In re Trust Under Will of Wallace B. Flint for the Benefit of Katherine F. Shadek, 118 A.3d 182

Background

Wallace B. Flint’s 1934 will created a testamentary trust providing lifetime income to his wife, then to daughter Katherine, with trustees (including non‑beneficiary individuals and a New York corporate trustee) given investment discretion and strict limits on beneficiary access to principal.
The Trust remained heavily concentrated in IBM stock (≈81% of corpus); beneficiaries preferred retention, the corporate trustee recommended diversification and used annual stock monetization (PrISM) transactions.
In 2002, New York and Delaware courts approved transfer of the Trust situs to Delaware; a 2002 Chancery Order appointed J.P. Morgan Trust Company of Delaware and declared Delaware law would govern specified statutory provisions while New York would govern other administrative matters.
Katherine (current income beneficiary and co‑trustee) petitioned to adopt a "Restated Will" that would convert the testamentary trust into a directed trust: create an Investment Advisor (initially one of Katherine’s children), strip trustees of monitoring duties, require trustees to follow advisor directions, expand advisor investment powers, and broadly exculpate and indemnify trustees.
Katherine also sought to modify the 2002 Order to adopt a contingent choice‑of‑law rule making Delaware law govern administration except where Delaware law "would or might" create adverse tax or vesting consequences, in which case New York law would apply.
The Court of Chancery denied both requests, concluding the proposed changes would contradict Wallace’s expressed intent and that the proposed contingent choice‑of‑law language was too vague.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the court may modify the testamentary trust to adopt the proposed Restated Will converting it into a directed trust where beneficiaries control investment via an Investment Advisor	Katherine: all current beneficiaries consent; modification formalizes existing delegation, reduces administrative burden, and reflects beneficiaries' wishes	Court/settlor intent: Wallace’s will manifests a different plan—trustees (including non‑beneficiaries) were to exercise investment discretion; settlor’s intent controls and beneficiaries cannot rewrite the will	Denied. Modification would conflict with settlor’s intent; Delaware law gives primary effect to settlor’s dispositions and disfavors wholesale consensual rewrites of testamentary trusts
Whether the court should modify the 2002 Order to adopt a contingent choice‑of‑law provision swapping between Delaware and New York law depending on tax/vesting consequences	Katherine: contingent rule gives flexibility to avoid adverse tax/vesting outcomes	Court: proposed language is vague, uncertain, and would produce unpredictable results	Denied. Proposed contingent choice‑of‑law provision is too vague and will not be implemented
Whether equitable doctrines (reformation, cy pres, deviation, statutory modification) support wholesale consensual modification of the trust	Katherine: analogizes several doctrines and prior consent decrees to argue for court power to permit consensual modification	Court: doctrines are narrow (mistake/fraud for reformation; cy pres limited to charitable trusts; deviation/statutory modification require impossibility or failure of purpose); prior consent decrees are not precedential	Held: Doctrines do not authorize the requested rewrite; modification is permissible only in narrow, statutorily or doctrinally defined circumstances

Key Cases Cited

Chavin v. PNC Bank, 816 A.2d 781 (Del. 2003) (settlor intent is cardinal rule in trust cases)
In re Peierls Family Inter Vivos Trusts, 77 A.3d 249 (Del. 2013) (limits on Chancery declaratory relief and context for prior consent decrees)
Roos v. Roos, 203 A.2d 140 (Del. Ch. 1964) (reformation of trusts; equitable power to reform instrument to reflect settlor intent)
Waggoner v. Laster, 581 A.2d 1127 (Del. 1990) (Court of Chancery’s jurisdiction to reform documents to reflect original intent)
Claflin v. Claflin, 20 N.E. 454 (Mass. 1889) (articulation of majority U.S. rule prioritizing settlor intent over beneficiary wishes)