Drafting Trusts That Include Broad Invasion Powers
From time to time a client might want to include an invasion standard in his or her trust that is broader in scope that the typical “health, support, education or maintenance” provision. In light of the enactment of F.S. §737.402(4)(a), if the beneficiary is named as a trustee, under certain circumstances he or she is not allowed to exercise these types of powers. However, broad invasion powers can still be exercised if what is involved is a marital trust or if an independent party is chosen to serve as trustee. Therefore, these standards are frequently found in many types of trusts.
This article will discuss some of the issues that should be considered whenever a broad invasion standard is used and will provide tips on how to draft the invasion provision to avoid misunderstandings and to achieve maximum effect.
What Does Your Client Want to Achieve?
In dealing with broad invasion standards, you must start from the premise established by case law that terms used in a trust are to be given their ordinary and usual meaning, unless some other meaning is clearly implied in the trust instrument.1 It therefore is helpful to have a basic understanding of the type of distributions permissible under some of the most commonly used broad invasion standards.
• Simple Additional Pleasures and Luxuries
In many instances, all the client wants is to provide the trustee the ability to distribute to the beneficiary some additional small amounts from the trust that are not authorized under the typical “health, support, maintenance, and education” provision. The invasion power that is most likely chosen to accomplish this result is the “comfort” standard. This term has been defined as “something more than maintenance but something less than welfare.”2 One court stated, “Comfort embraces a variety of things, it is not limited solely to the necessities of life but may include things which bring ease, contentment or enjoyment.”3 One example of a permissible distribution pursuant to this term is payments to allow beneficiaries to quit their jobs so as to experience comfort in their lives.4
Most courts would probably decide that the term “comfort” has at most only minor subjective connotations, and that what is envisioned by this term is primarily the beneficiary’s physical comfort.5 Permitting a trustee to make distributions for a beneficiary’s “comfort” should merely allow the trustee to make those distributions that provide additional simple luxuries which lead to the ease, contentment, and enjoyment for the beneficiary such as an extra vacation (which might not be permitted under a support standard), the housemaid twice a week, the first class plane ticket as opposed to tourist, and a country club membership. Depending upon the beneficiary’s station of life, such distributions would not be authorized under a standard health, support, maintenance, and education provision.
Based on the usual and common meaning given to the term “comfort,” distributions that would augment a beneficiary’s estate should not be permissible.6 Consequently, if a beneficiary is in need of housing, a trustee would not be able to purchase a house in the beneficiary’s name as he might be able to do under either a “welfare” or “best interests” standard. However, there is nothing that prevents the trustee from buying the house in the trust’s name and allowing the beneficiary to live rent-free, thereby providing for the beneficiary’s comfort.
• More Substantial Distributions
There will be instances in which a client will want to provide the trustee with the authority to make more substantial distributions to the beneficiary than can be made under a “comfort” standard. In such a case the client might want to consider using either a “best interest” or a “welfare” standard either alone or in addition to a “comfort” standard.
“Best interests.” The types of distributions to beneficiaries permissible under a “best interests” standard include “not only the relief of poverty and distress, but may well comprehend whatever aids to their welfare and advancement, and enables them to establish themselves in life.”7 Based on this interpretation, examples of possible permissible distributions would be education at a prestigious boarding school (in light of its possible role in enhancing the beneficiary’s chances to obtain future education at a prestigious college), vocational training, or postgraduate education. Payment for expenses of postgraduate education is not usually authorized pursuant to a invasion provision for someone’s “education.”8 But since postgraduate education is something that would aid in a beneficiary’s advancement and establishment in life, it should be permissible under a “best interests” standard assuming, of course, that the beneficiary has some clear and obtainable goal other than being a professional student. Other possible examples would be a distribution to pay off the beneficiary’s debts, a distribution to put a down payment on a house (or the whole purchase price of the house if the trust was substantial enough in size), or perhaps a distribution to terminate a trust although this is clearly a borderline distribution.9
Regarding the limits of this power, at least one court has reasoned that the term “best interests” does not permit the trustee to make a distribution to the beneficiary to allow the making of gifts to reduce the estate.10 The reasoning behind this court’s decision was that the primary purpose as indicated by the trust instrument, as a whole, was to provide for the surviving spouse and therefore the trustee had a duty to conserve corpus for the trustee’s future protection and security.11 Another reason the court could have used to deny the request was that the trustee must only be concerned with the beneficiary’s best interests, and that permitting the beneficiary to use trust assets to make gifts to her children is something that would be in her children’s best interests, not the beneficiary’s. Permissible distributions under a “best interests” standard are those solely for the beneficiary’s best interests and no one else’s. Therefore, any aid or assistance to others (except possibly distributions to support the beneficiary’s dependents12) should not be permitted pursuant to this standard.
“Welfare.” With reference to the type of permissible purposes for which distributions can be made under a “welfare” standard, as previously indicated, “comfort” is more than “maintenance,” and “welfare” is more than “comfort.”13 U.S. v. Powell, 307 F. 2d 821, 827 (1962), in citing Webster’s Dictionary, defined “welfare” as “the state or condition in regard to well-being; especially condition of health, happiness, prosperity or the like.” In Estate of Albert E. Nettelton v. Commissioner, 4 T.C. 987 (1945), the Tax Court stated, “The term ‘welfare’ has a broad connotation and may denote a condition of happiness and prosperity.” Interestingly, there are very few cases that set forth examples of actual distributions permissible under a “welfare” standard. One of the few examples of the type of distributions found to be permissible by a court pursuant to this standard was a distribution to purchase a large country estate for the beneficiary.14
There are a number of other cases in which it has been found that the term “welfare” is, in certain cases, synonymous with the term “happiness.”15 This is significant because a term like “happiness” permit distributions for almost any conceivable purpose, so long as the distributee is made “happy” by the distribution. Consequently, if it is found that the trustor intended to give this term its broadest definition, then the trustee could make the same type of distributions as he could make under a “happiness” standard, as will be explained below.
Black’s Law Dictionary defines “welfare” as “well-doing or well-being in any respect; the enjoyment of health and common blessings of life; exemption from any evil or calamity; prosperity; happiness.” The above definition states that welfare means well-being “in any respect.” This is also significant because it provides for a definition of welfare that includes not only the beneficiary’s physical and financial well-being but, possibly, mental and emotional well-being as well. Such a definition arguably permits distributions to the beneficiary to assist members of the beneficiary’s family (in addition to those members of the family who are dependant upon the beneficiary16) and others, assuming that the trustee believes that such distributions would promote the beneficiary’s emotional welfare, and also assuming that the size of the trust is adequate to provide these gifts and still provide for the beneficiary’s future welfare.17
If adjectives are used to modify the term “welfare,” this could affect this term’s interpretation. For instance, if the adjective “physical” is used, such an addition would be a limiting factor which would almost certainly preclude any trust distributions which the beneficiary might request to aid or assist others. With reference to how the adjective “physical” affects the term “welfare,” one court has stated, “The word’s natural meaning limits the trustee to invading the trust corpus only for the material, as opposed to the mental or spiritual, well-being of the income beneficiaries.”18 However, if the language used was “total welfare,” “overall welfare,” or “general welfare,” the use of such adjectives would seem to imply that the trustor wanted to give the standard its broadest definition, assuming, of course, that the rest of the trust confirms such a broad interpretation.
• Very Broad and Substantial Distributions
For some clients even a “best interest” or a “welfare” standard might not be broad enough to suit their tastes. For such clients, there is always the “benefit” standard. In dealing with this term, most courts have closely followed its dictionary definition. For instance, in Strite v. McGinnes, 64-1 USTC Par. 92,442 (1964), the court pointed out that the term “benefit” is a much broader word than “support” and has no such limited meaning as the later word. The court then referred to its definition in Worchester’s Dictionary as “advantage, gain, profit and its manifest signification is anything that works to the advantage or gain of the recipient.”19 Another court has stated, “Benefit means everything that is connoted by the term ‘support’ or ‘maintenance’ as well as it can, in a proper case, be construed to embrace many things over and beyond bare necessities.”20
There is one reported decision in which a beneficiary requested an invasion of a trust to purchase for himself a $4.5 million jet pursuant to a provision authorizing distributions for his “support, maintenance, benefit and education.”(emphasis added)21 Although the court did not approve the invasion of principal in this instance, its decision was based on the fact that the settlor used the conjunctive word “and” rather than the disjunctive term “or.” If the provision authorizing distributions had been for the “support, maintenance, benefit or education” of the beneficiary, the implication of the court was that an invasion to purchase the plane would have been a permissible expenditure. Notwithstanding the decision in this case, it still indicates the possible breadth of the term “benefit” under appropriate circumstances as including the whims and desires of the beneficiary.
There are two cases which appear to permit a trustee, pursuant to a discretionary invasion provision authorizing distributions for a beneficiary’s “benefit,” to pay over the entire principal to the beneficiary, thereby terminating the trust.22 As long as the rest of the will or trust does not contain any limitations on such power, the definition of this term is broad enough to permit a termination.
Another example of a possible authorized distribution pursuant to a “benefit” standard is an invasion to permit the beneficiary to purchase a house. Although the court in In Re Levinson’s Will, 162 N.Y.S.2d 287 (1957), stated that it would not advise the trustees in advance as to whether they could invade principal for this purpose, the court pointed to the broad powers given in the trust to the trustees which included the power to make distributions “for the purposes of making any provisions that my said trustees shall deem proper for the benefit of both or either.”23 (emphasis added)
Based of the broadest meaning of the term “benefit,” another possible permissible purpose for which a trustee could make a distribution might be to enable a beneficiary to start a business. Although there are no cases on point, such a distribution is clearly something that could result in gain or profit to the beneficiary as envisioned by the definition of this term. This assumes, of course, that the trustee is reasonably satisfied that the beneficiary has the knowledge, experience, and ability to successfully run the type of business involved. Other possible permissible purposes for which distributions could be made for a beneficiary’s “benefit” could be to pay off debts of the beneficiary24 or for cosmetic surgery since both these distributions would provide the requisite gain, advantage, or profit to the beneficiary.
Considering the extremely broad scope of what constitutes “benefit” to a beneficiary, there appears to be only one type of distribution that would not be permissible even when the trust indicates an intention that this term be afforded its broadest meaning. A distribution requested by the beneficiary to aid or benefit others (unless possibly if they are the dependents of the beneficiary25) would not be for the beneficiary’s “benefit.” In one case the beneficiary wanted the trustees to invade principal to establish a cardiac research unit at a hospital in memory of the settlor.26 The court denied her request since the settlor stated elsewhere in the will that his paramount intention was that his wife have anything she required or desired for “her personal welfare and comfort” thus limiting the purposes for which distributions could be made. But even if the above quoted language were not included, it is questionable whether distributions to assist others would be permitted pursuant to a “benefit” standard. The parameters of this standard indicates that only distributions that provide advantage, profit, or gain to the beneficiary are permitted.27 A distribution to assist others does not provide the beneficiary any direct advantage, profit, or gain. Although such gifts might result in an advantage to the beneficiary’s estate (in the form of estate tax savings), there is no financial gain or advantage directly to the beneficiary that would justify the distribution.
• Unlimited Distributions
If the trustor wants to make the type of permissible trust distributions virtually unlimited, he or she would want to consider the inclusion of either a “happiness” or an “enjoyment” standard. With respect to the term “happiness,” one court has stated, “It is, of course, true that it is difficult to define precisely what happiness means, but happiness is essentially a subjective matter that must be left to the honest determination of the widow. . . . If the widow should desire to provide permanently for the adopted children or for near relatives such a desire would be within the term ‘happiness.’”28
As to the term “enjoyment,” the Tax Court has stated that a power to invade principal for such a purpose is so broad it “may not be limited at all.”29
The effect of the inclusion of the standard “happiness” in a trust has been considered by the U.S. Supreme Court in Merchant’s National Bank v. Commissioner, 320 U.S. 256 (1943). This case is significant for two reasons. First, it recognized that the term “happiness” includes mental satisfaction as well as physical comfort.30 Secondly, the opinion cataloged a number of expenditures that would be authorized under a “happiness” standard.31 These expenditures included the purchase of two automobiles and a fur coat for the beneficiary, two pleasure trips, financial assistance for the beneficiary’s niece, financial help to send the beneficiary’s grandnephew through medical school, and the purchase of a fur coat for one of her late husband’s daughters. These type of expenditures indicate that a “happiness” standard permits the trustee to make distributions not only to satisfy the “whims” and “desires” of the beneficiary for her own wants but also to aid and assist others. It is indeed a very broad term and like the term “enjoyment” the type of permissible distributions may also be unlimited.32 An example of another type of distribution that can be made pursuant to a provision for someone’s happiness, one court has ruled that the trustee had the discretion to cancel obligations owed by the beneficiary to the trust is because “such action would be conducive to the happiness of the beneficiary”33
Consideration of Beneficiary’s Income, Other Resources in Exercising Standard
Are the beneficiary’s income and other resources required to be considered by the trustee in the exercise of a broad invasion power? In this respect, consideration of the beneficiary’s income and other resources are clearly factors that could limit the size of a requested distribution and affect the decision as to whether a distribution is warranted at all. Further, if income and other resources are not considered, any distribution would reduce the size of the trust which brings into consideration the issue of the trustee’s duty to protect the interests of remaindermen.34
The trustor’s intent is controlling in answering this question. However, in the absence of any clear indication of the trustor’s intent in the trust, the author suggests that whether an individual’s income or other resources must be considered probably depends to a large extent on which standard is used.
If the trustee can make distributions for the beneficiary’s “welfare,” an argument can be made that the beneficiary’s income and other resources should be considered. As an example, assume that the stated purpose set forth in the trust is to provide for the beneficiary’s “welfare.” If the beneficiary has substantial income or other assets, his or her income and/or other assets already provide certain degree of welfare. Unless the trust indicates some higher degree of welfare, or specifically states that the individual’s income and/or other resources should be ignored in determining his welfare, the beneficiary’s income and/or other assets would arguably be relevant factors in any decision as to whether or not a trust distribution is warranted.
On the other hand, however, if the trust agreement adopted either a “benefit”or “happiness” standard, a strong argument can be made that the beneficiary’s income should not be considered. As noted above, the use of the term “happiness” in most cases indicates the settlor’s intent to provide for the beneficiary’s whims and desires. As long as the rest of the trust confirms an intent to provide for such whims and desires, requiring or even permitting the trustee to consider the beneficiary’s income and/or other resources would be inconsistent with the settlor’s wishes.35
Notwithstanding the above, the law is far from clear as to whether or not income and/or other resources should be considered in making distributions under broad invasion standards. Therefore, as discussed below, this is an issue that should be clarified in the drafting of the invasion provision.
Consideration of Standard of Living
In the context of each broad invasion standards discussed above, there has been at least one decision as to whether the beneficiary’s station in life/standard of living36 must be taken into account by the trustee.37 In light of these decisions, can a general rule be formulated as to these standards? Before attempting to formulate such a general rule, it might be helpful to first examine how consideration of a beneficiary’s station in life could affect a broad invasion standard?
Consider, for example, the effect that the beneficiary’s station in life has on a standard such as “benefit.” In Salisbury v. U.S., 377 F.2d 700 (1967), the court considered whether the trustee was required to consider the beneficiary’s station in life under a “benefit” standard. The court indicated that “the extent of permissible invasion would be limited to maintenance of the beneficiary’s ‘station in life’”38 In effect, what such a court-imposed limitation does is transform to a “benefit” standard into a “maintenance in accordance with the beneficiary’s station in life” standard. Therefore, if the station in life of the beneficiary is working class, in theory at least no distributions from the trust would be permitted in excess of those distributions necessary to maintain the beneficiary in that lifestyle. A beneficiary’s station in life has the effect of drastically limiting the type of distributions that otherwise might be permissible under many broad invasion standards.
In many cases, this is not what the trustor would have intended by using a broad invasion standard. Particularly if the trustor adopts a “benefit” or “happiness” standard, what the trustor presumably would have wanted is to permit the trustee to make distributions to satisfy the whims and desires of the beneficiary. Requiring the trustee to consider the beneficiary’s station in life to a large extent negates the definition of the term “benefit” as providing gain, advantage and profit to the beneficiary. How can there be any advantage, gain, or profit if distributions are limited solely to those distributions which maintain the beneficiary’s previous station in life? Similarly, under a “happiness” standard, a determination that the beneficiary’s station in life is relevant might negate to a large extent the trustor’s purpose for using such a broad and subjective term.
To avoid any uncertainty as to whether a beneficiary’s station in life is relevant not only in the context of a “benefit” standard but in connection with all other broad invasion standards, this aspect should be clarified in the drafting of the invasion provision.
Weighing Interests When Trust Contains Broad Invasion Powers
From the preceding discussions the reader can see that there are two classes of broad invasion standards. The first class would include those standards which do not permit distributions to satisfy the whims, desires and caprice of the beneficiary. This category would include standards such as “comfort,” “best interest,” and “welfare”39 (as long as “welfare” is not intended to be equivalent to “happiness”). The second class includes those standards that permit distributions to satisfy the whims, desires, and caprices of the beneficiary. Included within this second class are distributions for a beneficiary’s “benefit,” “happiness,” “enjoyment,” and “welfare” (when “welfare” is the being used as the equivalent to happiness).
Depending upon which class a particular standard fits, there are certain fiduciary responsibilities that the trustee may or may not have. These responsibilities relate to the interests of remaindermen and the future needs of the current beneficiary. With a standard that fits within the first class, the trustee would almost certainly have the duty to consider how any proposed distribution could adversely affect the interests of remaindermen40 and/or the future needs of the current beneficiary.41 However, if the standard fits within the second class, the trustee’s responsibilities under Florida law are far from clear.
Consider, for example, a trust calling for distributions under a “benefit” standard. In such a trust, the trustee must give consideration to the beneficiary’s sobriety, his competency to manage and husband property,42 and other relevant circumstances43 in deciding whether to make a current distribution. But, assuming the trustee gives due consideration to these factors, based on a literal definition of the term “benefit,” the primary focus is on whether the proposed distribution will result in some type of gain, profit, or advantage to the beneficiary. This standard permits distributions to satisfy the whims and desires of the beneficiary.44 If the trustor wanted to permit the trustee to provide some gain to the beneficiary, he or she would have to also recognize that the interests of the remaindermen would be reduced accordingly and that a substantial distribution would affect the amount of the trust assets available for future distributions to this beneficiary. Consequently, under a “benefit” standard a logical argument can be made that the trustee need not even consider the interests of remaindermen and the future interests of this beneficiary in deciding whether to make a distribution as he would have to under a “best interest” or a “welfare” standard. In support of this concept, in the two cases discussed above in which a “benefit” standard permitted the termination of trusts, the courts did not even mention the remaindermen’s interests or the beneficiary’s future need for the now depleted trust assets as being relevant factors.
On the other hand, at least as far as the interests of remaindermen are concerned, the trustee must also consider the rule set down in Mesler v. Holly, 318 So. 2d 530, 533 (Fla. DCA 1975), that “[e]ven unlimited power of invasion is subject to implied limitations to protect remaindermen.”45 Even though Mesler dealt with the significance of absolute discretion as opposed to a broad invasion power, the rule in Mesler appears to be equally applicable in this later instance because a standard such as “happiness” provides essentially an unlimited power of invasion to the trustee. Because a trustee might owe a duty to remaindermen,46 even when an extremely broad invasion power is present, and to avoid the time and expense of having to obtain a court order prior to every distribution, the drafter should provide guidance in the trust instrument.
Drafting Suggestions
When drafting trusts that include broad invasion powers, the attorney might want to consider the following:
1) Separate the broad invasion power from other invasion standards. Assuming the client desires that the broad invasion standard should be an independent basis upon which the trustee can make a decision to distribute trust assets, the broad invasion standard should be set forth in a separate paragraph. Combining the broad invasion standard with another invasion standard (i.e., “support”) in the same provision through the use of the conjunction “and could cause confusion as to whether the trustor intended the broad standard to be a separate standard for invasion and might bring into consideration the doctrine of ejusdem generis.”47
2) Indicate that the trustor’s intent is to give the invasion standard its broadest meaning. Assuming that a client wants to provide the trustee the broadest possible authority under the invasion standard used, language supporting or confirming that broad meaning should be included. This will minimize the risk that a court might decide that the trustor wanted to give the standard less than its broadest meaning. The following provision is suggested:
I have provided the trustee in this trust with the power to make distributions for my wife’s “welfare.” It is my express intention that the term “welfare” should be given its broadest meaning as set forth in the current edition of Black’s Law Dictionary and that any distribution that is permissible under that definition is a permissible distribution under this trust, and provided further that permissible distributions shall include not only those distributions that provide for my wife’s physical welfare but also those distributions that bring her mental satisfaction.
3) Define the interests of the remaindermen. Because of the uncertainty as to a trustee’s duty to remainder beneficiaries when a broad invasion power is used, this issue should also be addressed in the drafting of the invasion provision. As indicated above, even with a standard such as “happiness,” there is case law to the effect that a trustee must consider how a proposed distribution would affect the interests of the trust’s remaindermen.48 Because of this, in many instances when a broad invasion power is involved, a trustee will either deny a borderline distribution or may seek prior court approval which will result in additional legal expenses to the trust.
A client can always release the trustee from his or her duty to protect the interests of remaindermen. In most cases, the client’s decision to use a standard such as “benefit” or “happiness” is a pretty good indication of his intent that the interests of the remaindermen are secondary and that the current beneficiary is the primary object of the settlor’s bounty. To avoid any uncertainty, however, it would be better to clarify this issue in the governing instrument. The following is a suggested provision assuming the trustor wants to favor the current beneficiary:
In exercising the power to invade the principal of this trust for my wife’s “best interests,” the trustee shall concern itself primarily with the interests of my wife and need not be concerned with what, if any, part of the principal remains for the remaindermen upon her death.
4) Define the trustee’s duty regarding the future needs of the beneficiary. Because there is very little existing case law regarding this issue, the invasion provision should clearly set forth the client’s intention regarding the possible future needs and welfare of the current beneficiary. Particularly with standards such as “comfort,” “best interests,” and “welfare,” providing for the future needs of the beneficiary might be extremely important to the trustor. With standards such as “benefit” or “happiness,” however, the choice of such a term would in many cases indicate that the beneficiary’s present whims and desires are paramount. To avoid any questions, however, it is better clearly to set forth the trustor’s intent. A possible suggested provision could provide: “My trustee [shall] [need not] consider the future welfare and well-being of my wife in deciding whether to make a current distribution pursuant to the above invasion standard.”
6) Make it clear that the trustee’s judgment is controlling. In the 1960s, the Internal Revenue Service argued in two cases49 that invasion standards such as “welfare,” “best interest,” “benefit,” and “happiness” were so subjective (from the beneficiary’s standpoint) that, if a beneficiary requested a distribution and the trustee refused to make such a distribution, a state court would feel compelled to order the distribution. Presumably, the IRS’s position in these two cases stems from the language used in Commissioner of Internal Revenue v. Merchants Bank of Boston, 132 F.2d 483, 486 (1942). In that case, the court stated that with a standard such as “happiness,” the beneficiary was the best judge of what makes her happy. The IRS therefore attempted to take this argument to its logical conclusion and apply it to all broad invasion standards. Fortunately, the courts did not agree with the IRS’s argument in either of these cases.
What the IRS’s position in these two cases does point out, however, is the need to clarify that the trustor is relying on the trustee’s determination, and not upon the beneficiary’s opinion, in matters relating to the timing and amount of trust distributions. Even though a beneficiary has no power to control a trustee’s action,50 by making this point clear in the governing instrument the beneficiary may be deferred from challenging the trustee’s exercise of discretion.
Because of the uncertainty as to whether the beneficiary’s income, or other resources, or the beneficiary’s station in life should be considered when broad invasion standards are used, the drafter should explicitly address these matters as well. The following is a suggested provision to accomplish these objectives:
The trustee may also pay to my wife so much or all of the principal of the trust estate as the trustee, in his total, absolute and complete discretion, deems advisable from time to time for her best interests. It is my specific intention to rely totally and completely upon the judgment and wisdom of my trustee regarding (1) what he considers to be in my wife’s best interests, (2) whether or not to make any distribution to my wife for her best interests, and (3) the amount of any distribution made even if it results in the distribution of the entire trust estate. My trustee need not consider the wishes and/or desires of my wife regarding whether or not a distribution should be made nor her wishes or desires regarding the amount of any distribution. My trustee need not consider the income or other assets of my wife, or her station in life, in deciding whether or not to make a distribution. To the extent permitted by law, the determination by my trustee as to both the propriety and amount of any distribution shall not be subject to question by anyone, including my wife and/or the remaindermen.
Conclusion
A broad invasion standard can be a welcomed addition to many trusts. In selecting the most appropriate broad invasion standard for a client’s trust, the estate planner should obviously look for a standard that will provide the greatest flexibility to the trustee while at the same time providing certainty to all parties involved. It should be noted that most of the better trust company form books use either a “best interests” or a “welfare” standard and sometimes add a “comfort” standard. At least in their opinion, these standards provide the most flexibility and present the least problems.
1 Barnett First Nat. Bank of Jacksonville v. Cobden, 393 So. 2d 78 (Fla. 5th D.C.A. 1981).
2 Lord v. Roberts, 153 A. 1, 4, 84 N.H. 517 (1931).
3 Zumbro v. Zumbro, 69 Pa. Super. 600, 603 (1918).
4 Equitable Trust Company v. Montgomery, 44 A.2d 420, (1945).
5 Price v. Rothensies, 67 F. Supp. 591, 596 (1946).
6 Stoker v. Foster, 60 N.E.407, 408, 178 Mass. 591(1901).
7 Bowditch v. Attorney General, 134 N.E. 796, 800, 242 Mass. 168 (1945).
8 Southern Bank & Trust Co. v. Brown, 246 S.E. 2d 598 (S.C. 1978); see also Annotation, 36 A.L.R. 2d 1323.
9 Kemp v. Paterson, 158 N.Y.S.2d 870 (1956), 163 N.Y.S. 2d 245 (1957), 188 N.Y.S.2d 161 (1958).
10 In re Estate of Howard, 236 S.E.2d 423 (1977).
11 Id. at 425.
12 See Fowler v. Hancock, 197 A. 715 (1938).
13 Supra note 2.
14 Nettelton, 4 T.C. at 992, 993.
15 National Security Co v. Jarret, 95 W. Va. 420, 121 S.E. 291 (W.V. 1924); Combs v. Carey’s Trustee, 287 S.W.2d 443 (Ky. 1955). But see Blodgett v. Delaney, 201 F.2d 589, 598 (1953).
16 Fowler v. Hancock, 197 A. 715 (1938).
17 But see Blodgett v. Delaney, 201 F.2d 589, 598 (1953).
18 Hartford National Bank And Trust Company v. United States, 467 F. 2d 782, 786 (1972).
19 Id. at ¶92,446.
20 In re Emmons’ Will, 300 N.Y.S. 580, 584 (1937).
21 Stuart v. Wilmington Trust Co., 474 A.2d 121 (1984).
22 In Re Rachlin’s Will, 133 N.Y.S.2d 151 (1954); Lees v. Howath, 131 A.2d 229 (1957).
23 Levinson, 162 N.Y.S.2d at 291.
24 National Surety Co v. Jarrett, 131 S.E. 291, 295 (W.V. 1924).
25 Fowler v. Hancock, 197 A. 715 (1938).
26 In Re May’s Estate, 112 N.Y.S.2d 847 (1952).
27 See In re Watson’s Estate, 88 A. 433, 436 (1918).
28 Commissioner of Internal Revenue v. Merchants Bank of Boston, 132 F.2d 483, 486 (1942).
29 Stafford v. U.S., 65-1 USTC 95,629, 95,631 (1964).
30 Merchant’s National Bank, 320 U.S. at 257. See also Dana v. Dana, 70 N.E.49 (1904).
31 Merchant’s National Bank, 320 U.S. at 263; supra note 10.
32 Dana v. Dana, 70 N.E. 49 (1904). But also see In re Buell’s Estate, 66 N.Y.S.2d 180 (1946); and U.S. v. Powell, 307 F. 2d 821 (1962) (“happiness” is synonymous with“welfare” and “comfort”).
33 Combs v. Carey’s Trustee, 287 S.W.2d 443 (Ky. 1955).
34 NCNB National Bank of Florida v. Shanaberger, 616 So. 2d 96 (Fla. 2d D.C.A. 1993).
35 See, e.g., In Re Rachlin’s Will, 133 N.Y.S.2d 151, 152 (1954).
36 Station in life and standard of living are one and the same. See Salisbury v. U.S., 377 F.2d 700, 704 n.6 (1967).
37 Salisbury v. U.S. (as to the term “benefit”), 377 F.2d 700 (1967); In re Levinson’s Will (as to the term “benefit”), 162 N.Y.S.2d 287 (1957). See also Blodgett v. Delaney, 201 F.2d 589 (1953) (as to the term “welfare”). See In re Buell’s Estate, 66 N.Y.S.2d 180, 186 (as to the term “welfare”). See U.S. v. Powell, 307 F. 2d 821 (1962) (as to “happiness”). See CIR v. Robertson, 141 F2d 855 (1944) (as to “best interests”).
38 Salisbury, 377 F.2d at 704.
39 See Blodgett v. Delaney, 201 F.2d 589, 593 (1953) (as to “welfare”). See Kemp v. Paterson, 163 N.Y.S. 2d 245, 248 (1957) (as to “best interest”).
40 Blodgett v. Delaney, 201 F.2d 589, 593 (1953).
41 In re Estate of Howard, 236 S.E.2d 423 (1977).
42 Viall v. Rhode Island Hospital Trust Co., 123 A. 570, 571 (1924).
43 In re Perkin’s Estate, 157 N.E. 750, 751, (1927).
44 Stuart v. Wilmington Trust Co., 474 A.2d 121, 126 (1984).
45 NCNB National Bank of Florida v. Shanaberger, 616 So. 2d 96 (1993).
46 See U.S. v. Powell (as to the requirement of considering a remaindermen’s interests when a “happiness” standard is used), 307 F. 2d 821, 825 (1962).
47 See Cooper v. Tallahala, 86 So. 646 (1921).
48 U.S. v. Powell (as to a “happiness” standard), 307 F. 2d 821, 825 (1962)
49 Security-Peoples Trust Company v. U.S., 238 F. Supp. 40, 48 (1965); Lettice v. U.S., 237 F. Supp. 123 (1964); see also Trustee’s Absolute and Uncontrolled Discretionary Powers, 104 Trusts and Estates 1062, 1064 (Oct. 1965).
50 In re Emmon’s Will (as to a “benefit” standard), 300 N.Y.S. 580 (1937).
Peter B. Tiernan is a tax attorney who practices in Margate. His practice focuses on the area of estate planning, probate, and taxation. Mr. Tiernan received his J.D. from the University of Florida College of Law and his Master’s of Law in taxation from the University of Miami School of Law. He is a former chair of the Trust and Probate Section of the Broward County Bar Association. He is the author of various articles on estate and tax planning topics and is a frequent contributor to The Journal of Taxation in estate planning topics.
This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Louis B. Guttmann III, chair, and Richard R. Gans and William P. Sklar, editors.
