In re Marden Mosman Cove Irrevocable Trust

In re Marden Mosman Cove Irrevocable Trust (2004-475); 179 Vt. 587; 893 A.2d 344

2006 VT 3

[Filed 06-Jan-2006]

                                 ENTRY ORDER

                                  2006 VT 3

                      SUPREME COURT DOCKET NO. 2004-475

                            SEPTEMBER TERM, 2005

  In re Anne Roberts Marden Mosman     }	 APPEALED FROM:
  Cove Irrevocable Trust	         }
                                       }
     	                                 }	Addison Superior Court
                                       }	
  	                                 }
                                       }	DOCKET NO. 227-10-03 Ancv

                                          Trial Judge: Helen M. Toor

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  This appeal concerns the disposition of a family trust
  entitled the Anne Roberts Marden Mosman Cove Irrevocable Trust ("Trust"). 
  Appellant Anne Roberts Marden is settlor of the Trust and mother of the
  appellees, Elliot Davis and George Davis, Jr., who are trustees.  The
  Trust's only asset is a parcel of real estate located in Ferrisburgh,
  Vermont; specifically, at Mosman Cove on Lake Champlain.  In October 2003,
  after funds to pay property taxes and expenses ran low, appellees brought
  an action to modify the provision in the trust that disallowed sale of the
  property prior to 2024.  Appellant opposed the modification request and
  submitted counterclaims.  The parties eventually stipulated to sell the
  Trust's property, but continued to dispute entitlement to the proceeds of
  the sale.  After a bench trial, the trial court ruled in favor of
  appellees.  On appeal, appellant contends that the court erred in finding
  that the primary purpose of the Trust was to preserve the Trust assets for
  use of the three named beneficiaries (three of appellant's five sons) and
  their children, and in not finding that the Trust had failed so that the
  sale proceeds would revert to her, the settlor.  We affirm.  

       ¶  2.  We review a trial court's findings only to ensure that any
  credible evidence fairly and reasonably supports them, and we set them
  aside only when they are clearly erroneous.  Simendinger v. City of Barre,
  171 Vt. 648, 649, 770 A.2d 888, 890-91 (2001) (mem.).  We uphold
  conclusions of law if they are reasonably supported by the findings. 
  Goodrich v. U.S. Fid. & Guar. Co., 152 Vt. 590, 596, 568 A.2d 385, 389
  (1989).
   
       ¶  3.  The trial court found that appellant created an irrevocable
  family trust, the only asset of which was the Mosman Cove Property, and
  that the property was not to be sold until March 17, 2024.  The provision
  regarding irrevocability delineated that appellant "shall not have any
  right at any time to withdraw any of the property held hereunder or to
  revoke, annul or cancel the trusts created hereunder in whole or in part or
  to alter, amend or modify this Agreement in any respect."  Upon
  termination, any remaining assets in the Trust would be distributed in
  three equal shares to the beneficiary sons or their respective "bloodline
  issue."  The document also contained the following paragraph:

    Intent.  It is the Grantor's intent in establishing this Trust, to
    provide her sons and their issue with a pleasant, restful,
    refreshing, healthy and revitalizing experience available
    throughout each year, to provide the financial resources and
    structure to maintain trust assets, to avoid unnecessary family
    discord and disagreements, and to strengthen and invigorate the
    Roberts family's loyalty and fellowship, as well as affection
    among all of her descendants. 

       ¶  4.  Based on the trust language and parol evidence, (FN1) the court
  held that the purposes of the Trust went beyond the stated "intent"
  paragraph in the trust document, and that the "primary goal" was "to
  preserve assets for the use of Marden's three named sons and their
  children."  The court also found that the Trust's purposes included
  securing tax savings, shielding appellant's assets from creditors, and
  protecting appellant's assets to be passed on to children and
  grandchildren.  Because the primary goal of the Trust could still be
  satisfied, the court ordered that the income from the property sale replace
  the property as the trust asset and that the trustees manage and distribute
  the cash assets pursuant to the Trust terms.

       ¶  5.  Appellant first argues that the trial court erred in
  determining the primary purpose of the Trust, which she asserts was
  contained in the written "intent" provision.  We find no error.  In
  determining the purpose of the Trust, we do not examine only the paragraph
  labeled "intent"; in fact, we are bound to examine the entirety of the
  document.  Proctor v. Woodhouse, 127 Vt. 148, 154, 241 A.2d 785, 789 (1968)
  (to determine intent, court looks to entire document and does not take
  words out of context).  Notwithstanding the "intent" paragraph, the Trust
  is irrevocable in its own terms, grants the use of the property only to the
  three named sons and their issue, and provides that, upon termination,
  trust assets be divided into equal shares for those beneficiaries.  We find
  no error in the trial court's determination that the Trust's primary
  purpose is to preserve assets for the beneficiaries.                    
   
       ¶  6.  Appellant also argues that, because the property needed to be
  sold, the purpose of the Trust became impossible to fulfill so the Trust
  must be terminated, and that the Trust failed so proper disposition of the
  sale proceeds is a resulting trust for appellant.  It is true that if it
  becomes impossible to carry out all of the purposes of a trust, the trust
  should be terminated.   Restatement (Third) of Trusts § 30, cmt a (2003). 
  But where other trust purposes can still be fulfilled, the proper course of
  action is to modify the trust terms to accomplish those remaining purposes. 
  Id. §§ 30, cmt a, 66, cmt c.  Also, this Trust has not failed.  A trust
  fails when the settlor "has not made full and complete disposition of all
  of the present and future beneficial rights in the property transferred to
  the trustee."  Id. § 8, cmt b.  In such a case, the trustees hold the
  assets in a resulting trust for the settlor.  Id.  This rule is typically
  concerned with structural problems, often regarding the beneficiary, such
  as when a beneficiary is not named, is nonexistent, is incapable of taking,
  or disclaims.  Id.  The rule also applies when "the purpose or purposes of
  a properly established trust may be fully accomplished without exhausting
  the trust property."  Id.  No such circumstances exist here.  The failure
  to achieve a purpose of a trust is not a failure of the trust itself.  The
  trial court held that the primary goal of the Trust, preservation of assets
  for the beneficiaries, could still be fulfilled, and substitution of the
  sale proceeds for the Mosman Cove property was proper.  Indus. Nat'l Bank
  of Providence v. Colt, 233 A.2d 112, 117-19 (R.I. 1967) (finding, where
  trust term provided that trust real property was not to be sold but real
  property was condemned, that intent was to provide for welfare of named
  beneficiaries and substituted condemnation proceeds for real property as
  trust res; trust did not fail and give rise to resulting trust). 

       Affirmed. 

                                       BY THE COURT:



                                       _______________________________________
                                       Paul L. Reiber, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice
     
                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice

                                       _______________________________________
                                       Brian L. Burgess, Associate Justice


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                               Footnotes


FN1.  Appellant objects to the use of parol evidence here, but
    neither party objected to admission of such evidence at trial. 
    Although the trial court initially ruled that the document was
    ambiguous as to the trust purpose and so took parol evidence on
    the issue, it also noted that, even disregarding all parol
    evidence, it would reach the same conclusion based solely on the
    express trust terms regarding distribution of assets.