We have had the honor and experience of successfully litigating religious property disputes throughout the United States and helping local churches out of mainline denominations. From this experience, we have learned that local churches must consider at least three ideas before committing to litigating a trust clause claim.
- Constitutional issues – You can challenge the Trust clause in Court
Despite the many reservations that you may have about leaving a denomination, you should know that church property disputes are not something new. When it came to judicial decisions concerning the ownership of property, the dominant rule for roughly 150 years was the “English rule,” which required courts to award property to whichever faction of the church adhered to “the true standard of faith,” meaning the old established orthodoxy of that religious group. This is no longer the rule.
In 1979, the U.S. Supreme Court brought about a significant change in the legal landscape, concluding that civil courts have a role in resolving property disputes. This shift means that state courts may use neutral law principles to determine whether the parties intended to create a trust. “These neutral principles’ rely [y] exclusively on objective, well-established concepts of trust and property law familiar to lawyers and judges,’ thereby producing outcomes reflecting the ‘intentions of the parties.” It’s important to note that ‘may’ is the key phrase here, as most state courts use neutral principles, while others defer to the hierarchy.
2. Your State law will control the outcome of your case.
Because states regulate property, congregants will encounter different rules in every state. In many cases, applicable rules differ only slightly from jurisdiction to jurisdiction. Though differences may be apparent and their impact palpable, subtleties may spell the difference between property retention and forfeiture. One must, therefore, look cautiously to respective state laws for guidance. Key starting points include the state’s trust law and court decisions that interpret those provisions and reveal how courts might respond to claims in a church property dispute.
Trusts are conditional transfers of property. Like contracts, trusts are dependent on mutual consent. In trust law, the one creating a trust is referred to as the settlor. The settlor transfers property to a trustee under certain agreed-upon conditions, creating a fiduciary duty for the trustee. A trustee has a responsibility to abide by the terms of the trust in fulfilling the prescribed duties to specified beneficiaries.
State-to-state, there are many similarities in trust law. Still, it is essential to remember that states, through jurisprudence or statutory instruction, create their standards for trust law. Your state’s stance on the revocability of trusts is one of the most important things to consider. In some states, trusts are revocable. In others, they may not be. Most commonly, only the settlor can modify or revoke an extant trust. But in any event, some rules and exceptions must be considered closely to align with your situation.
3. Before you file, review, update, and amend your governing documents and property deeds.
The local church incorporating documents and deeds is critical when reviewing whether litigation should proceed immediately or if the governing documents and property deeds should be amended before litigation. For instance, references to the United Methodist Church in a congregation’s articles of incorporation and deeds may be problematic depending on the state of the property. For this reason, it is essential to examine your congregation’s founding documents to assess how closely it is part of the general church.
The law continues to evolve on this topic, and it is essential to research and review the law in each particular state before taking action on the Trust Clause. If you wish to learn more, please get in touch with us to review your governing documents and property deeds. We look forward to helping your church move toward a future with hope and confidence.
