In re The Irrevocable Supplemental Needs Trust of Jennifer Collins created pursuant to Court Order dated February 2, 1998.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-1018

 

In re The Irrevocable Supplemental Needs Trust

of Jennifer Collins created pursuant to Court Order

dated February 2, 1998.

 

Filed ­­­December 14, 2004

Reversed

Harten, Judge

 

Ramsey County District Court

File No. C8-98-200011

 

Randy F. Boggio, Theresa M. Lewis, Garvey & Mathison, P.A., 9995 Lyndale Avenue South, Bloomington, MN 55420 (for appellant Stephen M. Collins)

 

Carrie Bender, 121 83rd Avenue Northeast, Apartment #110, Fridley, MN 55432 (pro se respondent)

 

            Considered and decided by Harten, Presiding Judge; Klaphake, Judge; and Stoneburner, Judge.

U N P U B L I S H E D   O P I N I O N

 

HARTEN, Judge

 

            Appellant, trustee and father of the beneficiary of a supplemental needs trust, appeals from an order disallowing certain discretionary disbursements made on behalf of the beneficiary.  Because we conclude that appellant did not abuse his sole discretion as trustee in making those disbursements, we reverse. 

 

FACTS

 

Jennifer Collins, age 15, suffered personal injuries from injections of Gammagard, produced by Baxter Healthcare Corporation.  The resulting litigation was settled, and Jennifer became the beneficiary of a trust account established with the proceeds of the settlement.  Her father, appellant Stephen Collins, was named trustee.  The trust document provided in relevant part:

It is the intent of this agreement to create a Supplemental Needs Trust for the benefit of Jennifer Collins. . . . The purpose of the Trust is to provide for Jennifer Collins' reasonable living expenses and other needs when benefits from publicly funded benefit programs are not sufficient to provide adequately for those needs. . . . The Trustee shall expend such sums from the principal of the Trust to or for the benefit of Jennifer Collins only for purposes which supplement benefits from publicly funded programs.  Such expenditures may include but are not necessarily limited to entertainment, education, vacations and travel, comfort, convenience and reasonable luxuries, as the Trustee, in the Trustee's sole discretion, deems advisable. . . . The Trustee may also pay for . . . companion services. . . .

 

            After five years, appellant petitioned for court approval of the first five annual accountings.  While much of the money disbursed was for administrative expenses and in-home care for Jennifer, a number of disbursements were made for non-medical purposes.  Following a hearing, the district court disallowed a total of $2,093.  Some disallowances were partial, for disbursements that had benefited family members other than Jennifer; those disallowances are not challenged on appeal.[1] 

            The district court also denied a December 2000 disbursement of $1,000 for a child's snowmobile and a October 2001 disbursement of $123 for Britney Spears concert tickets.  After learning from appellant that he supports himself and his family by working in a machine shop, the district court ordered him to repay the trust at the rate of $200 monthly.  Appellant challenges only the disallowances of $1,000 for the snowmobile and $123 for Britney Spears concert tickets.  

D E C I S I O N

            This court reviews a district court's exercise of its equitable jurisdiction over a charitable trust under an abuse-of-discretion standard.  In re Ruth Easton Fund, 680 N.W.2d 541, 547 (Minn. App. 2004).  A decision that is arbitrary, capricious, or not in conformity with law is an abuse of discretion.  Id.  Courts will not substitute their discretion for that of a trustee except when necessary to remedy an abuse of discretion.   In re Trusts A & B of Divine, 672 N.W.2d 912, 919  (Minn. App. 2004).

            In Divine, this court adopted six factors for determining whether a trustee has abused discretion: 

(1) the extent of the discretion conferred upon the trustee by the terms of the trust; (2) the purposes of the trust; (3) the nature of the power; (4) the existence or non-existence, the definiteness or indefiniteness, of an external standard by which the reasonableness of the trustee's conduct can be judged; (5) the motives of the trustee in exercising or refraining from exercising the power;  and (6) the existence or nonexistence of an interest in the trustee conflicting with that of the beneficiaries.

 

  Id. at 919-20 (quotation omitted); see also Cox v. Mid-America Dairymen, Inc., 965 F.2d 569, 572 (8th Cir. 1992) (reflecting eighth circuit's adoption of the same factors).  An analysis of the factors does not indicate that appellant abused his discretion.

            1.         Extent of Appellant's Discretion.  The trust gave appellant "sole discretion" to make expenditures for Jennifer's "entertainment, education, vacations and travel, comfort, convenience and reasonable luxuries."  Both the snowmobile and the concert tickets fall into the "entertainment" category. 

            2.         Trust Purposes. The purpose of this trust is "to provide for Jennifer Collins' reasonable living expenses and other needs when benefits from publicly funded benefit programs are not sufficient . . . ."  Purchasing the snowmobile and the concert tickets did not conflict with that purpose; neither could have been acquired through a publicly funded benefit program. 

            3.         Nature of Trustee's Power.  Appellant clearly had power to make disbursements for Jennifer's entertainment; the district court implicitly acknowledged this by not objecting to disbursements for, e.g., a bicycle and accessories ($793.36), dance lessons and clothing ($351.56), trampoline safety net ($525), skates ($107.54), sled, boots and socks ($169.20), and various outings ($454.89).

            4.         External Standard.  The record does not reflect any external standard.  Whether a snowmobile and concert tickets were "entertainment" or "reasonable luxuries" for this disabled teenager is a question on which appellant and the district court had different but equally subjective opinions.

            5.         Trustee's Motives.  Appellant had no discernible motive other than providing for Jennifer's enjoyment in making these disbursements.  We note that appellant did not appeal from the district court's disallowances of expenditures that benefited other family members as well as Jennifer.

            6.         Conflict Between Interests of Trustee and Beneficiary.  Appellant testified that Jennifer suffers from "Downs syndrome and immune deficiency with hepatitis C and speech impairment."  His interest in the disallowed expenditures was providing Jennifer with treats or "reasonable luxuries" that would not otherwise be available to her.  The district court defined Jennifer's interest as "she needs this [trust] to last her lifetime" and noted that "[Jennifer] may well live to 60" and "her life expectancy is into the 70s at this point." 

            The district court went on to say,  "[These trusts] were not set up to accomplish trips to Disneyland, snowmobile rides, or anything of that sort.  Dance lessons, yes; memberships in Shoreview's community center, yes. . . ."  Deciding whether dance lessons are appropriate expenditures for an 11-12 year old, whether a snowmobile is an appropriate expenditure for a 13-year-old, or whether Britney Spears concert tickets are an appropriate expenditure for a 14-year-old requires an exercise of discretion: parents of disabled and nondisabled children are constantly faced with such discretionary decisions.  Appellant is both parent and trustee; we conclude that he exercised, but did not abuse, his "sole discretion" in providing a child's snowmobile and concert tickets for Jennifer.  The district court substituted its own discretion for appellant's when it arbitrarily disallowed these expenses from among the many made for Jennifer's entertainment and "reasonable luxuries."

            The district court's decision provides no guidance to appellant as to what entertainment disbursements will be allowed in the future.  The district court approved some disbursements and not others, but provided no clear objective rationale for its decision.

            Reversed.

[1] The district court's position on vacation trips was somewhat ambivalent.  Appellant had asked his attorney if a Disney World trip would be an acceptable use of trust funds and was told that it would be, but the district court disallowed $400 of that trip because other family members had gone along.  She allowed $400 for a trip to northern Minnesota, saying, "I understand the need for vacations for anybody," but, although she also allowed $400 for a trip to Wisconsin Dells, she said, "I'm telling you right now it will not be allowed in the future."  The district court later added, "I allowed the trips to northern Minnesota and to Wisconsin.  I think . . . those are perfectly fine.  No clear message emerges here.