Court Rejects Beneficiary’s Claim to Additional Distribution

Carol and Velma Saling created a trust in 1990 to distribute to Raymond Frakes and other specified beneficiaries over $1 million upon Carol and Velma’s deaths. After Carol died in 2002, Frakes received $500,000 and another $500,000 in 2005 after Velma’s death. The trustee expressly declined to provide an accounting to Frakes during the second distribution, stating that Frakes no longer had an interest in the trust.

Frakes filed an action against the trustee, seeking an accounting and reimbursement of funds he spent prior to Velma’s death. During the trial, Frakes asserted he was entitled to a third distribution from the trust and the court deferred the ruling base on an agreement by the parties. The trustee then filed an action seeking an interpretation of the trust regarding the number of distributions required. The trial court concluded that the trust required two distributions. In the alternative, the court allowed for the reformation of the trust to require only two distributions. Frakes appealed.

In In Matter of Saling Family Trust v. Nay (Or. Ct. App., No. A140655, Dec. 14, 2011), the Oregon Court of Appeals affirmed the trial court’s decision and allowed for the reformation of the trust. The court rejected Frakes’ claimed entitlement to a third distribution, concluding that clear and convincing evidence established that Carol and Velma intended for Frakes and the other beneficiaries to receive only two distributions.

See Oregon Court Allows Reformation of Trust Over Beneficiary’s Challenge, ElderLawAnswers, Jan. 3, 2012.