923 N.W.2d 815
N.D.2019Background
- Roger S. Linn executed a revocable trust (restated 2000) that split into a Linn Marital Trust and Linn Family Trust at his 2003 death; Shirley Linn is the marital beneficiary; Stephen Linn, Deborah Wagner, and Mark Wagner are remainder beneficiaries; Wells Fargo and Harris Widmer are co-trustees.
- The trust gave Shirley the right to choose one of two trust-owned residences as her principal residence and required the trustees to maintain the selected residence while she resided there.
- In 2016 Shirley moved into an assisted living facility; the trustees paid initial acquisition-related charges (reservation, initial rent, moving expenses) but declined to pay ongoing monthly assisted-living charges.
- Shirley petitioned the district court to compel trust payments for ongoing assisted-living/nursing-home costs under Article V(10)(F) (trust must pay “any obligations the Donor’s spouse may incur in acquiring assisted living or nursing home care”); trustees and remainder beneficiaries opposed.
- The district court held the trust language unambiguous, construed “acquiring” to cover only initial acquisition expenses (not ongoing charges), denied Shirley’s petition, and denied the remaindermen’s request for attorneys’ fees.
- On appeal the Supreme Court concluded the phrase at issue is ambiguous, remanded for factual findings on settlor intent and reconsideration of the fee request.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Article V(10)(F)’s duty to pay "any obligations ... in acquiring assisted living or nursing home care" requires payment of ongoing monthly assisted-living/nursing-home expenses | Shirley: “Acquiring” includes ongoing obligations (e.g., monthly rent); read with Articles VI and VII, settlor intended trust to provide for all housing/ care costs regardless of mandatory income distributions | Trustees/remaindermen: “Acquiring” means initial acquisition only (unit costs); ongoing expenses are covered by mandatory income distributions and discretionary principal invasion standards; language is plain and limits principal access | The phrase is ambiguous; rational arguments support both readings. Court reverses and remands for factual findings on settlor intent and consideration of extrinsic evidence. |
| Whether extrinsic evidence may be considered to determine settlor intent | Shirley: If ambiguous, extrinsic evidence should be admitted to determine intent | Trustees/remaindermen: Language is plain and unambiguous so extrinsic evidence is not admissible | Because the provision is ambiguous, the district court may consider extrinsic evidence on remand. |
| Whether trustees properly exercised discretion under Articles VI/VII regarding additional distributions | Shirley: Trustees abused/failed to follow settlor’s intent if ongoing costs are within trust obligation | Trustees: They lawfully exercised discretion not to invade principal absent meeting standards; mandatory income distributions were paid | Not finally resolved; remand to make findings on intent may change analysis of trustee discretion. |
| Reclaiming attorneys’ fees by remainder beneficiaries | Remaindermen: Should recover fees incurred responding to Shirley’s petition | Shirley: Opposes fee award | Court remands fee request for reconsideration after district court’s factual findings on primary ambiguity/intent. |
Key Cases Cited
- Langer v. Pender, 764 N.W.2d 159 (N.D. 2009) (primary rules for construing trusts and applying contract interpretation principles)
- Hecker v. Stark County Soc. Serv. Bd., 527 N.W.2d 226 (N.D. 1994) (whether a trust instrument is ambiguous is a question of law)
- Vanderhoof v. Gravel Prods., Inc., 404 N.W.2d 485 (N.D. 1987) (definition of ambiguity: rational contrary interpretations)
- Hallin v. Inland Oil & Gas Corp., 903 N.W.2d 61 (N.D. 2017) (applying N.D.C.C. ch. 9-07 contract interpretation rules to trusts)