In re Estate of Brown - 148 Vt. 94, 528 A.2d 752 (1987)

Rule:

An active trust may not be terminated, even with the consent of all the beneficiaries, if a material purpose of the settlor remains to be accomplished.

Facts:

The trustee complied with the terms of the trust and used the trust proceeds to pay for the education of the beneficiaries. Once the trustee determined that the beneficiaries' education was complete, he began to distribute the trust income to the beneficiaries in their capacity as lifetime beneficiaries. The beneficiaries petitioned the probate court for termination of the trust, arguing that the sole remaining purpose of the trust was to maintain their lifestyle and that distribution of the remaining assets was necessary to accomplish that purpose. The remaindermen filed consents to the proposed termination, but the probate court denied the petition. However, on appeal, the superior court granted the petition. The trustee challenged the decision.

Issue:

Was the trust’s material purpose fulfilled, thereby making the trust terminable?

Answer:

No.

Conclusion:

On appeal, the Court concluded that the superior court's conclusion that the trust was terminable because the material purpose of the trust had been accomplished had an insufficient basis in the findings. The Court held that the settlor's intention to assure a life-long income for the beneficiaries would have been defeated if termination of the trust were allowed so the judgment of the superior court was reversed.