This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
In the Matter of the Trust
Filed January 3, 2006
Ramsey County District Court
File No. C8-04-200049
Steven R. Hedges, James H. Gilbert Law Group,
Michael P. Sampson, Sarah B. Stroebel, Lindquist & Vennum P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402-2205 (for respondent U.S. Bank)
Considered and decided by Kalitowski, Presiding Judge, Stoneburner, Judge, and Crippen, Judge.
Marie La Belle Maloney (decedent)
died testate in August 1997. Her will
provided several specific bequests and named First Trust Company of
In March 2004, respondents contacted appellant
and offered him “a one-time payment of [$100,000] in cash, payable from the
assets of the trust, to consent to dissolution of the
In May 2004, the parties petitioned the district court for an immediate and complete termination of the trust, then valued at approximately $993,279.87, an outright distribution of $100,000 to appellant, and distribution of the remaining balance in equal shares to respondents. When notified of the petition, both trustees objected to complete termination, arguing that the distribution to appellant (1) would violate the trust’s specific directives concerning the manner and amount of trust payments to appellant; (2) would violate the trust’s spendthrift provision by diverting funds intended for the remainder beneficiaries to appellant; and (3) would frustrate the trust’s purpose by assigning to appellant remainder funds specifically intended for medical research.
At the hearing, the court stated its belief that the agreement among the beneficiaries contravened the obvious intent of the trust. The court indicated that it would consider ordering a partial termination of the trust on the conditions that appellant’s interests were protected by a set-aside of capital sufficient to guarantee him the monthly payments required by the will and that he was reimbursed for his attorney fees. Following the hearing, the parties negotiated an agreement to which appellant’s counsel specifically assented.
In February 2005, the district court issued an order incorporating the parties’ agreement. The order (1) partially terminated the trust; (2) reserved $300,000 of the trust to guarantee appellant’s monthly lifetime payments; (3) reserved $200,000 to pay for appellant’s anticipated legal claims to the $100,000 lump sum; and (4) distributed the remainder of the trust in equal parts to the remainder beneficiaries. Appellant, who does not dispute the terms of the partial distribution, contests the district court’s choice of partial, rather than complete termination of the trust.
This court reviews an order affecting a trust
under an abuse of discretion standard. In re Trust Created by Hill, 509 N.W.2d
168, 172 (Minn. App. 1993), review denied
(Minn. Feb. 1, 1994). The district
court’s interpretation of an unambiguous written document is a legal issue
subject to de novo review. In re Trust Created by Hill, 499 N.W.2d
475, 482 (Minn. App. 1993), review denied
(Minn. July 15, 1993). Where the
language of the trust instrument is unambiguous, the intent of the settlor must
be ascertained from the four corners of the agreement, without resort to
extrinsic evidence of intent. In re Trust Created under Agreement with
The supreme court has
recognized that “the beneficiaries of a trust created for successive
beneficiaries can compel the termination of the trust before its natural
expiration if its continuance is not necessary to carry out a material purpose
for its creation—provided that all of the beneficiaries consent.” In re
Trust of Boright, 377 N.W.2d 9, 12 (
Appellant’s contention that the agreement between him and the remainder beneficiaries must be upheld as a legal, binding contract is flawed. The remainder beneficiaries’ offer to terminate the trust was explicitly contingent upon approval by the district court and complete dissolution of the trust. Absent that approval, the agreement never became enforceable.
Appellant also argues that permitting a partial termination of the trust will encourage remainder beneficiaries such as respondents to breach otherwise enforceable agreements “to their own benefit.” But the record is clear that the remainder beneficiaries did not breach the agreement and attempted in good faith to secure complete termination and court approval. And the remainder beneficiaries would have collected a greater part of the trust had the petition been granted as initially presented.
next argues that the district court erred by concluding that the beneficiaries’
agreement violated the trust’s material purposes and spendthrift
provision. A spendthrift trust is “a
trust in which the power of alienation has been suspended.”
Decedent’s will gave specific directions concerning the timing and amount of distributions to appellant. The lump-sum payment contemplated by the beneficiaries’ agreement is plainly contrary to the structured and limited distributions provided by the trust. See Boright, 377 N.W.2d at 12 (observing that “[o]rdinarily, the presence of a spendthrift provision precludes termination of a trust prior to its natural termination date, for if one of the purposes for which the settlor created the trust was to protect the life beneficiary from his own improvidence, that purpose would be frustrated by a premature termination of the trust”).
Appellant contends that the
beneficiaries’ agreement should be enforced because the underlying motive of
the will reveals no specific desire to postpone his receipt of trust
funds. But where, as here, the trust
instrument is unambiguous, the parties may not go outside the four corners of
the document in order to discover underlying meanings. See
Appellant also argues that
Having properly concluded that the agreement among the beneficiaries contravened the plain intent of the trust, the district court appropriately denied a complete termination of the trust and approved instead a partial termination.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.