In re Estate of Brown
undetermined (1987)
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Rule of Law:
An active trust may not be terminated, even with the consent of all beneficiaries, if a material purpose of the settlor remains to be accomplished. Providing a beneficiary with a guaranteed, managed income for the duration of their life is a material purpose that precludes early termination of the trust.
Facts:
- Andrew J. Brown died in 1977, establishing a testamentary trust.
- The trust's first purpose was to use its income and principal to provide a college education for the children of his nephew, Woolson S. Brown.
- The trust's second purpose, effective after the first was complete, was to use the income and principal to provide for the 'care, maintenance and welfare' of Woolson and his wife, Rosemary Brown, for the remainder of their natural lives.
- Upon the death of Woolson and Rosemary, any remaining trust assets were to be distributed to their 'then living children.'
- The trustee determined that the educational purpose was accomplished and began distributing income to Woolson and Rosemary.
- Woolson and Rosemary, along with their children (the remaindermen), all consented to terminate the trust and distribute the remaining assets immediately.
Procedural Posture:
- The lifetime beneficiaries, Woolson and Rosemary Brown, petitioned the probate court for termination of the trust, with the consent of the remaindermen.
- The probate court denied the petition to terminate.
- The beneficiaries appealed the denial to the Washington Superior Court (a trial court of general jurisdiction).
- The Superior Court reversed the probate court, concluding the trust's material purpose had been accomplished and ordering termination.
- The trustee (appellant) appealed the Superior Court's decision to the state's highest court.
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Issue:
Does a trust provision directing the trustee to use trust assets to provide for the 'care, maintenance and welfare' of the life beneficiaries for the 'remainder of their natural lives' constitute a material purpose that prevents the beneficiaries from terminating the trust after an initial educational purpose has been fulfilled?
Opinions:
Majority - Gibson, J.
Yes. A trust provision directing a trustee to provide for the lifetime care and maintenance of beneficiaries constitutes a material purpose of the settlor that prevents premature termination. The court reasoned that in the interpretation of trusts, the settlor's intent is determinative. Although the trust was neither a formal support trust nor a spendthrift trust, the specific language directing the trustee to provide for the beneficiaries 'for and during the remainder of their natural lives' clearly expressed the settlor's intent to provide a secure, lifelong income stream. Allowing the beneficiaries to terminate the trust and receive the principal as a lump sum would defeat this unaccomplished material purpose, which was distinct from the completed educational purpose.
Analysis:
This decision reaffirms and clarifies the Claflin doctrine, which prioritizes the settlor's intent over the unanimous wishes of the beneficiaries. It establishes that a provision for lifelong income, managed by a trustee, is a significant material purpose sufficient to prevent termination. The case demonstrates that courts will look beyond formal classifications like 'spendthrift' or 'support' trusts and analyze the specific language of the instrument to discern the settlor's intent. This precedent strengthens the power of settlors to control distributions long after their death and limits the ability of beneficiaries to accelerate their enjoyment of trust assets.
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