Matter of Sunray Holdings Trust
2013 SD 89
| S.D. | 2013Background
- Lester and Harriet Shoup created an inter vivos Sunray Holdings trust with Gregory and Larry as co-trustees.
- Lester died in 2008 and Harriet died in 2012; after Harriet’s death Gregory opened the safe deposit box containing the trust documents.
- Two handwritten letters were found: a 1994 letter with distribution instructions and a 2007 letter titled Sunray Holdings Trust Instructions, which lacked signatures.
- The 1994 letter suggested allocations among family members and potential division after eight years; the 2007 letter directed income distributions and referred to Lee and Linda as co-trustees but did not specify ultimate disposition.
- Gregory and Larry petitioned to terminate the trust arguing the trust had fulfilled its purpose and no dispositive provisions survived the trustors’ deaths.
- Lee and Linda argued that the letters were contemplated by the trust and constituted instructions directing disposition after death, thus not a mere amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the letters amount to a substantial change requiring co-trustee consent | Lee/Linda: letters are contemplated by Article I(D) and thus form part of the trust. | Gregory/Larry: letters substantially change the trust and require written consent; there was no consent. | Yes; letters substantially change the trust and lack of consent defeats their effect. |
| Whether the trust lacked a dispositive provision for death, making termination inappropriate | Lee/Linda: trust contemplated post-death disposition via letters. | Gregory/Larry: no dispositive language for death; letters cannot supply it. | Trust had no death-disposition language; termination proper due to fulfilled purpose. |
| Whether extrinsic letters can be construed with the trust to alter terms | Lee/Linda: letters should be construed with the trust as a single instrument. | Gregory/Larry: extrinsic evidence not admissible where terms are unambiguous. | Extrinsic letters cannot alter the instrument where language is unambiguous. |
Key Cases Cited
- In re Schwan, 709 N.W.2d 849 (S.D. 2006) (trust interpretation and de novo review of issues of ambiguity or meaning)
- In re Florence Y. Wallbaum Revocable Living Trust, 813 N.W.2d 111 (S.D. 2012) (trust interpretation; emphasis on honoring trustor’s language)
- Luke v. Stevenson, 696 N.W.2d 553 (S.D. 2005) (principles for constraining trust interpretation to expressed language)
- In re Estate of Stevenson, 605 N.W.2d 818 (S.D. 2000) (guidance on interpretation and enforceability of trust terms)
- Baker v. Wilburn, 456 N.W.2d 304 (S.D. 1990) (treating related instruments consistently when same subject matter/transaction)