This case centers on interpretation of a trust agreement and its provisions governing distribution of assets upon termination of the trust. In the Matter of the Guardianship and Conservatorship of G.I.C. (No. 2025 ND 36, February 13, 2025).
In 1997, G.I.C. and her husband (Trustors) executed a revocable living trust agreement, naming themselves trustees and funding the trust with several parcels of farmland. The Trustors have five children: Luke (a pseudonym), John (a pseudonym), G.D.T., M.I.R., and M.P.C. The Trustors are the primary beneficiaries of the Trust’s income and principal during their lifetimes.
Upon the death of either Trustor, article III of the trust agreement directs the surviving trustee to divide the trust property into two trusts: Trust A and Trust B. All income from both trusts will go to the surviving spouse for the remainder of their lifetime. Upon the death of the surviving trustor, the couple’s five children become beneficiaries of the trust. Trust B (the Trust) is what is at issue here.
G.I.C.’s husband died in 2007, triggering article III of the trust agreement and leading to the creation and funding of the Trust. In 2016, three of Luke’s siblings petitioned the district court for: (1) appointment of the fourth sibling as guardian of G.I.C.; (2) appointment of Bremer Trust as conservator; (3) construction and modification of the trust agreement; (4) removal of trustees; and (5) appointment of successor trustees. The petition alleged that G.I.C. was suffering from dementia and in need of a guardian and that Luke was benefitting financially from G.I.C.’s vulnerability.
In 2017, the district court granted the petition and appointed Bremer Trust as successor trustee and conservator of G.I.C.’s estate. Bremer found the Trust to be asset-rich but cash-poor. Since the Trust’s purpose was to pay for G.I.C.’s care and comfort, Bremer petitioned the district court for authorization to sell the Trust’s real estate. The five children opposed the plan to sell the land, so the court directed Bremer to pursue alternative financing for G.I.C.’s care.
In July 2023, the district court authorized Bremer to sell the real estate because Bremer had exhausted all other means of producing funds for the Trust to provide for G.I.C.’s care. According to the trust agreement, after the death of the surviving trustor, the disparate parcels comprising the total amount of real estate will be bequeathed to the five children in unequal shares. The district court determined that selling some parcels would affect the children unequally. The district court thus decided it would be reasonable and prudent to sell all of the Trust’s real estate and deposit the net proceeds into the Trust’s account for G.I.C.’s benefit, the residue of which would pass in equal shares to the five children after G.I.C.’s death.
After a public auction, Bremer entered into purchase agreements for the Trust’s land. G.I.C. died in November 2023. The sales closed the following month.
In February 2024, Bremer petitioned the district court for approval of its final account, discharge as conservator, an order directing trust distribution, and termination of the trust. Bremer requested that the district court order distribution of the remaining trust assets in five equal shares to the siblings.
Luke opposed the petition, arguing that each beneficiary is entitled to the net proceeds from the sale of the specific parcel they would have received had the land not been sold.
The district court sided with Bremer, ordering equal distribution of the remaining Trust assets among the five children. Luke appealed.
Luke argues that the trust agreement demonstrates the Trustors’ intention to leave him the majority of the Trust’s land. Bremer contends that distribution of the specific parcels was no longer possible and that the trust agreement doesn’t provide express direction on how remaining Trust assets should be distributed if the land were liquidated. Bremer maintains that despite the specific land distributions, the totality of the trust agreement seeks to treat all the children equally and fairly.
Although the trust agreement does not provide express direction on how remaining trust assets should be distributed if the land is liquidated, it does provide terms of final distribution of Trust assets among the five children if Luke and John’s farming partnership dissolves, which it did.
Though the Trustors’ hope was that all their children would benefit from the Trust’s land for many years, the trust agreement clearly contemplated dissolution of Luke and John’s farming partnership and final distribution of the parcels of land to specific children. The court finds that distributing the land to the children according to the specific parcels the Trustors allotted to them is most consistent with the Trustors’ intent as expressed in the trust agreement. Therefore, the court reverses and remands this case for redistribution of the Trust’s assets according to the value of specific parcels of land.
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