In the Matter of the Helen R. MacMasters Trust John Weaver, Laurie Weaver, and Richard Weaver v. Clarence Riha
15-2142
| Iowa Ct. App. | Dec 21, 2016Background
- Helen MacMasters died in 2013; her will created the Helen R. MacMasters Trust (a testamentary trust) and named her brother, Clarence Riha, as income beneficiary. Residue passes to several remaindermen, including the Weavers.
- The will authorized principal invasions "as the trustee deems advisable" for Riha’s "health, education, support, or maintenance," creating a discretionary support trust. Estate assets (≈ $3.4M) were transferred to the trust and DB&T was appointed trustee.
- Before transfer, Riha requested $331,159.75 from principal to buy a lawnmower, a 2013 Chevrolet Impala, and to build a handicapped-accessible house; he is wheelchair-confined and has significant disabilities. He provided testimony about his needs.
- Trustee Roger Huinker (DB&T) initially denied the large distributions, citing insufficient information and a duty to protect residuary interests; later he met Riha, obtained some financial info, but still opposed the requests. The trust began paying Riha income distributions ($16,000 lump sum and $2,000/month).
- The district court (equity) found the trustee abused discretion by not diligently investigating and ordered the trustee to make the requested payments; the residual beneficiaries (Weavers) appealed.
Issues
| Issue | Plaintiff's Argument (Weavers) | Defendant's Argument (Riha/beneficiary) | Held |
|---|---|---|---|
| Whether trustee abused discretion by denying principal invasions for lawnmower, car, and home | DB&T did not abuse discretion; it reasonably requested information and exercised broad discretion to protect trust and residuary interests | Trustee abused discretion by failing to timely/diligently investigate and by denying funds needed for Riha’s support | Reversed district court: no abuse of discretion; trustee acted within reasonable judgment in requesting information and delaying large distributions |
| Whether trustee had obligation to investigate beneficiary’s financial situation before denying requests | Trustee reasonably could require beneficiary to justify requests; no affirmative duty to investigate every claim | Trustee should have proactively investigated beneficiary’s needs and finances before denying | Court held trustee had no blanket duty to investigate; requiring beneficiary to provide information is reasonable; no abuse shown |
| Proper standard of review for discretionary trustee actions | Abuse of discretion standard; court should defer absent clear abuse | Same — beneficiary urged intervention given trustee’s procedural conduct | Appellate review de novo on equity record but applies trustee-deference principles; absent dishonesty or acting beyond reasonable judgment, court will not substitute its judgment |
| Whether trustee’s motives or conflicts invalidated its discretion | Motives were proper (protect trust/residuum); no conflict | Trustee’s limited initial contact and delay evidenced improper motive or failure to exercise judgment | Court found no dishonesty, improper motive, or conflict; trustee’s motives were acceptable |
Key Cases Cited
- In re Barkema Trust, 690 N.W.2d 50 (Iowa 2004) (distinguishes pure vs. discretionary support trusts and explains principal invasion standards)
- In re Clement Trust, 679 N.W.2d 31 (Iowa 2004) (sets multi-factor test to assess trustee abuse of discretion)
- In re Clark, 154 N.W. 759 (Iowa 1915) (courts should not substitute their judgment for trustee’s absent abuse of discretion)