Wills and Trusts

Wyatt, Tarrant & Combs, LLP

Trust Reformation to Change Dispositive Provisions

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In re Trust D Created Under the Last Will and Testament of Darby, 234 P.3d 793 (Kan. 2010).  In 1986, Darby executed his last will and testament, which established several trusts for the benefit of his siblings.  The trust at issue, Trust D, was to be established at Darby’s death by a specific bequest of $240,000 to the trustee.  The trustee was to pay $12,000 each year to Darby’s daughter Marjorie.  Upon Marjorie’s death, the funds in Trust D  were to be paid annually to Marjorie’s three daughters for their lives.  The bequest to Trust D and the annual payments to Marjorie’s daughters were subsequently increased by a codicil to Darby’s will.

After Darby’s death, Marjorie sought to have the trust modified to increase her payments and to achieve Darby’s alleged tax objectives regarding the trust.  All of the beneficiaries consented to the modifications, which the district court approved pursuant to K.S.A. § 58a-411.

The sole question on appeal was whether Kansas law supported the trust modification.  Marjorie argued that such modifications were necessary to provide her basic living expenses and that Darby’s intent was shown by the codicil increase to the payment amount.  Under Kansas law, a modification cannot be approved unless it is consistent with the purposes of the trust or unless changed circumstances mandate modification to comport with the purposes of the trust.

The court held that there was no evidence that Marjorie’s basic support was a material purposes of the trust because the trust instrument did not contain any language of such and the codicil could not be used to imply such a purpose.  The court also noted that the trust did contain a spendthrift provision, which the court held constituted the true material purpose of the trust under Kansas law and the proposed modification would be inconsistent with this purpose.  Regardless of taxes, the court held that a modification cannot be validated when it would alter the dispositive provisions of the trust.

Leave a reply. Please note that although this blog may be helpful in informing clients and others who have an interest in information privacy and security, it is not intended to be legal advice. The information on this blog also should not be relied upon to form an attorney-client relationship.

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