Facts: During the marriage, Husband created a trust that owned a life-insurance policy, named Trustee to serve as trustee, and named Wife and the parties’ two adult Sons as beneficiaries.

Wife created a second trust that owned another life-insurance policy, named the same Trustee, and named the Sons as beneficiaries.

Trustee and the Sons were not parties to the parties’ later divorce.

The parties’ Marital Dissolution Agreement (“MDA”) required Husband, Wife, and the Sons to sign settlement agreements terminating both trusts, after which the policies would be distributed to Wife. The final divorce decree was entered in June 2017.

Trustee, Wife, and one Son promptly signed both agreements, but Husband and the other Son did not initially sign every required document, so the trusts remained in existence.

Wife first sued her divorce lawyer for malpractice and later added Trustee and the Sons in an effort to compel compliance with the settlement agreements.

The circuit court entered default judgments, but it set aside Trustee’s default after he asserted that Wife’s lawyer had described the lawsuit as a technicality and had not disclosed that Wife intended to obtain exclusive control of the trust assets. After obtaining the remaining signatures, Wife voluntarily dismissed Trustee from the circuit court action and sued him in chancery court to enforce the settlement agreements.

Trustee demanded payment for his services under the settlement agreements. When Wife refused, Trustee counterclaimed for trustee fees and attorney fees, alleging that Wife breached the settlement agreements by suing him, breached the trusts’ indemnification and hold-harmless provisions, and owed reimbursement and fees under the Tennessee Uniform Trust Code (“TUTC”).

The chancery court granted Trustee summary judgment on all three grounds. After applying Tennessee Supreme Court Rule 8, RPC 1.5, the court awarded $8,508 in trustee fees, $161,584.74 in attorney fees, and later another $20,995.06 in attorney fees. The court also authorized Trustee to liquidate the policies to satisfy the judgment if it was not paid, with any remaining cash value or unliquidated policy going to Wife after the trusts were dissolved and Trustee was released.

Wife appealed.

On Appeal: The Court of Appeals affirmed summary judgment and the fee awards for Trustee and remanded for calculation of his reasonable attorney fees and expenses on appeal.

TCA § 35-15-709(a) entitles a trustee to reimbursement from trust property, with appropriate interest, for expenses properly incurred in administering the trust and, to the extent necessary to prevent unjust enrichment, for expenses not properly incurred in administration. TCA § 35-15-1004(a) separately allows a court to award costs and expenses, including reasonable attorney fees, to any party in a judicial proceeding involving trust administration, payable by another party or from the trust.

The trial court has considerable discretion over the reasonableness of a fee award, which Tennessee courts review for abuse of discretion, applying the factors in Tennessee Supreme Court Rule 8, RPC 1.5. A claimant must make reasonable efforts to mitigate a loss, but mitigation is not required when it would be impossible or impose an undue burden. TCA § 35-15-1004(a) also authorizes appellate attorney fees in a proceeding involving trust administration.

The Court of Appeals held that the Tennessee Uniform Trust Code independently supported summary judgment and the fee awards because Trustee reasonably incurred the expenses while protecting the trusts and obtaining assurance from every interested person:

While the chancery court recognized that the litigation “could have been resolved at a much earlier juncture” it determined [Trustee] “was entitled to receive assurance that all parties with an interest in the trust agreements agreed to a resolution of the matters at issue.” Therefore, it found that he could “not be faulted for failing to simply stand down under the circumstances.”

Wife argued that Trustee’s expenses were motivated by self-interest and therefore were neither properly incurred nor reasonable. But Wife identified no disputed or undisputed fact showing an improper motive, no incorrect legal standard, and no lapse in the chancery court’s reasoning. The chancery court reviewed itemized billing records and counsel’s declarations, considered all ten RPC 1.5 factors, and found the issues somewhat novel and difficult, that Trustee’s professional reputation was at stake, and that his litigation strategy was justified by the circumstances.

Likewise, while the chancery court recognized that the litigation “could have been resolved at a much earlier juncture” it determined that [Trustee] “was entitled to receive assurance that all parties with an interest in the trust agreements agreed to a resolution of the matters at issue.” While we appreciate that [Wife] disagrees with this determination, she has not pointed to any evidence contradicting it.

Because Wife failed to show error in the independent statutory ground for recovery, the Court of Appeals did not decide whether her lawsuits breached the settlement agreements or whether the trusts’ hold-harmless provisions independently required reimbursement. Those issues could not change the result after the Court affirmed the statutory ground.

Finally, because Trustee prevailed on every issue and the appeal involved trust administration, the Court exercised its discretion under TCA § 35-15-1004(a):

Because [Trustee] has prevailed on each issue raised in this appeal, we find that an award of reasonable attorneys’ fees and expenses incurred on appeal is appropriate in this case.

Thus, the Court of Appeals affirmed the trial court in every respect.

K.O.’s Comment: A divorce court can bind Husband and Wife through their MDA, but the MDA does not bind a trustee or adult beneficiaries who never became parties. If the agreed property division depends on terminating a trust, get every required signature before the decree is entered, or make closing contingent on signed trust documents. Wife was always going to receive the policies or their remaining cash value, but she got there only after fee awards of more than $190,000, and that was before appellate fees.

Compare this with Dunavant v. Dunavant Revocable Living Trust, which I wrote about in October 2025. There, the Court of Appeals reversed a ruling that a trust promise in an MDA was too vague to enforce. In Dunavant, the promise came from the Husband, who signed the MDA. Here, the promise depended on people who did not.

Source: Feltus v. Wright (Tennessee Court of Appeals, Western Section, October 13, 2026).

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