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Keywords

trialtrust

attorneytrialtrust

Related Cases

In re Estate of Somers, 277 Kan. 761, 89 P.3d 898

Facts

Eula M. Somers established a testamentary trust for her grandchildren, which grew significantly over the years. The trust included a spendthrift provision to protect the assets from creditors. The life beneficiaries and the remainder beneficiary sought to terminate the trust, agreeing on distributions, but the trustee opposed this. The district court modified the trust to allow a partial distribution while maintaining sufficient funds for the life beneficiaries' annuity payments.

Eula M. Somers died in 1956. She left a testamentary trust (Trust) for her grandchildren, Susan Somers (now Smiley), then age 7, and Kent Somers, then age 5 (hereinafter Grandchildren). The Trust was funded from the residuary estate of Eula Somers in an amount of approximately $120,000. By January 2001, the value of the Trust had increased to approximately $3,500,000.

Issue

Whether the trial court properly ruled on the termination and modification of a spendthrift trust at the request of the beneficiaries, all of whom were competent to consent.

The parties do not dispute that the Trust is a spendthrift trust. Thus, the question is whether a court can terminate a spendthrift trust at the request of the beneficiaries, who are all in agreement and competent to consent, if the settlor is not available to consent to the termination.

Rule

A spendthrift provision is presumed to constitute a material purpose of the trust, and a court may modify a trust if circumstances not anticipated by the settlor warrant such modification to further the purposes of the trust.

A spendthrift provision in the terms of the trust is presumed to constitute a material purpose of the trust.

Analysis

The court found that the spendthrift provision served a material purpose of the trust, which could not be achieved by terminating the trust. The significant growth of the trust's corpus constituted changed circumstances that justified a partial distribution to the remainder beneficiary while ensuring the life beneficiaries' interests were protected.

The district court found that the dramatic growth in the Trust's corpus presented a 'unique and unusual set of facts' justifying modification of the Trust.

Conclusion

The court affirmed the district court's decision to modify the trust, allowing a partial distribution to the remainder beneficiary while maintaining sufficient funds for the life beneficiaries' annuity payments. The court reversed the district court's decision regarding additional distributions to the life beneficiaries.

We conclude that the district court was correct in its finding that the growth of the trust and its present worth constituted a circumstance that was not anticipated by the settlor and that modification or a partial distribution of the trust assets furthers the purposes of the trust, to benefit Shriners.

Who won?

The prevailing party was the Shriners Hospitals for Children, as the court allowed a partial distribution to them while upholding the material purpose of the trust.

The trial court made a finding that the efforts of the Grandchildren's attorneys secured a favorable result for the Shriners' remainderman and clarified a controversy pending between the annuitants and remainderman and trustee.

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