A trustee and four beneficiaries disagree about what a 1994 trust means. The old answer was a petition, an order for hearing, published notice, a hearing date four months out, and a bill that ate a meaningful share of whatever they were fighting about.
Minnesota’s answer since 2015 is Minn. Stat. § 501C.0111. Interested persons may enter into a binding nonjudicial settlement agreement about essentially any matter involving a trust. No filing. No hearing. No publication. No judge.
In my practice it’s the most used and least examined tool in Minnesota trust law. Signing one isn’t hard. The problem is that an NJSA is a private agreement whose validity is never adjudicated unless somebody attacks it — so the parties grade their own work on the two conditions in paragraph (c), potentially for decades, and the grade only gets published when it’s too late to change the answer.
What can a nonjudicial settlement agreement actually resolve?
Almost anything. Paragraph (b) throws the door wide open:
“(b) Except as otherwise provided in paragraph (c), interested persons may enter into a binding nonjudicial settlement agreement with respect to any matter involving a trust including but not limited to:”
The six enumerated matters are:
- the interpretation or construction of the terms of the trust;
- the approval of a trustee’s report or accounting;
- direction to a trustee to refrain from performing a particular act or the grant to a trustee of any necessary or desirable power;
- the resignation or appointment of a trustee and the determination of a trustee’s compensation;
- transfer of a trust’s principal place of administration; and
- liability of a trustee for an action relating to the trust.
“Including but not limited to” is doing real work there. The list is illustrative, not exhaustive. But before you treat that as a blank check, read the ceiling.
The two conditions everyone signs past
Paragraph (c) is one sentence, and it’s the whole game:
“(c) A nonjudicial settlement agreement is valid only to the extent it does not violate a material purpose of the trust and includes terms and conditions that could be properly approved by the court under this chapter or other applicable law.”
Those are two separate tests, and the agreement has to pass both.
The second condition is the tighter one, and it’s the one I watch people misread. It doesn’t mean “a court would probably sign off.” It means the agreement can’t do anything a court itself lacks the power to do. Section 501C.0111 gives you no new substantive authority. It’s a procedural shortcut around the courtroom, and it brings along every substantive limit that applies inside one.
Here’s how that plays out. A family wants to terminate an irrevocable trust early and split the principal. Under § 501C.0411(b), that requires a court to conclude “that continuance of the trust is not necessary to achieve any material purpose of the trust.” Paragraph (c) requires the same finding — except now nobody makes it out loud. The parties make it themselves, in a recital, and it sits there unexamined until the remainder beneficiary who was seven at signing turns thirty and hires a lawyer.
The mandatory provisions in § 501C.0105(b) mark the outer edge of what any private deal can reach. Among them: the trustee’s duty of good faith, the benefit-of-beneficiaries requirement, the court’s power to modify or terminate under §§ 501C.0410 to 501C.0416, the spendthrift and creditor rules of §§ 501C.0502 to 501C.0507, and the effect of an exculpatory term under § 501C.1008. Draft an NJSA as if those didn’t exist and you’ve drafted right past paragraph (c).
Who is an “interested person” for an NJSA? (Not who you think.)
Chapter 501C defines the phrase twice, differently, and I’ve watched lawyers grab the wrong definition and either collect more signatures than they need or — much worse — miss one.
For a nonjudicial settlement agreement, § 501C.0111(a):
“(a) For purposes of this section, ‘interested persons’ means persons whose consent would be required in order to achieve a binding settlement were the settlement to be approved by the court.”
That’s a functional test, not a roster. You don’t start by listing people. You start by asking who a district court would have required to sign before it entered an order. Then you get those signatures, plus representation coverage for anyone who can’t sign for themselves.
For a judicial proceeding, § 501C.0201(b) is far broader. It includes an acting trustee, any person named as or seeking appointment as successor trustee, a beneficiary, a creditor, and “any other person having a property or other right in or claim against the assets of the trust” — plus representatives under §§ 501C.0301 to 501C.0305, delegees under § 501C.0807, and holders of a power to direct under § 501C.0808. The meaning, that section adds, “may vary from time to time and must be determined according to the particular purposes of, and matter involved in, any petition.”
That has two practical consequences. A trust creditor is an interested person for a judicial proceeding, and § 501C.0111(a) doesn’t make it one. An NJSA doesn’t bind a creditor who wasn’t a party, the same way a settlement among heirs doesn’t resolve a creditor’s claim against a probate estate. And the § 501C.0111(a) test is matter-specific: the people you need for an accounting approval aren’t the same people you need for a trustee-liability release.
How do you bind a minor, an unborn beneficiary, or someone you cannot find?
Through the representation sections, §§ 501C.0301 to 501C.0305. This is where an NJSA either holds up for good or turns into a time bomb.
Section 501C.0301(a) gives you the notice rule: notice to a representative “has the same effect as if notice were given directly to the other person.” Paragraph (b) gives you the binding rule, and it was amended effective August 1, 2025 to say what practitioners had assumed it said:
“(b) The consent, agreement, or waiver of a person who may represent and bind another person under sections 501C.0302 to 501C.0305 is binding on the person represented unless the person represented objects to the representation before the consent, agreement, or waiver would otherwise have been effective. The provisions of this paragraph shall not apply to representation under section 501C.0302.”
Before the amendment the paragraph spoke only of “consent.” An NJSA is an agreement, so the fix closes a gap that mattered. The last sentence still matters most: representation by a power-of-appointment holder under § 501C.0302 isn’t subject to the represented person’s right to object at all.
Here’s the representation ladder:
| Section | Who may bind whom | Condition |
|---|---|---|
| § 501C.0302 | Sole holder or all co-holders of a presently exercisable or testamentary power of appointment, power of revocation, or unlimited power of withdrawal — binding permissible appointees, takers in default, and others subject to the power | None stated; the § 501C.0301(b) objection right does not apply |
| § 501C.0303(a) | Conservator (the estate controlled); agent with authority as to the question; trustee (the trust’s beneficiaries); personal representative (persons interested in the estate); parent (own minor or unborn child, if no conservator appointed) | Only “to the extent there is no conflict of interest between the representative and the person represented or among those being represented with respect to a particular question or dispute” |
| § 501C.0303(b) | Tiebreaker where parents disagree about representing the same minor | Priority to the parent who is a trust beneficiary; then the parent who is a lineal descendant of the settlor; failing both, a guardian ad litem must be appointed |
| § 501C.0304 | Anyone with a substantially identical interest may bind a minor, an incapacitated or unborn individual, or a person whose identity or location is unknown and not reasonably ascertainable after reasonable efforts | Only if not otherwise represented under §§ 501C.0302, .0303, or .0305, and “only to the extent there is no conflict of interest” |
| § 501C.0305 | The court itself, or a court-appointed representative | See below |
Section 501C.0302 got materially broader on August 1, 2025. It used to reach only the holder of a general power of appointment. It now reaches a power “whether general or special.” The holder of a limited power — a very common drafting pattern — can now bind the permissible appointees and takers in default. Trusts that were hard to settle privately because the power was special are easier now.
The conflict-of-interest condition is where most of the NJSAs I review are actually vulnerable. Picture a parent who’s also a current beneficiary, signing an agreement that speeds up distributions to current beneficiaries at the expense of the minor’s remainder. That parent isn’t a permissible representative under § 501C.0303(a) or § 501C.0304, because the conflict is the entire point of the deal. Papering it anyway doesn’t fix it. It preserves it.
The move I see most practitioners skip: § 501C.0305(b)
If virtual representation is thin, you don’t have to choose between an unsafe NJSA and a full modification petition. Section 501C.0305(b):
“(b) As to any other matter arising under this chapter, whether or not a judicial proceeding concerning the trust is pending, if the court determines that a person with an interest in a trust is not represented under sections 501C.0301 to 501C.0304, or that the otherwise available representation might be inadequate, the court may appoint a representative on behalf of such unrepresented person. The appointment of a representative pursuant to this section shall constitute a determination by the court that such appointment is appropriate.”
Read the bolded clause. You can get a representative appointed without a pending proceeding, on application of the trustee or any other person with an interest, or on the court’s own motion under paragraph (c). That’s a narrow, cheap petition, and it hardens an agreement that would otherwise be fragile. Paragraph (d) then adds a rule of decision that’s easy to miss and often decisive: the court or representative “may consider general benefit accruing to the living members of the represented person’s family.”
NJSA or petition? An honest comparison.
You’re not trading cost against quality. You’re trading speed and privacy against finality.
| Nonjudicial settlement agreement (§ 501C.0111) | Judicial proceeding (§§ 501C.0201–0208) | |
|---|---|---|
| Filing required | No | Yes — petition, order for hearing |
| Notice | Only to interested persons as the parties define them | In rem: publication at least 20 days before hearing plus mailing at least 15 days before, to known current trustees and qualified beneficiaries. In personam: Rule 4 service at least 15 days before |
| Public record | No | Yes |
| Who is bound | The signatories and those validly represented | In rem: “binding in rem upon the trust estate and all interested persons, including without limitation all beneficiaries, vested or contingent, even though unascertained or not in being” (§ 501C.0204, subd. 1) |
| Who decides whether the material-purpose test is met | The parties, in a recital | The court, on the record |
| Who decides whether representation was adequate | The parties | The court |
| Durability | Contingent — attackable whenever someone later claims a defect | Order, subject to appeal within the § 501C.0204 window |
| Cost | Drafting only | Drafting, filing, publication, hearing; the court may award costs and reasonable attorney fees from the trust “as justice and equity may require” (§ 501C.1004) |
Section 501C.0204, subdivision 1, is the line that should decide close cases. An in rem order binds unborn and unascertained beneficiaries by operation of law. An NJSA binds them only if the representation was in fact adequate, and that question stays open until somebody challenges it.
The middle path: an NJSA the court blesses
Paragraph (d) doesn’t get used nearly enough, and it offers three distinct forms of relief:
“(d) Any interested person may request that the court approve a nonjudicial settlement agreement, to determine whether the representation as provided in sections 501C.0301 to 501C.0305 was adequate, and to determine whether the agreement contains terms and conditions the court could have properly approved.”
Three requests, and they line up exactly with the three ways an NJSA fails. Section 501C.0202(22) confirms the court’s subject matter jurisdiction “to approve a nonjudicial settlement as provided in section 501C.0111.”
My rule falls right out of that: negotiate the deal privately, then decide whether to file it. Where every affected person is a competent adult signing for themselves, don’t file. Where minors, unborn beneficiaries, or a conflicted representative are involved — or the agreement terminates a trust early, releases a trustee from liability, or changes distributions in a way somebody will resent later — spend the filing fee. Under § 501C.0201(c) the petition must designate in rem or in personam jurisdiction. Designate neither and in rem is invoked by default, which is usually what you want here.
The statute also expressly makes room for an NJSA in two places worth knowing: § 501C.0704(c)(3) makes appointment “pursuant to a nonjudicial settlement agreement as defined in section 501C.0111” the third-priority method of filling a noncharitable trusteeship vacancy, and § 501C.0111(b)(5) offers an alternative to the 60-day notice-and-objection procedure of § 501C.0108(d)–(e) for moving the principal place of administration.
Drafting notes that decide later fights
Identify each signer’s capacity on the face of the agreement — individually, as representative under § 501C.0303(a)(5) for a named minor, as holder of a power under § 501C.0302. A signature block with just a name proves nothing about representation years later. And address the conflict question expressly for every representative relying on § 501C.0303 or § 501C.0304, because both are conditioned on there being no conflict.
Recite the paragraph (c) analysis. Don’t just assert the conclusion. “The parties agree this does not violate a material purpose” is worth nothing. Identify the trust’s material purposes from its terms, explain why the agreement is consistent with them, and name the section that would have given a court authority to approve the same terms.
Be careful with trustee releases. Paragraph (b)(6) permits an NJSA to resolve trustee liability, but § 501C.1009 makes a beneficiary’s release non-binding where the beneficiary didn’t know their rights or the material facts and the trustee did. A release signed by beneficiaries who never got an accounting is exactly the release § 501C.1009 unwinds. That’s why the duty-to-inform demand belongs before the settlement. Section 501C.1008 separately makes an exculpatory term unenforceable to the extent it relieves a trustee of liability for a breach “committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries.”
Check the collateral consequences. Changing distribution rights can affect public-benefits eligibility and medical assistance estate recovery, and can collide with the spendthrift and creditor rules in ways nobody at the table intended. Section 501C.0111 has no tax provision at all. The tax analysis is yours to run.
Draft it as though a judge will read it
The legislature’s call in § 501C.0111 was that most trust disputes are family disputes, and family disputes don’t need a courtroom. That call was right, and the section has saved a great many Minnesota families a great deal of money.
But it moved two judicial findings — material purpose, and adequacy of representation — off the record and into the parties’ own hands, without ever relieving anyone of having to be right about them. I draft these agreements assuming a judge will read them someday, because someday one might.
At Madgett Law, LLC I draft and review Minnesota nonjudicial settlement agreements, handle trust construction and accounting disputes, and file the § 501C.0305 representative appointments and § 501C.0111(d) approval petitions that make a private agreement stick. If your family is trying to sort out a trust problem without litigation, send us a message or call 612-470-6529.
Sources: Minn. Stat. § 501C.0111 (nonjudicial settlement agreements) — para. (a) (definition of “interested persons”), para. (b)(1)–(6) (matters that may be resolved), para. (c) (material purpose; terms the court could properly approve), para. (d) (court approval; adequacy of representation); § 501C.0105(b) (mandatory provisions); § 501C.0108(d)–(e) (60-day notice and objection on transfer of principal place of administration); § 501C.0201(b) (definition of “interested person” for judicial proceedings), (c) (designation of in rem or in personam jurisdiction); § 501C.0202(22) (jurisdiction to approve a nonjudicial settlement); § 501C.0203, subds. 1–2 (publication at least 20 days and mailing at least 15 days before hearing; Rule 4 service at least 15 days before hearing); § 501C.0204, subd. 1 (in rem order binding on the trust estate and all interested persons, including unascertained and unborn beneficiaries), subd. 2 (in personam order); §§ 501C.0301–0305 (representation) — § 501C.0301(a)–(b) (effect of notice; binding effect of consent, agreement, or waiver; § 501C.0302 carve-out), § 501C.0302 (holder of a power of appointment, whether general or special), § 501C.0303(a)(1)–(5) and (b)(1)–(4) (fiduciaries and parents; parental tiebreakers; guardian ad litem), § 501C.0304 (substantially identical interest), § 501C.0305(a)–(d) (court representation; appointment whether or not a proceeding is pending; family-benefit consideration); § 501C.0411(b) (termination by beneficiary consent subject to a material-purpose finding); § 501C.0704(c)(3) (NJSA as a method of filling a trusteeship vacancy); § 501C.1004 (attorney fees and costs); § 501C.1008(a) (exculpation unenforceable for bad faith or reckless indifference); § 501C.1009 (beneficiary’s consent, release, or ratification) — all from the Minnesota Office of the Revisor of Statutes. The August 1, 2025 amendments to §§ 501C.0301 and 501C.0302 are Laws 2025, ch. 15, §§ 2–3, effective by default under Minn. Stat. § 645.02. This article is general legal information about Minnesota law, not legal advice, and reading it does not create an attorney–client relationship. Whether a particular matter can be resolved by nonjudicial settlement agreement depends on the trust instrument and the circumstances. No outcome is promised or implied.