In Re the Administration of the Florence Y. Wallbaum Revocable Living Trust Agreement, 2012 S.D. 18

Florence Y. Wallbaum created the revocable living trust in 1991 for her children and grandchildren.
The trust includes a spendthrift clause and a life estate structure for Douglas and other real properties.
Amendments in 1996 and 1997 revised distributions: Wallbaum residence to Douglas as a life estate, Inch Farm and Nebraska farm held in trust for Douglas, and other assets split between Douglas and Daniel with trusts for income.
Douglas lived in the Wallbaum residence after Florence’s death; trustee initially paid maintenance from trust income and later used principal to support the residence.
First Dakota National Bank served as trustee; the trust’s assets were eventually sold (Wallbaum residence in 2000 for $80,000 and Inch Farm in 1999–2000), with proceeds paid to the Trust.
Beneficiaries petitioned in 2009 alleging trustee invaded principal without consent and breached fiduciary duties; trial court found some ambiguity and admitted extrinsic evidence to interpret Florence’s intent.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was the trust ambiguous regarding use of principal for the Wallbaum residence?	Grandchildren contend terms are ambiguous and require extrinsic evidence.	Trust terms, read as a whole, can be understood; ambiguity is a question for the court only if language is unclear.	Yes, the trust was ambiguous.
Did the trial court err in finding Florence intended principal to be used to maintain the Wallbaum residence?	Extrinsic evidence shows principal invasion was not authorized.	Extrinsic evidence supports Florence’s intent to allow invasion of principal to maintain the residence.	No; the court’s extrinsic-evidence-based determination was supported.
Did the trustee violate fiduciary duties by invading principal and by selling property without proper consent or court approval?	First Dakota breached duties by improper sales and mismanagement.	No clear loss to the trust; sales and management were within discretion if reasonably justified.	No reversible fiduciary breach; no proven loss to the trust; actions within evidentiary and standard-of-review limits.
Did the beneficiaries have standing to challenge the timing of income distributions to Douglas?	Beneficiaries are affected by improper distributions and should challenge timing.	Beneficiaries lack standing to challenge distributions that did not injure them directly.	Beneficiaries lacked standing to challenge timing of distributions.

Luke v. Stevenson, 2005 S.D. 51 (S.D. 2005) (trust interpretation when settlor’s intent is unclear; use of extrinsic evidence)
In re Estate of Stevenson, 2000 S.D. 24 (S.D. 2000) (ambiguous trust construction; de novo review of questions of law)
In re Estate of Brownlee, 2002 S.D. 142 (S.D. 2002) (ambiguity defined by multiple reasonable meanings; use of extrinsic evidence)
Klauzer v. Klauzer, 2000 S.D. 7 (S.D. 2000) (interpretation of wills; admissibility of extrinsic evidence to clarify ambiguity)
Jetter v. Jetter, 1997 S.D. 125 (S.D. 1997) (trust/will interpretation; avoid meaningless language; multiple senses of terms)
Willers v. Wettestad, 510 N.W.2d 676 (S.D. 1994) (trustee fiduciary duties; loyalty and highest good faith to beneficiaries)
Thomas v. Thomas, 2003 S.D. 39 (S.D. 2003) (life estate duties; taxation and maintenance responsibilities)
Arnoldy v. Mahoney, 2010 S.D. 89 (S.D. 2010) (standing; real party in interest requirement)