Probate & Trust Law Section Conference Manual ... - Minnesota CLE

health, education, support, maintenance and care.” The Trustees “shall
have no obligation to consider other assets or available” to the wife. The
trust agreement also provided that the trustees were to “use principal
liberally for [his wife] to enable her to maintain insofar as possible the
standard of living to which she was accustomed during the Grantor’s
lifetime.” In addition, the trust agreement provided that the wife had the
power to require the trustees to convert unproductive property to
productive property.
From 2000 to 2011, the wife received income distributions from the trust
and limited principal distributions. In 2010, the wife requested that the
trustee make a principal distribution to her to pay various living expenses
and attorneys’ fees. The trustee denied the requested based on her other
sources of income. While the case was pending, the wife made five
additional requests for distributions and she requested that the trustee
convert the trust property to income producing investments. The trustee
denied both requests. The district court held that the denials for principal
distributions were justified and that the wife was not entitled to require the
trustee to convert the trust property to 100% income producing.
The court held that its role is to ascertain and give effect to the grantor’s
intent. The language that principal was to be used for the wife’s health,
education, support, maintenance and care” implies that the trustee had a
duty to ensure that principal remains available for such purposes
throughout her lifetime. Additionally, the court found that the language
used for the marital trust indicated that the grantor’s intent was for the
principal to be used liberally in favor of the wife, without concern for the
preservation of principal. The court compared the language used in the
marital trust to the language in another trust in the same document, which
did not have as liberal as language. The Court held that the trustee did
have discretion in exercising its duties but that such discretion was not so
broad as to permit the trustee to contradict the grantor’s intent. The Court
held that the district court misinterpreted the trust instrument when it held
in favor of the trustee’s actions.
The Court also found that the district court misinterpreted the trust
agreement but not considering the standard of living to which the wife was
accustomed to, and that by doing so, the trustee contradicted the grantor’s
intent and the plain language of the trust agreement. The Court also found
that the trustee was not required or prohibited from considering the wife’s
other sources of income; however, when considering such sources of
income, the trustee was still required to provide liberally for the wife.
The Court held that the trustee did not act within its discretion by failing to
convert the trust property to income-producing property. The language
“productive property” has been interpreted to mean “productive so that a
reasonable income” will be available.
42