Wednesday, January 30, 2013
Fern Stafford established a trust for her daughter Kathy Buckalew in 1997. Upon the death of settlor, the assets of the trust were suppose to transfer into a Buckalew's trust, then Anderson, named the Kathy Anderson Trust. At the time, she was the trustee of the trust and "authorized to distribute income and principal of the Anderson Trust for her own health, education, maintenance and support." The trust allowed her to withdraw assets from the trust at any time. The remainder of the trust was set to be distributed to Buckalew's estate. Two years later, Stafford amended the trust instrument to change where the remainder would go upon termination of the trust. Stafford stated that upon her death, "the Fern Trust would terminate and its assets would be conveyed to Arvest Trust Company as trustee of the Anderson Trust." This trust stated that Buckalew would not receive any of the trust until he reached the age of 60. The distribution would be based upon her income from the three years prior to her 60th birthday. The remainder of the trust would go to Buckalew's aunt. The trust also contained a spendthrift clause that prevented "Buckalew from receiving distributions other than the annual payment."
In Buckalew v. Arvest Trust Company, N.A., Buckalew argued that unforeseen circumstances warranted termination of the amended trust. Buckalew argued that these changes frustrated the purpose of the trust, which was to provide for her care. She claimed that the trust was over-funded and the amended trust placed an arbitrary limit on distributions that were made to her. Furthermore she claimed that it was an unforeseen circumstance that her mother died before Buckalew turned 60, and that her employment was interfered by Stafford's care. All of this limited Buckalew's ability to draw from the trust. The court disagreed and held that none of these were considered to be unforeseen circumstances.
See Luke Lantta, What Is An "Unforeseen Circumstance" That Might Permit Trust Termination?, BryanCaveFiduiciaryLitigation.com, Jan. 29, 2013.