212 Conn. 678 | Conn. | 1989
In the first action the Connecticut Bank and Trust Company, N.A. (CBT), sought a declaratory judgment to determine which of the defendants are “issue” of Dexter D. Coffin, Jr., and thus beneficiaries of an inter vivos trust created by his father, Dexter D. Coffin,
In the second action, which was consolidated for trial with the first, the plaintiff CBT and its cotrustee, James E. Morgan, Jr., sought approval of the trust account for the period April 30,1957, to May 2,1984. They also requested approval of an agreement modifying the terms of the trust and settling various claims relating thereto that are the subject of litigation in the federal district court for this state.
Appeals have been taken from both judgments by various beneficiaries and claimed beneficiaries.
I
The first case presents the issues of whether the trial court erred: (1) in construing the term “issue” as used
Most of the facts relied upon by the trial court are contained in a written stipulation of the parties. By an instrument dated April 30,1957, Dexter D. Coffin, who died in 1966, created a trust with CBT and James M. Carlisle as trustees for the benefit of “[his] son, Dexter D. Coffin, Jr. the grantor’s daughter-in-law, Joyce C. Coffin or issue of the grantor’s son Dexter D. Coffin, Jr.” The trust contains spendthrift provisions authorizing the trustees to apply “so much of the net income or principal of the trust fund as [CBT] shall in its absolute and sole discretion determine to or to the use of such one or more of the [designated beneficiaries] as may from time to time be living, as the corporate trustee shall in its absolute and sole discretion from time to time select, without requirement upon the corporate trustee to maintain any equality in the amounts paid to or applied to the use of the person or persons so selected by it.”
Another paragraph of the trust indenture provides as follows: “SECOND: Wherever in this trust indenture reference is made to the ‘issue’ of the grantor’s son Dexter D. Coffin, Jr., the term ‘issue’ shall be deemed not to include the grantor's said grandson Robert L. Olmstead or any issue of said grandson, and no part of the net income or principal of the trust fund shall be paid to the grantor’s said grandson Robert L. Olmstead or to any issue of said grandson. The term ‘issue’ as used in this trust indenture is not intended to include adopted persons and their issue.”
A
Those defendants who have been adopted into the Coffin family by Dexter D. Coffin, Jr., or by his genetic
Before addressing these arguments, it is well to consider whether persons adopted into the Coffin family would have been included in the class of “issue” of Dexter D. Coffin, Jr., apart from the provision excluding “adopted persons” from that class. “In construing the word ‘issue,’ we have often noted that, in its primary meaning, ‘issue’ connotes lineal relationship by blood.” Schapira v. Connecticut Bank & Trust Co., 204 Conn. 450, 455, 528 A.2d 367 (1987). The word “will be so construed unless it clearly appears that [it was] used in a more extended sense.” Connecticut Bank & Trust Co. v. Hills, 157 Conn. 375, 378, 254 A.2d 453
These rules of construction create certain presumptions of intent based upon “considerations which experience has shown are apt to be in the minds of [settlors], to be given such weight in a particular case as its circumstances justify; they are merely aids to construction which cannot prevail over an intent fairly deducible from the terms of the [trust] read in the light of the surrounding circumstances.” Trowbridge v. Trowbridge, 127 Conn. 469, 474, 17 A.2d 517 (1941). “We have held on several occasions that language ordinarily indicating a preference for ancestral blood can be shown to include adoptees.” Sehapira v. Connecticut Bank & Trust Co., supra, 456.
In 1959, the legislature enacted the predecessor to General Statutes § 45-64a (4),
In cases where we have concluded the presumption has been overcome that a testator or settlor, other than an adopting parent, did not intend to benefit adopted children because he was a “stranger to the adoption,” there has been substantial evidence in the circumstances underlying the creation of the trust or devise indicating a probable intention to include adopted children in the designated class of “issue” or “children.” Parker v. Mullen, supra, 4-5 (testimony that testator’s attorney had advised him that use of the word “children” rather than “issue” would allow an adopted child, for whom the testator had expressed a desire to provide, to benefit from a designation of “children” as remaindermen); Mooney v. Tolles, 111 Conn. 1, 10-11, 149 A. 515 (1930) (evidence that testator knew and approved of the adoption and had the opportunity to change her will to exclude her son’s adopted child from testamentary trusts created for benefit of “children” of son as remaindermen); Ansonia National Bank v. Kunkel, supra, 753-54 (evidence that testator knew his sister’s adopted child, that he was her godfather and had a close relationship with her, that he realized his bequest to the “issue” of his sister could refer only to her adopted child, and that he had used the terms
The first contention of those adopted into the Coffin family is based on the juxtaposition of the phrase “adopted persons” with the sentence specifically excluding from his largesse the settlor’s grandson, Robert L. Olmstead, who was the only person who had been adopted either into or out of the Coffin family in 1957 when the trust was created. Robert was the son of Dexter, Jr., by his first wife. Because the settlor clearly intended that Robert not be included as a beneficiary, it is suggested that the settlor added the second sentence solely to achieve the same result for any other child who might be adopted out of the Coffin family. There was evidence, however, that the settlor had explained his refusal to include Robert on the ground that he had already provided for him. Testimony was presented that the settlor had paid $100,000 for Robert’s benefit in order to acquire some stock of the corporation the settlor controlled, C. H. Dexter Corporation. This stock had left the Coffin family when Dexter D. Coffin, Jr., and his first wife were divorced. After the divorce, she married Frederick Olmstead,
The fact that the settlor provided for a distribution of the trust corpus to his heirs at law in the absence of surviving issue of his sons hardly indicates a desire that adopted and natural children should share equally, because this provision would become effective only in the absence of natural children or blood descendants of the two sons of the settlor. Because heirs at law may benefit only in the event that there are no surviving issue when the trust terminates, this provision demonstrates a clear preference for blood descendants over other relatives.
Although the naming of Joyce C. Coffin, the second wife of Dexter D. Coffin, Jr., as a beneficiary of the trust does indicate that the settlor intended to benefit someone not of his blood, that circumstance is of little significance in determining his intention in respect to other persons not so named and, in particular, those referred to as “adopted persons.”
The presumption against disinheriting heirs at law in this case has certainly been overcome by the expressed intention of the settlor to limit the beneficiaries of the trust, with the exception of Joyce, to the issue of his sons and to exclude heirs at law who are “adopted persons,” so long as there are any surviving blood descendants of either of his sons.
We conclude, therefore, that even without the express exclusion of “adopted persons” from the class of “issue” designated as beneficiaries of the trust, there are no circumstances that can reasonably be claimed
B
We must next decide whether descendants of Dexter D. Coffin, Jr., related to him by blood but who have been adopted out of the Coffin family, are beneficiaries of the trust. One of Dexter, Jr.’s natural children, Robert Olmstead, and one of Dexter Ill’s natural children, Kathryn Blaire Greenhalgh, were adopted by men whom their mothers married after termination of their marriages to their fathers by divorce. No claim to be a beneficiary has been made by Robert Olmstead, whom the settlor excluded by name from inclusion in the term “issue.” Kathryn Blaire Greenhalgh is presently the only living person adopted out of the family who claims to be a beneficiary of the trust. The trial court has awarded her that status, concluding that she fell within the settlor’s definition of “issue.”
The primary meaning of “issue,” when used in a trust or will, is “heirs of the body, and includes descendants in every degree.” Middletown Trust Co. v. Gaffey, 96 Conn. 61, 66, 112 A. 689 (1921). Since the term is regarded as having a genetic connotation, it must be taken to include all blood descendants of Dexter D. Coffin, Jr., unless they are within the class the settlor specifically intended to exclude as beneficiaries by stating that “[t]he term ‘issue’ as used in this trust indenture is not intended to include adopted persons and their issue.” The settlor apparently recognized that Robert Olmstead, who had been adopted out of the Coffin family, was included in the term “issue” and, for the purpose of excluding him as a beneficiary, referred to him by name rather than rely on the general exclusion of “adopted persons.” If the general exclusion of “adopted persons” were intended to apply
Most of the cases that have considered the effect of an adoption out of his family of birth upon a child who otherwise would come within the class of “issue” designated as beneficiaries of a trust or bequest have held that such a child is entitled to participate as a member of the class. In Pennsylvania, it has been held that provisions for a distribution to “issue” or “issue per stirpes” of a life tenant are intended to include his natural children who have been adopted out of his family. Matter of Tracy, 464 Pa. 300, 346 A.2d 750 (1975); Taylor Estate, 357 Pa. 120, 53 A.2d 136 (1947). This result was reached despite the existence of a statute, like General Statutes § 45-64a (6),
In the cases holding to the contrary cited in the briefs, the courts purport to have found in statutes similar to § 45-64a (6) some overriding public policy, of which the settlor or testator was presumed to have been aware, which bars adopted children from inheriting from their genetic parents. Estate of Russell, 17 Cal. App. 758, 95 Cal. Rptr. 88 (1971); Matter of Estate of Best, 66 N.Y.2d 151, 485 N.E.2d 1010, 495 N.Y.S.2d 345 (1985). Although § 45-64a (6) of our adoption statutes contains a like prohibition applicable to intestate distributions, we have rejected the notion that to allow an adopted-out child to inherit from a natural parent who has died in Connecticut is contrary to our public policy, when such a right of inheritance is given by the state in which the adoption occurred. Slattery v. Hartford-Connecticut Trust Co., 115 Conn. 163, 161 A. 79 (1932). “Recognition of it here would not be injurious to our public rights or violate our positive laws. Nor is it so opposed to any established policy of our own that there is sufficient reason for us to refuse to recognize it.” Id., 167. We agree with the courts that have held that statutes precluding an adopted child from inheriting from his natural parents or relatives apply only to intestate distributions and are of little significance in ascertaining the intention of a donor in using such a term as “issue” to designate his intended beneficiaries. Monroney v. Mercantile-Safe Deposit & Trust Co., supra; Matter of Tracy, supra. Indeed our legislature presumably entertained the same view, that the scope of § 45-64a (6) and its predecessors was limited to intestate distribution, because otherwise the enactment of § 45-64a (4), spe
In Stamford Trust Co. v. Lockwood, 98 Conn. 337, 119 A. 218 (1922), this court held that a child who had been adopted out of the family of her deceased natural father, the son of a life tenant of a testamentary trust established by the child’s great grandfather, could not participate in a distribution of the remainder of the trust as one of the “lawful issue” of her grandfather, the life tenant, because she had no vested interest in the remainder at the time of her adoption and had ceased to be the child of her natural father by virtue of a statutory predecessor of § 45-64a (6) providing that an adopted child “shall not inherit estate from its natural parents or their relatives.” General Statutes (1918 Rev.) § 4879. The present case may be distinguished on the ground that the interest of Kathryn Blaire Greenhalgh as one of the income beneficiaries of the trust vested upon her birth. To the extent that the opinion in Stamford Trust Co. may have relied upon a statute plainly applicable only to intestate distributions in construing the term “lawful issue” not to include an adopted-out child, however, it is overruled.
The exclusion of “adopted persons” as beneficiaries of the trust is ambiguous in that it conceivably may refer to those adopted into the Coffin family, to those adopted out of the family, or to both. The purpose of the exclusion would, of course, be wholly defeated if the phrase were construed to apply to neither of these classes of adopted persons, because it then would be of no effect. Because of the ambiguity, the trial court admitted testimony concerning the settlor’s intention in using the phrase “adopted persons.” David L. Coffin, a son of the settlor for whose benefit a trust similar to that established for Dexter D. Coffin, Jr., had also been established in 1957, testified that his father had declared that he had “a strong feeling that benefici
“Testimony of declarations of a decedent introduced to show his state of mind is not excluded by the hearsay rule.” Kukanskis v. Jasut, 169 Conn. 29, 36, 362 A.2d 898 (1975); Babcock v. Johnson, 127 Conn. 643, 644, 19 A.2d 416 (1941). Since it was not erroneous for the court to admit or to credit this testimony, there is little basis for claiming that it was erroneous for the court to infer from such evidence that the settlor would not want the issue of his son, Dexter, Jr., to be “cut off” in the event of their adoption out of the family. We have indicated that the settlor’s reference to “adopted persons” is ambiguous in the context of this case. The trial court did not abuse its discretion as trier of fact in resolving that ambiguity on the basis of the testimony concerning the settlor’s intention.
C
The trial court refused to order payment from the trust of counsel fees and other litigation costs incurred by the children born to Mary K. Elliott, the third wife of Dexter D. Coffin, Jr. These children were adopted by Dexter, Jr., after the marriage and they claimed unsuccessfully to be beneficiaries of the trust by virtue of their adoption into the Coffin family. Others having the same status as the Elliott children by virtue of having been adopted into the Coffin family did receive an award from the trust estate for their litigation
When the plaintiff as cotrustee brought this action for a declaratory judgment because of its uncertainty over the construction of the term “issue,” it sought such relief only with respect to Kathryn Blaire Greenhalgh, who had been adopted out of the Coffin family. With respect to certain other children of Dexter D. Coffin III the plaintiff sought only a determination of paternity in the same suit. At that time the plaintiff apparently entertained no doubt concerning whether children adopted into the Coffin family were beneficiaries of the trust and had concluded that they were not.
After this action had been brought, the Elliott children moved to intervene, claiming to be “issue” of Dexter D. Coffin, Jr., by virtue of their adoption into his family. After this motion had been granted, the plaintiff moved for summary judgment against the Elliott children on the ground that adopted children were excluded from the trust. The court, Byrne, J., concluded, however, that the factual issue of the settlor’s intention could not be determined without a trial and denied the motion for summary judgment. After this denial, the plaintiff amended its complaint to add children born to Joanne Fogerty, the third wife of Dexter D. Coffin III, prior to their marriage. These children were adopted by Dexter D. Coffin III after the marriage. Another child, bom to Elaine Van Schoonmaker before she became the second wife of Dexter D. Coffin III and adopted by him after the marriage, had been made a party in the original complaint in order to resolve the question of his paternity. The amendment to the complaint adding the Elliott and Fogerty children as parties for the purpose of determining the rights of children adopted into the Coffin family also included an amendment concerning the status of the Van Schoon-maker child in this respect. The finding that Dexter Coffin III was not the natural father of this child made
The trial court denied an allowance for the litigation expenses of the Elliott children, while granting such an allowance for the others asserting unsuccessfully the same claim, that adopted children were “issue,” because the Elliotts, unlike the others, had voluntarily intervened in the suit. The Elliotts attack this ruling on the grounds that: (1) General Statutes § 52-251
Section 52-251 provides for an allowance of counsel fees and expenses in actions “for the construction of a will or for the advice of the court as to the administration of an estate or trust under a will or trust instrument” brought only by fiduciaries. “The statute should be so construed as to limit it to proceedings fairly falling within its terms.” Connecticut Bank & Trust Co. v. Hurlbutt, 157 Conn. 315, 329, 254 A.2d 460 (1968). Despite the mandatory form of language, that “there shall be allowed to each of the parties to the proceeding such reasonable sum for expenses and counsel fees as the court, in its discretion, deems equitable,” we have held even in cases where the statute is applicable
The equitable consideration relied upon by the trial court was that the Elliotts were interlopers in a proceeding that originally did not involve them. The beneficent purpose of § 52-251 is to make it possible for fiduciaries to obtain a binding resolution of questions that give them serious concern in the performance of their duties. It is not a vehicle available to others who seek to raise issues that do not trouble the fiduciaries. The Elliotts, of course, were not foreclosed from pursuing their claim to be beneficiaries in a separate suit against the trustees, but in that event would have had to bear their own litigation expenses, at least if they were unsuccessful.
Although the other adopted-in children have the same status as the Elliotts under the trust indenture, they were not interlopers in this case but, except for the Van Schoonmaker child, who had been made a party in the original complaint in regard to the issue of his paternity, were joined as defendants by the plaintiff after the Elliotts had successfully intervened. Apparently the trustee at that point decided that, since the beneficiary status of the Elliotts as children adopted into the Coffin family had to be resolved, all of those who had
The claim of the Elliott children that they have conferred a benefit on the trust by obtaining the resolution of an important issue in the construction of the trust indenture and thus are entitled to have their expenses paid is unsound. The court found that as a result of this intervention the trust had become obliged to reimburse the other adopted-in children for the substantial expenses they had incurred as a result of the intervention by the Elliotts. The trust would not have been required to bear any such cost if the Elliotts had simply brought an action against the trustees directly in pursuit of their claim to beneficiary status. Since the view of the trustees that no serious question could be raised concerning the exclusion of adopted-in children from the trust has now been vindicated, it is difficult to perceive how the formal resolution of this issue has benefited the trust.
There is no error in the first case.
II
In the second action, in which the trial court approved the trustees’ account of the administration of the 1957 trust from its inception until May 2,1984, but rejected the agreement for settling the federal court suit, only the latter portion of the judgment is challenged on appeal. All of the parties to the agreement, except the
The federal court action was brought by Joyce C. Coffin on December 5,1980, to remove CBT as the corporate trustee. Four children of Joyce from her marriage to Dexter D. Coffin, Jr., intervened in that action, and both he and his present wife, Mary K. Coffin, also intervened. The principal issue in the case is whether CBT abused its discretion by making distributions from the trust to Dexter D. Coffin, Jr., that were excessive while other beneficiaries received little or nothing. Joyce, his former wife, who was named in the trust indenture as a beneficiary, had not received any payment. Mary claimed that, as Dexter’s present wife, she was entitled to receive payments from the trust as a beneficiary.
By the end of 1983 the trustees had spent more than $400,000 in legal fees related to this litigation. At that point the parties had taken only one of thirty depositions for which notices had been filed. After numerous settlement conferences extending over a period of thirteen months under the auspices of a federal court magistrate, however, the parties to the federal court action entered into a settlement agreement that the federal district court approved on May 9, 1984.
The agreement provides for a settlement of the various claims of the parties and for a dismissal of the federal court action following approval by the Superior Court of this state of the account of the trustees as well as the terms of the settlement agreement. The agreement provides for payments from the trust principal of $600,000 each to Joyce C. Coffin and to Mary K. Coffin for the relinquishment of their claims to be beneficiaries of the trust and of $185,000 to Dexter D. Coffin, Jr., and to each of five children born to him. Of future income distributions from the trust, Dexter
The agreement modifies the spendthrift provisions of the trust in respect to Dexter D. Coffin, Jr., by removing the authority of the trustees to withhold from him the payment of his share of the income of the trust, while retaining this authority for other beneficiaries. It provides, however, that the income distributed from the trust to any beneficiary, including Dexter, Jr., “shall not be subject to assignment or alienation.” The parties construe this provision to invalidate a voluntary transfer by Dexter, Jr., of his right to receive future income from the trust.
In its memorandum of decision the trial court gave three reasons for disapproving the settlement agreement: (1) it “is clearly not in the best interests of the minor and unascertained beneficiaries”; (2) it “severely modifies the Settlor’s intentions in regard to spendthrift provisions”; and (3) “by the payment to Mary, [it] seeks to expend trust funds for purposes never contemplated by the wording of the Trust.” In its memorandum denying the defendants’ motions to set aside the judgment, the court expressed concerns that the settlor’s purpose in inserting the spendthrift provisions would be defeated if they were modified in respect to Dexter D. Coffin, Jr., and that a trust modification should be made only when it is necessary to preserve the trust or to protect the interests of the beneficiaries. The court also indicated that it did not question the sufficiency of the consideration given by Mary and Joyce to support the contract, by relinquishing their claims, but stated its belief that “Mary’s claim is a poor one and significantly less viable than Joyce’s.”
A
The court’s explanation of its reasons for concluding that the proposed modifications of the trust are contrary to the best interests of minor and unascertained beneficiaries is challenged by the guardian ad litem appointed to represent those beneficiaries, who has approved the changes contemplated. He maintains that the settlement agreement provides greater protection of those interests than is presently afforded by the trust indenture.
During the ten year period, July 1, 1977, through June 30, 1987, Dexter D. Coffin, Jr., had received $4,305,760.99 from the trust, including $1,057,000 from principal, an average of $430,576 annually. Payments had been made to five of his natural children: Dexter III, $811,860.15; Edward, $569,204.59; Martha, $521,127.58; Laura, $478,132.49; and Windsor, $540,605.47. In making these distributions the trustees have generally followed a formula of paying one half the annual income to Dexter, Jr., and one tenth to each of the five chil
Because the settlement agreement would prevent any substantial
The agreement, however, provides that the sums of $600,000 each to be paid to Joyce C. Coffin and to Mary K. Coffin, as well as $185,000 each to be paid to Dexter, Jr., and five of his children are to be made from the trust principal. This total reduction in the trust corpus of $2,310,000 is not negligible even for a trust valued at $35,000,000, but it does eliminate claims that potentially would require the payment from the trust of much more to the parties in the federal court action, if they were successful. In addition, that sum may well be exceeded by the cost to all the beneficiaries of litigating to a conclusion the multiplicity of claims in the federal court action, based upon the expenses incurred by the trust prior to the settlement.
In further articulating the reasons for its conclusion that the settlement was contrary to the interests of minor and unborn beneficiaries, the trial court expressed concern that under the settlement agreement CBT would be obliged to pay one half of the
In the federal court action four adult natural children of Dexter, Jr., claimed that CBT had abused its discretion because of the disproportionate distributions made to him, despite the express disavowal in the indenture of any requirement for an equal division of income. These claims were never fully litigated because a settlement was reached. The settlement agreement curtailed the discretion CBT had previously exercised in distributing the trust income. All but one of the persons primarily concerned with that aspect of the agreement, Dexter, Jr., and his four adult children, are under no disability and are best able to judge their own interests in restricting the discretion formerly exercised by CBT and in thus removing a source of discord within the family. The interest of the fifth child, who is a minor, is the same as that of these adult children and his guardian ad litem has also approved the agreement.
Although the minor and unborn beneficiaries are also bound by the continuance for his lifetime of the prior practice of allocating one half the income to Dexter, Jr., they will not be entitled to any share of the income until their parents die unless CBT exercises its discretion, as provided in the settlement agreement, to distribute a parent’s share of income to his child. It is possible that one or more of Dexter, Jr.’s children may predecease him, but not probable. In any event, these minor and unborn beneficiaries do gain from the agreement the same protection as their parents from distri
B
Another concern of the trial court was that the administration of the spendthrift provisions in respect to Dexter, Jr.’s share of the income of the trust would defeat the settlor’s purpose of protecting his son from the consequences of immaturity, prodigality or misadventure. In 1957, when the trust was created, Dexter, Jr., was about one half of his present age of approximately sixty-six years. After termination of his first two marriages by divorce, his third marriage has lasted since 1969.
“If the continuance of the trust is necessary to carry out a material purpose of the trust, the beneficiaries cannot compel its termination.” 2 Restatement (Second), Trusts § 337. “If owing to circumstances not known to the settlor and not anticipated by him the continuance of the trust would defeat or substantially impair the accomplishment of the purposes of the trust, the court will direct or permit the termination of the trust.” Id., § 336. The same considerations apply in large measure to the modification of a trust. Peiter v. Degenring, 136 Conn. 331, 334, 71 A.2d 87 (1949); see Connecticut Bank & Trust Co. v. Hurlbutt, supra, 315. The consent of those interested in the trust is not required when § 336 is applicable. 2 Restatement (Second), Trusts § 336, comment c. The existence of consent to a particular modification, however, indicates at least that those interested in the trust and most familiar with its operation believe the change will benefit them.
These circumstances, which have arisen since the creation of the trust, may reasonably be deemed to “impair the accomplishment of the purposes of the trust” under § 336 of the Restatement. We are not concerned with whether this impairment is sufficiently substantial to warrant the termination of the trust, however, because the settlement involves only its modification, a lesser departure from the settlor’s plan. The proposed changes apply primarily to Dexter, Jr., removing the authority to withhold his share of the income but also restricting further invasions of the trust corpus for his benefit. The question for us is whether these deviations from the settlor’s intent as expressed in the indenture are justified by the benefits the settlement provides in protecting against further invasion of the trust corpus, terminating expensive and complex litigation, and removing a major obstacle to harmonious family relationships.
The concern expressed by the trial court for Dexter, Jr.’s welfare if, at his venerable age, he will now be
C
The final reason given in the first memorandum of decision for rejecting the settlement agreement was that “by the payment to Mary [it] seeks to expend trust funds for purposes never contemplated by the wording of the Trust.” The court took a jaundiced view of Mary’s claim to beneficiary status as the present wife of Dexter, Jr., characterizing it as “a poor one and significantly less viable” than Joyce’s claim as a beneficiary named by the settlor. Although the first memorandum of decision intimates that any payment to Mary would be contrary to the settlor’s intention, the court later declared that it “has never questioned that the consideration which is promised by Mary and that promised by Joyce are each sufficient to support the contract.”
Whenever a dispute arises among those claiming to be beneficiaries of a trust or will concerning the interpretation of the instrument and a compromise is reached by them, some deviation from the intention of
We do not understand the court’s reference to Mary’s claim as “poor” to imply a lack of good faith or reasonable grounds for its pursuit. The finding that the relinquishment of her claim was a consideration “sufficient to support the contract” indicates that these threshold requirements were satisfied. We conclude, therefore, that the court’s doubt about the likelihood that Mary would prevail if her claim were fully litigated was not an adequate reason to conclude that the sett-lor’s intentions would be so greatly thwarted by the payment to her of a sum approximating the estimated cost of further litigation that the settlement should be rejected.
The trial court in rejecting the proposed trust modifications relied upon statements in several cases of the conditions necessary for termination of a trust: “(1) that all the parties in interest unite in seeking the termination, (2) that every reasonable ultimate purpose of the trust’s creation and existence has been accomplished, and (3) that no fair and lawful restriction imposed by the testator will be nullified or disturbed by such a result.” Adams v. Link, 145 Conn. 634, 638, 145 A.2d 753 (1958); Hills v. Travelers Bank & Trust Co., 125 Conn. 640, 648, 7 A.2d 652 (1939); DeLadson v. Crawford, 93 Conn. 402, 411, 106 A. 326 (1919); Ackerman v. Union & New Haven Trust Co., 90 Conn. 63, 71, 96
It is apparent that the second and third criteria for termination of a trust have not been fulfilled in this case because the trust was intended to continue until the death of the survivor of eight persons named, including the settlor’s four grandchildren living in 1957, and because the proposed modifications do alter lawful restrictions imposed by him. These conditions precedent to termination of a trust under ordinary circumstances, as applied to its modification, must give way when it appears that a substantial impairment of the purposes of the trust is likely to occur unless certain modifications are made in order to resolve problems that the settlor never envisioned. 2 Restatement (Second), Trusts § 336. When the provisions of the trust to be altered have resulted in difficulties harmful to the interests of the objects of the settlor’s beneficence, and the proposals do not unnecessarily change the settlor’s plan or thwart his purposes, the court should approve them. We conclude that the undisputed facts bring the present case within this principle and that the trial court should have approved the settlement agreement.
There is error in the second case, the portion of the judgment rejecting the settlement agreement is set aside and the case is remanded with direction to approve that agreement.
In this opinion the other justices concurred.
The complaint also sought a construction of the word “issue” as used in two testamentary trusts created by Dexter D. Coffin and his wife Elizabeth Dorr Coffin. The trial court limited its decision to a construction of “issue” as used in the 1957 inter vivos trust.
Issues concerning the paternity of certain children of Dexter D. Coffin III, a son of Dexter D. Coffin, Jr., were also resolved by the judgment. No appeal has been taken from that part of the judgment.
The federal court action was brought against the trustees by Joyce C. Coffin, the second wife of Dexter D. Coffin, Jr., who, in addition to him, was named as an income beneficiary of the 1957 trust. She sought removal of the trustees upon the ground that they had breached their fiduciary duties in distributing the trust income.
Paragraph First (a) of the 1957 trust provides: “During the term of this trust and so long as the grantor’s son Dexter D. Coffin, Jr. or the grantor’s daughter-in-law Joyce C. Coffin or issue of the grantor’s son Dexter D. Coffin, Jr. shall be living, the trustees shall pay or apply so much of the net income or principal of the trust fund as said Connecticut Bank and Trust Company (hereinafter sometimes called ‘the corporate trustee’) shall in its absolute and sole discretion determine to or to the use of such one or more of the grantor’s son Dexter D. Coffin, Jr., the grantor’s daughter-
Paragraph First (d) of the 1957 trust provides: "Upon the termination of this trust the trustees, subject to the provisions hereinafter contained relating to retention of shares of minors by the trustees, shall convey and deliver all property then belonging to the trust, including the principal and any undistributed income thereof, absolutely in equal shares to the issue of the grantor’s son Dexter D. Coffin, Jr. then living, per stirpes, or in default of such issue to the issue of the grantor’s son David L. Coffin then living, per stirpes, or in default thereof, the trustees shall convey and deliver all said property to the persons who would be entitled to take the same in accordance-with the laws of the State of Connecticut then in force, if the grantor had died upon the termination of this trust, intestate and a resident of the State of Connecticut and the absolute owner of said property, excluding, however, the grantor’s grandson Robert L. Olmstead (formerly Robert Linwood Coffin) and any issue of said grandson.”
General Statutes § 45-64a (4) provides: “The adopted person shall, except as hereinafter provided, be treated as if he were the genetic child of the adopting parent for purposes of the applicability of all documents and instruments, whether executed before or after the adoption decree is issued, which do not expressly exclude an adopted person in their operation or effect. The words ‘child,’ ‘children,’ ‘issue,’ ‘descendant,’ ‘descendants,’ ‘heir,’ ‘heirs,’ ‘lawful heirs,’ ‘grandchild’ and ‘grandchildren,’ when used in any will or trust instrument shall include legally adopted persons unless such document clearly indicates a contrary intention. Nothing in this section shall be construed to alter or modify the provisions of section 45-162 regarding children born through A.I.D.’’
General Statutes § 45-64a (6) provides: “The genetic parent or parents and their relatives shall have no rights of inheritance from or through the adopted person, nor shall the adopted person have any rights of inheritance from or through his genetic parent or parents and their relatives, except as provided in this section.”
General Statutes § 52-251 provides: “In any action brought to a court of equitable jurisdiction for the construction of a will or for the advice of the court as to the administration of an estate or trust under a will or trust instrument, by any person acting in a fiduciary capacity thereunder, there shall be allowed to each of the parties to the proceeding such reasonable sum for expenses and counsel fees as the court, in its discretion, deems equitable. The allowance shall be taxed as costs in the action, to be paid out of the estate.”
Paragraph First provides in part: “FIRST: In consideration of the covenants hereinafter contained, the grantor transfers and assigns to the trustees the property described in Schedule A hereto annexed, to hold the same and any property into which the same or any part thereof may from time to time be converted (all such property being hereinafter called the ‘trust fund’) IN TRUST during the lives of the grantor’s sons Dexter D. Coffin, Jr. and David L. Coffin, the grantor’s daughter-in-law Joyce C. Coffin and Dorothy Barbara V. Coffin, and his grandchildren Dexter D. Coffin, III, Edward M. Coffin, Deborah L. Coffin and David L. Coffin, Jr., and until the death of the survivor of the grantor’s said sons, daughters-in-law and grandchildren.”
Paragraph 5 of the settlement agreement provides as follows: “5. CBT may make distributions of the principal of the 1957 trust to a beneficiary, against future income distributions or otherwise, in the application of its discretion as provided in the trust instrument, subject to such mortgage or other safeguards as it deems necessary to protect the interests of that beneficiary and the other beneficiaries, and provided such distributions do not materially reduce the current income distributable to the remaining beneficiaries pursuant to paragraph 4 of this agreement. In making any distributions other than the distributions fixed in paragraphs 1, 2, 3 and
All of the parties stipulated that “materially reduce” in this paragraph should read “substantially reduce.” This restriction in principal distributions to those not substantially reducing current income is a significant modification of the “absolute and sole discretion” standard for both income and principal distributions contained in the 1957 trust instrument.