Uniform Trust Code Stresses Importance of Settlor’s Intent
Historically, the trust was a mechanism to allow a settlor to accomplish something through a third party that the settlor could not accomplish alone. The settlor, intending to transfer property to a beneficiary, created a trust and enlisted a trustee to protect and honor the settlor’s intention and ultimately to benefit the beneficiary. Equity courts enforced these trust arrangements by requiring a trustee to honor the settlor’s intent by managing the trust assets for the benefit of the beneficiaries. The modern day trust, while much more complex, essentially has the same purpose as historical trusts. Specifically, that purpose is to ensure that the trustee dutifully follows the settlor’s intent as set forth in the terms of the trust and carries out the settlor’s intent for the benefit of the beneficiary.
The various provisions of the Uniform Trust Code (“UTC”) codify the historical purpose of trusts. The UTC allows the settlor to set forth the terms of the trust and then requires the trustee to honor that intent for the benefit of a beneficiary. Additionally, the UTC requires courts deciding trust issues to ascertain the settlor’s intent and make decision in accordance with the settlor’s intent. Jurisdiction that have adopted the UTC have a framework to rely on in analyzing issues and consequently have reached conclusions that are in line with the historical purposes of trusts and more uniform with other UTC adopting jurisdictions. Additionally, adoption of the UTC will likely reduce litigation involving trusts, particularly involving routine matters that can be resolved with reference to the UTC.
Comparatively, jurisdictions that have not adopted the UTC reach conclusions that are not in line with the historical purposes of trusts. In J.P. Morgan Chase Bank, N.A. v. Longmeyer, the Supreme Court of Kentucky failed to even consider the settlor’s intent. Instead, the court relied on outdated statutes, while admitting that Kentucky laws were not in line with modern trends. However, the Supreme Court of Kentucky’s reasoning was backward. It is not that the Kentucky laws were out of date with modern trends; rather, it was that Kentucky case law was not in line with the historical purposes of trusts. The court’s failure to discuss and enforce the settlor’s intent leaves settlors, beneficiaries, and trustees with no choice but to litigate future issues.
Similarly, the Maryland Court of Special Appeals in Johnson v. Johnson, failed to uphold the intent of the settlor. The court repeatedly stated that a settlor could not relieve a trustee of all accountability. Because the court failed to uphold the intent of the settlor, the court essentially puts the beneficiary in a better position than the settlor and encourages beneficiaries to initiate litigation in order to “get what they want.” The court’s reasoning was also not in line with the historical purpose of trusts. The court should have examined the trust instrument to ascertain the settlor’s intent.
All jurisdictions should adopt the UTC. The provisions of the UTC clearly establish the need to look to the settlor’s intent when making important issues regarding the terms of the trust. Adopting the UTC will also assist jurisdictions in reaching decisions that honor the historical purposes of trusts, namely that a trustee has a duty to act in accordance with the settlor’s intent and courts should make the settlor’s intent paramount in deciding difficult issues in trust law.