressly disapproves contrary implications in Kuhling (¶ 23).
  • Atwood v. Atwood, 25 P.3d 936 (Okla. Civ. App. 2001) – articulates five discretionary factors for fee-shifting (“reasonableness, prolonging, ability to pay, prevailing party, bad faith”). Jackson imports these factors into Vermont practice under § 1004 (¶¶ 31-36).

2. Legal Reasoning

a) Breach of Trust / Removal Claims

  • Choice of Law: Whether Vermont or New York applied was immaterial because both have adopted the UPIA (¶ 13).
  • Prudent Investor Analysis: The Court accepted that (i) investing for growth rather than income was reasonable where the life beneficiary did not depend on trust income, (ii) the Inn should be assessed as part of the broader California real-estate investment, and (iii) pooling assets via a limited partnership is permissible with proper accounting (¶¶ 14-20, 26-28).
  • No Per Se Ban on Minority Interests: The distribution of minority interests in an LLC or partnership upon termination or death is not automatically imprudent or violative of duty (¶ 16).
  • Informed Consent: Petitioners had affirmatively participated in dynasty-trust planning that shifted land value to their own children (¶ 18).

b) Standard of Appellate Review

The Court reiterated that factual findings of a trial court will stand unless “clearly erroneous,” giving “due regard” to the trial judge’s credibility determinations (¶ 22). It then overruled Kuhling v. Glaze to the extent that case implied de novo review for trust disputes (¶ 23).

c) Attorney’s Fees under 14A V.S.A. § 1004

  • Statutory Text: § 1004 permits fee awards “as justice and equity may require.”
  • Atwood Factors Adopted: The Court confirmed that lower courts may apply the five Atwood criteria without requiring a finding of bad faith (¶¶ 31-36, 41).
  • Discretion Affirmed: Because petitioners lost on every substantive claim, the trial court did not abuse its discretion in shifting the full $212k in fees (¶¶ 37-43).

3. Impact of the Decision

  • Appellate Strategy: Litigants challenging trustee conduct now face a steep deferential standard on appeal. Purely evidentiary disputes are unlikely to succeed.
  • Fee Exposure: Beneficiaries contemplating litigation must weigh the real risk of being saddled with fiduciary’s fees even absent proof of bad faith.
  • Trust Administration: Trustees may invest in long-term, growth-oriented and illiquid assets—such as closely held LLC interests—so long as the overall portfolio strategy is prudent and well-documented.
  • Procedural Guidance: Probate victories are not precedential once the matter proceeds de novo in the Civil Division; parties cannot rely on them for appeal (¶ 24).

Complex Concepts Simplified

  • Prudent Investor Rule: A modern fiduciary standard requiring trustees to invest like a savvy investor managing an entire portfolio rather than evaluating each asset in isolation.
  • Remainder Beneficiary: A person entitled to receive trust principal (corpus) after the life beneficiary’s interest ends—often upon that beneficiary’s death.
  • Minority Interest: Ownership that is less than 50%, often lacking control. Not inherently disadvantageous if the underlying asset appreciates.
  • Dynasty Trust: A long-term trust designed to avoid estate taxes over multiple generations.
  • Fee Shifting (“Loser Pays”): A court order requiring one party to pay the other’s legal costs; under § 1004 this is based on “justice and equity,” not automatically on misconduct.

Conclusion

Jackson v. Jackson cements two practical guideposts for Vermont trust litigation: appellate courts will defer heavily to trial-level fact finding, and fee-shifting under § 1004 is a flexible, equity-driven remedy that does not hinge on proving bad faith. Trustees gain confirmation that diversified, growth-oriented strategies—even those generating minority or illiquid interests—can satisfy fiduciary obligations when carefully managed and transparently communicated. Beneficiaries, meanwhile, are reminded to marshal clear evidence of breach and to consider potential cost consequences before initiating suit.