In re the Joan C. Ranallo Trust.

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A22-0767

In re the Joan C. Ranallo Trust.

Filed March 27, 2023
Affirmed
Cochran, Judge

Hennepin County District Court
File No. 27-TR-CV-20-34

Andrew H. Bardwell, William R. Skolnick, Skolnick & Bardwell, P.A., Minneapolis,
Minnesota (for appellants Rochelle Casey, Lawrence Ranallo, Thomas Ranallo)

Elizabeth C. Henry, Francis J. Rondoni, Chestnut Cambronne PA, Minneapolis, Minnesota
(for respondent Julie Meredith)

Considered and decided by Worke, Presiding Judge; Smith, Tracy M., Judge; and
Cochran, Judge.
NONPRECEDENTIAL OPINION
COCHRAN, Judge
In this trust dispute, appellant-beneficiaries challenge the district court’s order
regarding their petition for redress of alleged breaches of trust and for removal of the
trustee. They raise several arguments, including that the district court failed to provide an
adequate remedy for respondent-trustee’s breach of the duty of loyalty. Appellants also
argue that the district court erred when it concluded that appellants failed to establish any
other actionable breach of trust. Finally, appellants contend that the district court abused
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its discretion by declining to remove respondent as the trustee and by awarding respondent
trustee compensation and attorneys’ fees. We affirm.
FACTS
This case involves the administration of a trust executed by Joan Ranallo (the
settlor) on May 12, 2015. The settlor contributed all of her personal property , her
homestead, and several rental properties to the trust. The trust agreement appointed
respondent Julie Meredith as the sole trustee upon the settlor’s death. The trust agreement
named the settlor’s four surviving adult children—appellants Larry Ranallo, Rochelle
Casey, and Thomas Ranallo, as well as respondent—as beneficiaries of the trust.
The trust agreement further provided that, upon the settlor’s death, the debts of the
estate were to be paid first, followed by special distributions of tangible personal property.
The remaining assets were then to be distributed in equal shares to the named beneficiaries,
except for a reduction of one beneficiary’s distribution based on lifetime gifts.
The settlor died at the age of 81 on May 18, 2015—just a few days after executing
the trust agreement. As of her death, the settlor had not filed income tax returns for
approximately 15 years. The trustee retained an accounting firm to help prepare the income
and estate tax returns and, in the meantime, held an estate sale and managed the rental
properties held by the trust. The back taxes were completed in the spring of 2017 and the
estate tax return was filed in the fall of 2017. For purposes of preparing the estate tax return
and a trust inventory, the trustee obtained multiple appraisals for the rental properties held
by the trust. The appraisals reflected the property values as of approximately the date of
the settlor’s death. The appraisal results were not identical, involving some variation in
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the values of the properties. The trustee decided to use the lowest of the estimated property
values, which were incorporated into the estate tax return prepared by the accounting firm.
In August 2016, one of the rental properties owned by the trust—the Elliot Avenue
property— was significantly damaged by an accidental fire. The fire started in an
unlicensed third-floor apartment that the trustee had rented to a childhood friend of the
settlor’s deceased son. The fire wa s caused by the renter’s laptop computer, which
overheated while charging on a couch cushion. The insurance policy for the property had
lapsed two months before the fire, after the renewal notice was sent to the wrong address.
The trustee later sold the property in its damaged condition for approximately $220,000.
The value of the property before the fire was estimated to be between $280,000 and
$300,000.
In January 2018, the trustee purchased two of the rental properties owned by the
trust. The purchase price for each property was offset against the trustee’s future
distribution from the trust. The trustee purchased the first rental property—the Polk Street
property—for $510,000. The trustee purchased the second property—the 24th Avenue
property—for $185,000. The trustee set the purchase price for each property based on the
2015 date-of-death appraisals. For the Polk Street property, the trustee used the lowest
appraised value. For the 24th Avenue property, the trustee used a value close to the
mid-point of the two appraised values. The trustee sold the remaining properties held by
the trust to third parties in 2017 and 2019. Before selling the properties, the trustee sent a
letter to appellants informing them that they could elect to purchase real property held by
the trust using their distributions, but none of them elected to do so.
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In August 2019, the trustee sent appellants a letter asking them to consent to a trust
inventory, final accounting, and plan for trust division and distribution prepared by the
trustee. The plan for trust division and distribution disclosed that the trustee had used her
distribution to purchase the Polk Street and 24th Avenue properties. The final accounting
listed the assets on hand as of July 2019.
The trustee later produced a second final accounting, which listed the assets on hand
as of June 2020. Appellants discovered that the first and second final accountings both
omitted $40,000 in cash that the trustee had received as repayment of a loan owed to the
settlor. Appellants confronted the trustee, and the trustee deposited the $40,000 in the trust
account.
In April 2020, appellants filed a petition for removal of the trustee and redress of
breach of trust. In the petition, appellants alleged that the trustee had breached her fiduciary
duties, in relevant part, by selling the Polk Street and 24th Avenue properties to herself in
2018 at a discount based on outdated appraisals from 2015, failing to maintain insurance
coverage for the Elliot Avenue property, selling the Elliot Avenue property for less than
fair market value, and “help[ing] herself to exorbitant and unreasonable fees.” Appellants
argued that, based on this conduct, the trustee had breached her duty of loyalty, her duty to
administer the trust in good faith, and her duty to inform and report, in violation of Minn.
Stat. §§ 501C.0801-.0802, .0813 (2022). Appellants also objected to the trustee’s final
accounting. They asked the district court to (1) compel the trustee to “redress her breaches
of trust by paying money and restoring property in an amount of damages to be determined
at trial”; (2) void the sale of the Polk Street and 24th Avenue properties and return those
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properties to the trust or, in the alternative, impose a constructive trust on all profits
generated by those properties; (3) remove the trustee; and (4) order the trustee to provide a
complete final accounting to the successor trustee, along with other relief. The trustee
objected to the petition and filed a counter-petition seeking approval of the final accounting
and an order to make proposed distributions to the beneficiaries.
The matter proceeded to a two- day court trial. At trial, the district court received
numerous exhibits and heard testimony from multiple witnesses, including the trustee, two
of the three appellants , the accountant who signed off on the back taxes and estate tax
return, and the insurance agent who previously handled the property insurance for the Elliot
Avenue property.
In December 2021, the district court issued a 22-page order with detailed findings
of fact and conclusions of law. The district court’s findings of fact included the
following: the trustee purchased the Polk Street and 24th Avenue properties for less than
their fair market value in 2018 and it was unreasonable for her to do so; the trustee rented
the unlicensed third-floor unit at the Elliot Avenue property to a friend of the settlor’s
deceased son and, given the family’s relationship with that person, it was not unreasonable
for the trustee to do so; the trustee testified credibly that she believed the Elliot Avenue
property was insured at the time of the fire and this belief was reasonable under the
circumstances; the trustee’s later decision to sell the Elliot Avenue property “was well
within [her] reasonable discretion”; in the trust inventory and the two final accountings
provided to appellants, the trustee did not reference a $40,000 loan repayment that she
received after the settlor’s death until after appellants confronted her about the funds; but
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the trustee testified credibly that she kept the $40,000 in a safe place in her home and
intended to distribute it along with other keepsake items when the trust distributions were
made in accordance with the settlor’s wishes.
The district court’s conclusions of law included the following: the trustee’s only
actionable breach of duty was her decision to sell to herself the trust properties in 2018
based on appraised values from 2015; by failing to obtain more recent appraisals for the
properties, the trustee breached her duty of loyalty to the trust beneficiaries; the trustee
should have paid an additional $67,987.50 for the two properties to reflect their fair market
value; paying this amount plus interest would fully compensate the trust for the trustee’s
breach of loyalty, whereas unwinding the sales and returning the properties to the trust
would not be an appropriate remedy; the trustee did not breach her duty of impartiality by
taking a distribution to fund her purchase of the trust properties before the other
beneficiaries received a distribution; the trustee did not breach her duty of prudent
administration by renting the third -floor unit at Elliot Avenue or failing to keep the
insurance current because she exercised reasonable care and the property was only
uninsured “due to some form of miscommunication”; and “there was no actionable breach
of fiduciary duty regarding the $40,000 loan” because the trustee kept the cash in a safe
place in her home and intended to distribute it in accordance with the settlor’s wishes and
the beneficiaries failed to prove any damage to the trust based on the trustee’s management
of that asset.
Based on these findings and conclusions, the district court ordered the trustee to pay
a money judgment of $67,988 to the trust but denied appellants’ requests to void the sale
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of the two properties to the trustee, to remove the trustee, and to deny or reduce the trustee’s
compensation.1 In another order filed in April 2022, the district court determined that the
trustee was owed $115,392 in total compensation for her work on the trust. And the district
court awarded attorneys’ fees to both parties.
This appeal follows.
DECISION
Appellants challenge the district court’s orders resolving their claims against the
trustee and awarding the trustee compensation and attorneys’ fees. Generally, we review
a district court’s factual findings concerning trusts for clear error and its conclusions of law
de novo. In re Estate of Short, 933 N.W.2d 533, 537 (Minn. App. 2019). A district court’s
factual findings “are clearly erroneous only if the reviewing court is left with the definite
and firm conviction that a mistake has been made.” Id. (quotation omitted). “However,
when reviewing mixed questions of law and fact, we correct erroneous applications of law,
but accord the district court discretion in its ultimate conclusions and review such
conclusions under an abuse of discretion standard.” Id. (quotation omitted).
Appellants raise multiple issues. First, they argue that the district court erred by
imposing an inappropriate remedy for the trustee’s breach of her duty of loyalty. Next,
they argue that the district court erred by concluding that the trustee did not breach her
duties of prudent administration and impartiality. In addition, they argue that the district
court “improperly shifted the burden of an accounting away from the trustee” and, in doing

1 In January 2022, the trustee certified that she had satisfied the judgment owed to the trust
based on the district court’s December 2021 order.
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so, erred by determining that the trustee had not committed an actionable breach of her
duty to inform and report. Finally, appellants argue that the district court abused its
discretion by declining to remove the trustee and by awarding the trustee compensation
and attorneys’ fees.
We address each issue in turn.
I. The district court did not misapply the law or impose an inappropriate remedy
to address the trustee’s breach of loyalty.

Appellants argue that the district court erred by imposing an inappropriate remedy
for the trustee’s breach of loyalty when it declined to unwind the sale of the two trust
properties to the trustee for less than fair market value and return those properties to the
trust. Appellants also assert that it was improper for the district court to consider capital
gains taxes in determining the damages award, and they challenge the district court’s
valuation of the properties for purposes of calculating the damages award. Because
determining the appropriate remedy presents a mixed question of law and fact, we will
correct any erroneous application of law by the district court “but accord the district court
discretion in its ultimate conclusions and review such conclusions under an abuse of
discretion standard.” Id. (quotation omitted). “A district court abuses its discretion by
making findings of fact that are unsupported by the evidence, misapplying the law, or
delivering a decision that is against logic and the facts on record.” Woolsey v. Woolsey ,
975 N.W.2d 502, 506 (Minn. 2022) (quotation omitted).
A trustee owes various duties to a trust’s beneficiaries, including the duty of loyalty.
Minn. Stat. § 501C.0802(a). Pursuant to the duty of loyalty, a trustee may not place their
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own interests above those of the beneficiaries. Id. Thus, a trustee can breach the duty of
loyalty by acting for their own personal gain. In re Revocable Tr. of Margolis ,
731 N.W.2d 539, 545 (Minn. App. 2007). “But there is no breach of the duty of loyalty
where [a] transaction is explicitly authorized by the terms of the trust.” Id.
When a trustee commits a breach of the duty of loyalty, a district court has the
discretion to take any number of different actions to remedy that breach of trust. Minn.
Stat. § 501C.1001 (2022). These actions include compelling a trustee to pay money or
restore property, voiding a trustee’s action, imposing a lien or a constructive trust, tracing
trust property that was wrongfully disposed of to recover the property or its proceeds, and
ordering “any other appropriate relief.” Minn. Stat. § 501C.1001(b)(3), (9)-( 10). In
addition, Minn. Stat. § 501C.1002 (2022), provides that “[a] trustee who commits a breach
of trust is liable for the greater of: (1) the amount required to restore the value of the trust
property and trust distributions to what they would have been had the breach not occurred;
or (2) the profit the trustee made by . . . the breach.”
Here, the district court determined that the trustee’s decision to buy two rental
properties from the trust was a breach of her duty of loyalty because the trustee paid less
than fair market value for the properties. In reaching this conclusion, the district court
recognized that the terms of the trust agreement expressly allowed the trustee to transact
business with the trust. But the district court determined that the trustee still had a duty not
to put her own interests above those of the beneficiaries. See Minn. Stat. § 501C.0802(a).
And, by paying a price below fair market value, the trustee breached that duty.
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The district court next considered the appropriate remedy. The district court
determined that appellants’ request to unwind the sales and return the two properties to the
trust was not an appropriate remedy for the breach because the breach related only to the
amount paid and not to the actual sale of the properties. T he district court calculated the
amount required to make the trust whole as $67,987.50 plus interest. To reach this amount,
the district court first computed the difference between the fair market value of each
property at the time of the sale and the discounted price that the trustee paid for each
property. Based on the differences in these values, the district court determined that the
trustee would have paid $92,500 more for the two properties if she had purchased them at
fair market value. But the district court also recognized that, if the trustee had purchased
the two properties at fair market value, the estate would have had to pay capital gains tax
on the sales at the higher purchase prices. Accordingly, the district court subtracted the
additional capital gains tax the estate would have had to pay from the $92,500 to arrive at
the $67,987.50 amount.
Appellants argue that the district court should have instead ordered that the
properties be returned to the trust so that they could be sold in an arms-length transaction,
as appellants originally requested. Appellants assert that, by failing to do so, the district
court misapplied the plain language of Minn. Stat. § 501C.1002, which establishes the
damages that a trustee owes for a breach of trust: the greater of either (1) the amount
required to make the trust whole or (2) the profit the trustee made from the breach.
Appellants argue that, by purchasing the trust properties at a discount, the trustee made a
profit that “was indisputably far greater than” the amount that the district court found was
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required to make the trust whole. Appellants appear to base their argument on their view
that the “profit” made by the trustee from the breach includes not only the price difference
between the fair market value and the purchase price but also the increase in property
values after the trustee purchased the properties and the rental income that she has received
from the properties since purchasing them. On this basis, appellants argue that the district
court was required to unwind the property sales and return the properties to the trust in
order to award the beneficiaries the proper damages under Minn. Stat. § 501C.1002(a)(2)—
the profit made by the trustee by reason of the breach.
The trustee argues that the district court did not misapply the law and “arrived at a
reasonable remedy for relatively minor breaches of trust related to underpayment on
authorized transactions .” The trustee asserts that “[a]ppellants’ argument confuses the
improper act of self-dealing, where the transaction is not permitted, [with] the failure of
the trustee to obtain the correct price for an authorized transaction.” The trustee
emphasizes that the district court correctly concluded that the trustee did not engage in
self-dealing when she purchased the rental properties because the trust expressly allowed
the trustee to purchase property from the trust. The trustee further argues that, because her
breach of duty was not due to self-dealing and “[t]he sole issue was the valuation” of the
properties she bought from the trust, the district court’s remedy was fully consistent with
Minn. Stat. § 501C.1002. We agree with the trustee.
The district court did not misapply the law or impose an improper remedy to address
the trustee’s breach of trust. As noted above, under Minn. Stat. § 501C.1002, “[a] trustee
who commits a breach of trust is liable for the greater of: (1) the amount required to restore
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the value of the trust property and trust distributions to what they would have been had the
breach not occurred; or (2) the profit the trustee made by . . . the breach.” In addition, the
Restatement (Third) of Trusts provides that, when a trustee breaches the duty of loyalty by
selling trust property to themselves, the beneficiaries may void the sale in order to eliminate
the trustee’s profit. Restatement (Third) of Trs. § 100 cmt. c (Am. L. Inst. 2012). But here,
the trustee did not breach the duty of loyalty by selling trust property to herself because, as
the district court correctly explained, the trust agreement permitted such a sale. And while
“[a] trustee can breach the duty of loyalty by acting for personal gain . . . there is no breach
of the duty of loyalty where the transaction is explicitly authorized by the terms of the
trust.” Margolis, 731 N.W.2d at 545; see also Minn. Stat. § 501C.0802(b)(1) (explaining
that a trustee breaches the duty of loyalty when they transact individually with a trust they
administer unless the transaction is authorized by the terms of the trust). Therefore, the
district court correctly concluded that the trustee only breached the duty of loyalty by
selling the trust properties to herself at too low a price.
Moreover, if a trustee’s “breach of trust involve[s] accepting too low a price in an
otherwise proper sale of trust property, the trustee’s liability [is] the amount by which the
sale price was inadequate, plus (or minus) a projected total return on that amount to the
time of surcharge.” Restatement (Third) of Trs. § 100 cmt. b(1) . Consequently, a ny
increase in property value or rent generated from the property after the sale is not relevant
to the calculation of damages caused by the trustee accepting a price below the fair market
value. See id. The district court therefore did not misapply the law by ordering the trustee
to pay the trust the difference between the fair market value of the two properties at the
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time of sale and the discounted price she paid for them —in other words, “the amount
required to restore the value of the trust property and trust distributions to what they would
have been had the breach not occurred.” Minn. Stat. § 501C.1002(a)(1). And while the
district court had the discretion to unwind the property sales and return the properties to
the trust under Minn. Stat. § 501C.1001 (b)(3), we discern no abuse of discretion in its
decision not to do so.
We further conclude that it was not inappropriate, as appellants assert, for the district
court to account for capital gains taxes in determining “the amount required to restore the
value of the trust property” in calculating the damages award. Minn.
Stat. § 501C.1002(a)(1). We review a district court’s damages award for an abuse of
discretion. In re Tr. of Williams, 631 N.W.2d 398, 407 (Minn. App. 2001), rev. denied
(Minn. Sept. 25, 2001). A district court abuses its discretion when it bases its decision on
an erroneous view of the law or reaches a decision that is inconsistent with the facts on
record. In re Stisser Grantor Tr., 818 N.W.2d 495, 508 (Minn. 2012). Moreover, “[w]e
will not disturb a damage award on appeal unless our failure to do so would be shocking
or would result in plain injustice.” In re Margolis Revocable Tr., 765 N.W.2d 919, 923
(Minn. App. 2009) (quotation omitted).
Appellants assert that it was improper for the district court to consider capital gains
taxes in determining the damages award because capital gains taxes could have been
avoided. Appellants emphasize that, when the trustee prepared the estate taxes, the trustee
used the lower of two different appraised property values she had obtained for each of the
properties she later purchased. Appellants contend that, if the trustee had used the higher
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appraisal values for each property for estate tax purposes, “there would have been no
capital gains,” even if the properties were sold at the fair market value calculated by the
district court. This argument is unavailing.
The trustee’s use of the lower appraisal values for estate-tax purposes was within
the trustee’s discretion. The district court addressed this issue in its December 2021 order,
finding that the beneficiaries had “failed to provide evidence that using the lower date of
death appraisal was unreasonable for filing estate taxes” and determining that the decision
to use the lower appraisal values “was well within the [t]rustee’s discretion.” In reaching
this decision, the district court also noted that “the estate taxes were prepared by [the
trustee’s] accountants and the [t]rust gives the [t]rustee authority to rely on her accountants’
advice without further investigation.” We discern no abuse of discretion in the district
court’s determination on this issue and therefore conclude that the district court did not err
by discounting the money judgment owed by the trustee to the trust based on the capital
gains tax that the trust would have owed on the higher purchase price. Instead, we conclude
that the district court appropriately sought to make the trust whole pursuant to Minn.
Stat. § 501C.1002(a)(1).
Finally, appellants argue that the district court abused its discretion when it
determined the fair market value of the two properties for purposes of calculating the
damages award. Appellants contend that the district court “failed to support its finding of
[fair market] value.” The district court determined the fair market value of the two
properties by calculating the value halfway between the conflicting look-back appraisals
that the parties submitted to the district court for each property. Appellants argue that the
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district court should not have assigned each trust property a value halfway between the
parties’ look-back appraisals. We disagree. A district court “confronted with conflicting
appraisals may conclude that a compromise in valuation is required, provided it has
evidentiary support and is not unreasonable or clearly erroneous.” Nw. Racquet
Swim & Health Clubs, Inc. v. County of Dakota, 557 N.W.2d 582, 588 (Minn. 1997). Here,
the district court’s valuation was supported by evidence in the form of the parties’ detailed
look-back appraisals and is not unreasonable.
In sum, we discern no basis for disturbing the district court’s award of damages for
the trustee’s breach of the duty of loyalty.
II. The district court did not err by denying appellants’ claims of breach of the
duty of prudent administration.

Next, appellants argue that the district court erred by determining that the trustee
did not breach the duty of prudent administration in relation to the rental property where a
fire occurred. We review the district court’s factual findings for clear error, but we review
the district court’s conclusions of law de novo. Short, 933 N.W.2d at 537.
The duty of prudent administration requires a trustee to “administer the trust as a
prudent person would, by considering the purposes, terms, and distribution requirements
of the trust and all relevant circumstances.” Minn. Stat. § 501C.0804 (2022). In doing so,
the trustee must “exercise reasonable care, skill, and caution.” Id.
Before the district court, the beneficiaries argued that the trustee breached the duty
of prudent administration by allowing a family friend to live in an unlicensed third-floor
apartment and by failing to renew the insurance on the property before the fire. The district
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court disagreed. The district court determined that the trustee ultimately satisfied her duty
of prudent administration with respect to both issues. The district court based its
conclusion on the following factual findings: the trustee did not know that the family friend
had created the dangerous condition that caused the fire; the trustee believed the insurance
was set up for automatic renewal; the insurance company sent the cancellation notice to
the wrong address; and, as a result, the trustee did not know that the insurance had lapsed
prior to the fire. Accordingly, the district court concluded that the trustee acted prudently
under the circumstances.
Appellants argue that the district court erred when it concluded that the trustee did
not breach the duty of prudent administration. In support of their argument, they contend
that (1) no fire would have occurred if the trustee had not allowed the family friend to live
in the unlicensed apartment, (2) allowing tenants to occupy unlicensed rental units can lead
to revocation of a landlord’s other rental licenses, and (3) allowing the insurance to lapse
compounded the trustee’s failure to prudently administer the trust. Appellants assert that
“a monetary judgment equal to the damage caused by the fire would be [an] appropriate
[remedy]” for the breach of trust. We are not persuaded.
To prevail on a breach -of-trust claim, a petitioner must prove four elements: duty,
breach, causation, and damages. Hansen v. U.S. Bank Nat’l Assoc., 934 N.W.2d 319, 327
(Minn. 2019). If even one element is not proven, no relief is available. See TCI Bus. Cap.,
Inc. v. Five Star Am. Die Casting, LLC, 890 N.W.2d 423, 434 (Minn. App. 2017).
We conclude that the record and the law support the district court’s determination
that appellants did not demonstrate a breach of the duty of prudent administration. First,
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appellants do not dispute the following findings by the district court: the Ranallo family
had a relationship with the tenant, the trustee did not know that the tenant had created an
unsafe condition, and the trustee was unaware that the insurance for the property had
lapsed. And appellants point to no caselaw to support their apparent contention that renting
an unlicensed unit automatically breached the trustee’s duty of prudent administration in
this context. In addition, the accidental fire was not caused by the fact that the third-floor
apartment was unlicensed. Therefore, absent a closer causal connection between the
trustee’s alleged breaches of duty and the fire, we conclude that the district court did not
err by determining that the trustee did not breach the duty of prudent administration as it
relates to the circumstances surrounding the fire.
III. The district court’s conclusion that the trustee did not breach the duty of
impartiality is supported by the record and the law.

Appellants also argue that the district court erred by determining that the trustee did
not breach her duty of impartiality when she gave herself a distribution from the trust to
fund her purchases of trust properties before the other beneficiaries received a distribution.
Again, we review the district court’s factual findings for clear error , but we consider the
district court’s conclusions of law de novo. Short, 933 N.W.2d at 537.
A trustee has a duty to administer the trust impartially, “ giving due regard to the
beneficiaries’ respective interests.” Minn. Stat. § 501C.0803 (2022); see In re Est. of King,
668 N.W.2d 6, 9 (Minn. App. 2003). In other words, if a trust has two or more
beneficiaries, the trustee must “manage the trust with equal consideration for the interests
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of all beneficiaries.” In re Van Dusen Marital Tr., 834 N.W.2d 51 4, 521 (Minn. App.
2013) (quotation omitted), rev. denied (Minn. June 26, 2013).
The district court found that the trustee did not breach the duty of impartiality by
giving herself a distribution from the trust before any other beneficiary because “no
evidence was presented that the other beneficiaries were harmed by a later distribution.”
The district court also found that the trustee’s attorney sent a letter in February 2016
informing the beneficiaries that they could elect to receive real property as their distribution
from the trust. In addition, the district court noted that the trust gave the trustee “broad
discretion in making distributions.”
Appellants assert that the district court’s conclusion that the other beneficiaries were
not damaged by the trustee’s partiality “is not supported by the evidence.” They argue that
the trustee breached the duty of impartiality and that the beneficiaries were damaged
because the trustee received the benefit of her distribution before the other beneficiaries
along with cash flow from the rental properties. We are not persuaded.
We conclude that the district court did not err when it concluded that appellants
failed to prove a breach of the duty of impartiality. First, “[t]he duty to act impartially does
not mean that the trustee must treat the beneficiaries [of a trust] equally. Rather, the trustee
must treat the beneficiaries equitably in light of the purposes and terms of the trust.” Unif.
Tr. Code § 803, cmt. (Unif. L. Comm’n 2000). Second, the trust agreement permitted the
trustee to sell trust property to herself, and the record supports the district court’s finding
that the other beneficiaries of the trust were given the same option to purchase property
from the trust instead of or in addition to receiving a cash distribution . The trustee sent a
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letter to the other beneficiaries in February 2016 stating that the trustee had “secured a
written appraisal of all real estate owned by [the settlor], including her homestead and her
four rental properties,” and that “[t]hese values will be used for the estate tax return and
for calculating distributions if one of you elects to receive real property as their
distribution.” (Emphasis added.) The letter further stated that the rental properties held by
the trust would “either be sold or distributed to you,” and that “[i]t is my understanding
that you three would like your share of the estate to be paid in cash and not real estate.
Please correct me right away if I am wrong.” (Emphasis added.) Only one of the three
non-trustee beneficiaries indicated an interest in purchasing one of the properties, and the
district court found that the trustee informed that beneficiary that he could use part of his
distribution to purchase the property. But the beneficiary ultimately told the trustee that he
was unable to afford the purchase price.
Because the record shows that the trustee informed all of the beneficiaries of their
right to receive their distributions from the trust as property, the fact that the trustee
obtained such a distribution before the other beneficiaries is insufficient to support a
conclusion that the trustee failed to treat the other beneficiaries “equitably in light of the
purposes and terms of the trust.” See id. We therefore conclude that the district court did
not err by determining that the trustee did not breach her duty of impartiality by giving
herself a distribution from the trust to fund her purchase of trust property before providing
distributions to the other beneficiaries.
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IV. The district cou rt did not err by determining that the trustee committed no
actionable breach of her duty to inform and report.

Appellants also challenge the district court’s determination that the trustee
committed no actionable breach of her duty to inform and report, arguing that the district
court “improperly shifted the burden of an accounting away from the trustee.” Whether a
trustee’s accounting fulfills the duty of disclosure is generally a question of fact for the
district court. In re Bailey’s Tr., 62 N.W.2d 829, 833-34 (Minn. 1954). We review the
district court’s factual findings for clear error and will not reverse for clear error unless we
are “left with the definite and firm conviction that a mistake has been made.” Short,
933 N.W.2d at 537 (quotation omitted). However, we review the district court’s legal
conclusions de novo. Id.
The duty to inform and report requires a trustee to “keep the qualified beneficiaries
of an irrevocable trust reasonably informed about the administration of the trust and of the
material facts necessary to protect their interests.” Minn. Stat. § 501C.0813(a). “Unless
unreasonable under the circumstances, a trustee shall promptly respond to a beneficiary’ s
request for information related to the administration of an irrevocable trust.” Id. And the
burden to prove the accuracy of an accounting is on the trustee. Malcolmson v. Goodhue
Cnty. Nat’l Bank, 272 N.W. 157, 160 (Minn. 1936).
Here, the district court determined that the trustee generally kept the beneficiaries
informed throughout the trust administration process. The district court noted that the
trustee sent a number of letters to the beneficiaries explaining the value of the settlor’s
estate, giving updates on tax preparation and other property management activities, and
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inviting the beneficiaries to reach out to the trustee or her attorney with any questions. The
district court further found that the beneficiaries “almost never asked for information, and
there is no evidence that they were not given the information they requested.” In addition,
with regard to the date-of-death appraisals in particular, the district court specifically found
that the beneficiaries “were informed that appraisals had been done” but “[n]one of them
asked to see the appraisals.” The district court did, however, agree with the beneficiaries
that the trustee had failed to disclose her receipt of $40,000 in cash as repayment of a loan,
but the district court concluded that this omission was not actionable because the funds
were ultimately deposited into the trust account. As a result, the trust did not suffer any
loss. The district court reached a similar conclusion with respect to the trustee’s failure to
inform the beneficiaries of the details of her property purchases until the final accounting,
explaining that they “failed to identify any damage from the failure to disclose this
information sooner” because “[t]hey know it now and have objected to the final accounting
and distribution because of it.” Finally, the district court determined that the trustee met
her burden to keep an accurate accounting of the estate sale by producing numerous receipts
from the sale and further found that there was no evidence showing that the estate sale
proceeds were not in the trust account.
Appellants do not challenge any specific findings of fact made by the district court
relating to the trustee’s duty to inform. Instead, appellants seem to suggest that this court
should conclude that the trustee breached her duty to inform and report by (1) omitting the
$40,000 loan repayment she had collected from both final accountings; (2) not sharing the
appraisals that she received and not disclosing sooner her decision to buy properties from
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the trust; and (3) failing to properly account for the proceeds of the estate sale of the
settlor’s personal property. Appellants further assert that the district court’s determination
that the trust suffered no damages from the trustee’s initial failure to disclose the $40,000
loan “simply cannot be correct.” We are not persuaded.
We conclude that the district court did not err by determining that the trustee did not
commit an actionable breach of her duty to inform and report and did not improperly shift
the burden of accounting away from the trustee. While the trustee could have informed
appellants about the administration of the trust in great er detail, the duty to inform and
report requires a trustee to keep qualified beneficiaries only reasonably informed. Minn.
Stat. § 501C.0813(a). And here, the record supports the district court’s findings that: the
trustee reasonably communicated with appellants about her administration of the
trust; appellants “almost never asked for information, and there is no evidence that they
were not given the information they requested”; appellants failed to identify any damages
stemming from either the trustee’s failure to disclose sooner the details of her purchase of
the trust properties or the $40,000 loan repayment; and the trustee produced numerous
receipts from the estate sale to meet her burden to keep an accurate accounting of that sale.
Based on these findings, we conclude that the district court did not err by determining that
the trustee did not commit an actionable breach of her duty to inform and report. And we
conclude that the district court did not improperly shift the burden of an accounting away
from the trustee because the district court’s d etermination was based on evidence of the
proceeds from the estate sale produced by the trustee.
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V. The district court did not abuse its discretion by not removing the trustee.

Next, appellants argue that the district court abused its discretion by declin ing to
remove the trustee. “We review a district court’s decision whether to remove a trustee for
abuse of discretion.” Lund ex rel. Revocable Tr. of Lund v. Lund, 924 N.W.2d 274, 284
(Minn. App. 2019), rev. denied (Minn. Mar. 27, 2019). A district court abuses its discretion
when it bases its decision on an erroneous view of the law or reaches a decision that is
inconsistent with the facts on record. Stisser, 818 N.W.2d at 508.
Generally, district courts are reluctant to remove a trustee selected by a settlor. See
In re Will of Gershcow, 261 N.W.2d 335, 338 (Minn. 1977). But a district court may, upon
petition or by its own initiative, remove a trustee if “the trustee has committed a serious
breach of trust” or “the [district] court determines that removal of the trustee best serves
the interests of the beneficiaries because of unfitness, unwillingness, or persistent failure
of the trustee to administer the trust effectively.” Minn. Stat. § 501C.0706(a), (b)(1), (b)(3)
(2022). The district court has discretion to determine “what constitutes sufficient grounds
for the removal of a trustee.” Gershcow, 261 N.W.2d at 338.
Here, the district court declined to remove the trustee. To support this decision, the
district court explained that the trustee had “managed the entire [t]rust essentially on her
own for several years and spent many hundreds of hours on its maintenance and
administration,” that the trustee’s “mistakes were not made in bad faith,” and that it was
the settlor’s intent to have the trustee manage the trust. The district court also noted that
because “[t]here is not much left to do other than to resolve the attorney fees issues and
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[the trustee’s] compensation . . . [i]t would be inefficient to bring in a new trustee at this
late date.”
Appellants argue that the district court “made a mistake” by not removing the trustee
because the trustee’s actions constitute numerous and substantial breaches of trust. And
they argue that removal is necessary in the event that this court decides to unwind the sales
of the trust properties to the trustee and return those properties to the trust, because there
will be additional work for the trustee to do and “she has amply demonstrated that she
cannot be entrusted with such duties.” We are not persuaded.
We conclude that the district court did not abuse its discretion by declining to
remove the trustee. As noted above, a district court may remove a trustee if “the trustee
has committed a serious breach of trust” or if “the [district] court determines that removal
of the trustee best serves the interests of the beneficiaries because of unfitness,
unwillingness, or persistent failure of the trustee to administer the trust effectively.” Minn.
Stat. § 501C.0706(b)(1), (3). Here, the district court determined that the trustee’s only
actionable breach of trust was her decision to sell trust property to herself for less than fair
market value without obtaining more recent property appraisals. The district court
determined that this breach of loyalty could be fully remedied through a money judgment
making the trust whole. The district court also found, contrary to appellants’ assertions,
that the trustee’s “mistakes were not made in bad faith.” (Emphasis added.) And the
district court further determined that removal of the trustee was not in the best interests of
the beneficiaries because administration of the trust was wrapping up and “[i]t would be
inefficient to bring in a new trustee at this late date.” We discern no abuse of discretion in
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these determinations. The district court acted well within its discretion when it decided not
to remove the trustee.
VI. The district court did not abuse its discretion by awarding the trustee
compensation and attorneys’ fees.

Finally, appellants argue that the district court abused its discretion by awarding the
trustee compensation and attorneys’ fees. We review a district court’s allowance of
compensation to a trustee for their services for an abuse of discretion. In re Tr. Created by
Voss, 474 N.W.2d 199, 201 (Minn. App. 1991). We also review the reasonableness of an
award of attorneys’ fees for an abuse of discretion. Margolis, 765 N.W.2d at 928.
“Where a trustee has committed a breach of trust, a court may deny compensation,
reduce compensation, or allow full compensation.” In re Tr. Created by Boss,
487 N.W.2d 256, 261 (Minn. App. 1992), rev. denied (Minn. Aug. 11, 1992). And, “[i]n
a judicial proceeding involving the administration of a trust, the [district] court, as justice
and equity may require, may award costs and expenses, including reasonable attorney fees,
to any party from the trust that is the subject of the judicial proceeding.” Minn.
Stat. § 501C.1004 (2022). “[A]ttorneys’ fees and other expenses reasonably and
necessarily incurred by all necessary parties to litigation may be allowed and properly
charged to the trust estate . . . if an adjudication . . . is essential to a proper administration
of the trust, and if . . . the litigation is conducted in good faith for the primary benefit of the
trust as a whole.” In re Atwood’s Tr., 35 N.W.2d 736, 740 (Minn. 1949); see also Minn.
Stat. § 501C.0106 (2022) (providing that common law su pplements the Minnesota Trust
Code except to the extent modified by the code or another Minnesota law).
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In its December 2021 order, the district court noted that the trustee had provided
detailed records of the time she spent administering the trust to the benefit of the trust. And
the district court concluded that, although the trustee “improperly sold herself two
properties a little below market value and should have disclosed that she had collected the
$40,000 loan, these lapses do not offset the substantial benefit that she provided to the trust
in wallowing through years of financial filings and managing the major assets of the
estate.” The district court therefore concluded that the trustee was entitled to reasonable
compensation and that her compensation should not be reduced or denied as appellants had
requested. In addition, the district court found that the trustee presented “reasonable good
faith defenses on many [of appellants’] claims” and that she could therefore submit an
affidavit to support her claim for attorneys’ fees and litigation costs. In its April 2022
order, the district court made detailed findings regarding the appropriate compensation for
the trustee and the reasonable attorneys’ fees that should be awarded to both parties.
Appellants do not dispute the specific amount of compensation and attorneys’ fees
awarded to the trustee. Instead, they argue that the district court should have denied the
trustee any compensation or attorneys’ fees because she breached her duty of trust
intentionally and in bad faith. And they argue that the district court should have denied the
trustee any compensation because the district court could not have made accurate findings
related to reasonable compensation based on the trustee’s incomplete and inaccurate
accounting. See Smith v. Tolversen, 252 N.W 423, 425 (Minn. 1934) (explaining that,
where a trustee’s records are “negligently kept, . . . the consequent obscurity or doubt
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cannot operate to [the trustee’s] advantage, but must be resolved against [the trustee]”).
We are not persuaded.
We conclude that the district court properly exercised its discretion in awarding the
trustee compensation and attorneys’ fees for several reasons . First, the district court did
not find that the trustee’s breach of trust involved “fraud, bad faith, or inexcusable
negligence.” In re Comstock’s Will, 17 N.W.2d 656, 664 (Minn. 1945) (explaining that a
district court has discretion to award reasonable compensation and attorneys’ fees to a
trustee in the absence of these conditions). Second, the trust agreement itself provides that
the trustee must be compensated at a rate of $100 per hour for her administration of the
trust. See In re Trusteeship of Williams, 591 N.W.2d 743, 747 (Minn. App. 1999)
(explaining that a court’s role in trust matters “is limited to fulfilling the [settlor’s] intent”).
Third, the district court made explicit findings that the trustee testified credibly about her
administration of the trust and that her “mistakes were not made in bad faith.” See Stisser,
818 N.W.2d at 507 (explaining that we “defer to the district court’s opportunity to assess
the credibility of witnesses”). In addition, the district court made detailed findings to
support its award of trustee compensation and its award of attorneys’ fees to both parties,
and the record supports the district court’s findings. Finally, the district court also declined
to compensate the trustee and award attorneys’ fees to the trustee for certain claims that the
district court deemed inappropriate, which further demonstrates that the district court
exercised its discretion with caution and discernment. The district court did not abuse its
discretion by awarding the trustee compensation and attorneys’ fees.
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In sum, we discern no basis for reversal of the district court’s order regarding the
administration of the trust and related matters.
Affirmed.