[¶ 1] Roland Eckes, personal representative of the estate of Hattie Hillestad, appeals the district court’s affirmation of the decision of an administrative law judge (“ALJ”), adopted as the final order by the Department of Human Services (“Department”), disqualifying Hillestad from Medicaid benefits because assets of a residuary trust, of which she was a beneficiary, were “available” for the purpose of determining eligibility for Medicaid. We hold the Department erred in construing the intent оf Hillestad’s deceased husband to allow Hil-lestad to invade the trust principal for her benefit, and based on that intent, the Department erred in determining Hillestad’s gifts to her children were not substantial. The district court’s judgment is reversed and remanded for further proceedings.
I
[¶ 2] Hattie Hillestad was a beneficiary of her late husband’s will, executed on November 16, 1973, creating a residuary trust for Hillestad’s benefit. The entire net income of the trust was to be paid to Hillestad for as long as she lived. The trust also prоvided that if, in the trustee’s judgment, the income from this trust and from all property accumulated during her lifetime was not sufficient to provide for Hillestad’s “suitable support, care, necessities, and medical attention,” then the trustee had the discretion to pay such sums from the principal of the trust for Hilles-tad’s benefit, with the following instructions:
It is my express direction that the principal of this trust not be invaded for the above-mentioned purposes until my said wife shall have exhausted all property held by her. I have purposely avoided making gifts of my property to my children during my lifetime to assure that the income of this trust be as large as possible. Therefore, in the event my said wife shall have made substantial gifts of her property to her children during her lifetime then I direct that no part of the principal of this trust be invaded for her benefit.
Further sections of the will devised the remaining principal and any undistributed income in the trust, upon the death of Hillestad, to her late husband’s children or their descendants if the children were deceased.
[¶ 3] When Hillestad’s husband died in 1992, Hillestad was 88 years old, and she entered a basic care facility. In 1993, she sold her house for $14,702, and also had other assets for a total of $42,762, of which she gave $20,000 to her two children. In 1994, 1995, and 1996, Hillestad had an income of $9,185, $9,342, and $10,844, respectively. During those three years, Hil-lestad gave gifts totaling $24,000 to her two children from her assets (i.e., $6,000 in 1994; $6,000 in 1995; and $12,000 in 1996). In 1997, Hillestad did not give any financial gifts to her children. From 1992-1997, Hillestad’s living expenses in the basic care facility were paid by a five-year insurance plan.
[¶ 5] Hillestad appealed to the district court, which upheld the Department’s decision determining Hillestad was ineligible for Medicaid benefits because the trust assets were available to her and, therefore, her assets exceeded the maximum amount permitted by law. In determining whether Hillestad’s gifts to her children were substantial, thereby foreclosing availability of the trust principal, the district court concluded the Department could reasonably consider the value of Hillestad’s income and assets at the time she made the gifts to her children, as well as the present and reasonably anticipated future costs of Hillestad’s support. The district court concluded a “reasoning mind could reasonably determine” the evidence supported the Department’s finding that Hillestad’s gifts to her children were not substantial in relationship to her property at the time she gave the gifts. Hillestad appealed to this Court. Hillestad died on January 6, 2001, and her personal representative was substituted as party pursuant to N.D.R.App.P. 43.
II
[¶ 6] When an administrative agency decision is appealed from the district court to this Court, we review the agency’s decision and the record compiled before the
agency,
rather than the decision and findings of the district court.
Kryzsko v. Ramsey County Soc. Servs.,
[¶ 7] When determining eligibility for Medicaid, the Department considers whether the applicant has sufficient assets to meet the costs of necessary medical care and services. N.D.C.C. § 50-24.1-02. No person may be found eligible for Medicaid unless the total value of that person’s assets do not exceed $3,000. N.D.Admin.Code § 75-02-02.1-26(1). In making this eligibility determination, all assets available to the applicant are considered. N.DAdmin.Code § 75-02-02.1-25(1). Assets held in trusts are not exempted from consideration to the extent these assets are available to the applicant. N.D.Admin.Code § 75-02-02.1-31.
[¶ 8] When construing a trust instrument, this Court’s primary objective is to ascertain the settlor’s intent, which is a question of fact.
Hecker v. Stark County Soc. Serv. Bd.,
Ill
[¶ 9] The Department argues the plain language of the trust unambiguously demonstrates Hillestad’s late husband’s intent was to create a support trust providing for Hillestad’s “suitable support, care, necessities, and medical attention,” not only from the income of the trust but also by invading the principal. We disagree.
A
[¶ 10] The settlor’s intent is crucial in determining the nature and extent of the beneficiary’s interest in the trust.
Bohac v. Graham,
[¶ 11] Conversely, a discretionary trust grants the trastee “uncontrolled discretion over payment to the beneficiary” and may reference the “general welfare” of the beneficiary.
Id.
at 230 (quoting Restatement (Second) of Trusts § 128 cmt. d (1959)). Because the beneficiary of a discretionary trust does not have the ability to compel distributions from the trust, only those distributions of income, principal, or both, actually made by the trustee may be considered by the agency as available assets when evaluating eligibil
[¶ 12] However, the language of a trust may include elements of both a support trust and a discretionary trust. This hybrid trust covers the middle ground between classic support and discretionary trusts.
Bohac,
[¶ 13] Similarly, in
Kryzsko v. Ramsey County Soc. Servs.,
[¶ 14] Here, the intent of Hillestad’s late husband may be discerned from the
[¶ 15] Therefore, we hold the settlor intended the trust income as a support trust, which was an available asset for the purposе of qualifying for Medicaid benefits. However, the settlor intended the principal as a hybrid trust, with elements of both a support and a discretionary trust, which was only an available asset if Hilles-tad fulfilled the conditions limiting the trustee’s power to invade the principal for her support.
B
[¶ 16] The Department insists the only limitation on the trustee’s discretion to invade the principal for Hillestad’s needs was to determine whether Hillestad made substantial gifts of her property during her lifetime. We disagree.
[¶ 17] The will executed by Hil-lestad’s late husband expressly imposed two conditions limiting the authority of the trustee to invade the trust principal for Hillestad’s support. First, the language of the will plainly states: “It is my express direction that the principal of this trust not be invaded ... until [Hillestad] shall have exhausted all property held by her.” Second, the will also unambiguously states: “[I]n the event [Hillestad] shall have made substantial gifts of her property to her children during her lifetime then I direct that no part of the principal of this trust be invaded for her benefit.”
[¶ 18] The first condition of the trust, which determines whether the trust principal may be invaded and, therefore, is available for the Department’s consideration in qualifying Hillestad for Medicaid benefits, depended on Hillestad’s exhaustion of all her property. The Department incorporated by reference the parties’ stipulation of facts as findings. The stipulated facts do not specifically address whether Hilles-tad exhausted her assets, but indicate Hil-lestad had a nursing homе insurance policy which paid for her care for five years.
[¶ 19] The second condition of the trust limiting invasion of the principal depended on whether Hillestad “made substantial gifts of her property to her children during her lifetime.” The Department’s findings defined the term “substantial” as “significantly great” or “considerable in quantity” and implying a comparison of the value of Hillestad’s gifts with the value of her income and assets, at the time she made the gifts, and the present and reasonably anticipated future costs of her support. After making this comparison, on a year-by-year basis from 1993-1997, the Department found Hillestad’s gifts were not substantial, considering her advanced age and insurance coverage during those years which militated against a need to conserve assets for her future support. However, we conclude the Department erred in defining “substantiаl” from the perspective of Hillestad’s intent and circumstances at the time of making the gifts, rather than from the perspective of her late husband’s intent in conditioning the trust.
See In re Estate of Neshem,
[¶ 20] When a term in an instrument is undefined, we usually look to the clear ordinаry meaning which a non-law-trained person would attach to the term.
Martin v. Allianz Life Ins. Co. of N. Am.,
[¶ 21] Furthermore, the unambiguous language of the will requires analyzing Hil-lestad’s gifts to her children “during her lifetime,” not piecemeal annual comparisons. Rather, the Department must construe the will according to the intent of the settlor, Hillestad’s late husband, by comparing Hillestad’s assets during the entire period of years from the creation of the trust until she exhausted her assets, which triggered the trustee’s discretion to invade the principal if she had not made substantial gifts to her children during that time. The Department’s findings indicated Hil-lestad’s late husband created the residuary trust for the benefit of Hillestad, which was to take effect following his death in 1992. Hillestad applied for Medicaid benefits in 1998, after her five-year insurance coverage expired. We assume that she exhausted her assets at this time, and this condition was not an impediment.
[¶ 22] We hold that a reasoning mind, considering the testator’s intent, must find Hillestad’s gifts to her children from 1993-1996, totaling $44,000 and representing 61% of her $72,331 income and assеts for that time period, are important and valu
[¶ 23] In construing a will, a court must harmonize all parts of the will, if possible, so each word and phrase is given effect, because every word and phrase is presumed to have meaning.
Neshem,
[¶ 24] Our construction of the unambiguous language of the will creating the trust, which holds Hillestad’s gifts to her children were substantial, comports with the intent of the settlor as expressed in the whole will. In article IV(2) of the will, Hillestad’s late husband expressly prefaced his second condition to invading the trust with the following words: “I have purposely avoided making gifts of my property to my children during my lifetime to assure that the income of this trust shall be as large as possible. Therefore, in the event [Hillestad] shall have made substantial gifts ... to her children ... no part of the principal ... be invaded.... ” In article IV(3), (4), the will devises the remaining principal and undistributed income from the trust to be distributed to the settlor’s own children and their heirs, not to Hillestad’s children.
[¶ 25] When giving effect to each word and phrase in the language of the whole will, the settlor’s intent unambiguously was to provide fоr Hillestad’s “suitable support, care, necessities, and medical attention” from the income of the trust. The settlor expressly limited the trustee’s authority to invade the principal by two conditions: exhaustion of Hillestad’s assets and not gifting her children substantially. In that same paragraph, the settlor explained his purposeful creation of the trust for Hillestad, rather than his own children, if she complied with his directive not to gift to her own children. Because of the settlor’s clear directive that no part of the principal could be invaded if Hillestad made substantial gifts to her children, followed by a devise to his own children of the remaining principal and unpaid income, we conclude the intent of Hillestad’s late husband was to forbid her to invade the trust principal if she failed to fulfill the conditions, thereby preserving the principal for the settlor’s own children to inherit on Hillestad’s death.
See Hecker,
IV
[¶ 26] Therefore, we hold that Hilles-tad’s late husband unambiguously created a support trust for Hillestad from the trust income, but the principal was a hybrid trust which could not be invaded because Hillestad made substantial gifts to her children during her lifetime. The Department’s finding that Hillestad’s gifts to her children were not substantial relative to the property she owned at the time she made the gifts is contradicted by the plain language of the trust instrument which indicated the settlor’s intent was to protect the trust principal for his own children unless Hillestad complied with his conditions. Based on the intent of Hillestad’s late husband, the Department’s definition of the term “substantial” is rejected, as a matter of law. The Department’s decision that the trust principal could be invaded and was available for the purpose of Medicaid eligibility is not supported by a preponderance of the evidence. We reverse and remand for further proceedings consistent with this opinion.