Background
Caron Jenson created a revocable living trust, initially served as trustee, and later resigned in favor of her son Kenneth “Ken” Jenson. A subsequent amendment described the trust as irrevocable. But another provision directed that the trustee “shall” pay principal to Caron upon her written request. Years later, Caron requested transfer of trust assets, including real property known as the Fairground property and forty-two shares in an irrigation company. Ken refused, contending that a distribution of all or substantially all assets would improperly terminate an irrevocable trust.
Caron sued Ken personally and as trustee, along with his wife, Julie, and sought a declaration enforcing the payment provision. The district court initially found a latent ambiguity when Caron sought all trust assets and contemplated extrinsic evidence. After Caron submitted more targeted written requests for the Fairground property and irrigation shares, the court granted partial summary judgment directing their transfer. Ken and Julie obtained permission for an interlocutory appeal, arguing that the irrevocability clause limited any withdrawal right and preserved trustee discretion.
The Court’s Holding
The Utah Court of Appeals affirmed the transfer order, though its reasoning effectively displaced part of the district court’s earlier ambiguity analysis. Under ordinary trust and contract interpretation, the payment provision was mandatory and unqualified. Utah’s Uniform Trust Code defines a power of withdrawal as a presently exercisable general power of appointment, and the provision gave Caron precisely that authority: on written request, the trustee was required to distribute principal to her. Nothing in its text imposed a dollar limit, percentage cap, purpose requirement, or trustee-approval condition.
The court held that the unrestricted withdrawal power included the practical power to revoke the trust. Applying the Utah Supreme Court’s decision in Dahl v. Dahl, the court concluded that when an unrestricted withdrawal provision cannot be harmonized with an irrevocability clause, the withdrawal provision prevails. Other clauses did not change that result. Language giving the trustee ownership-like management powers and “absolute” discretion was specifically limited by the mandatory payment direction. Nor did the spendthrift clause require a narrower reading; Utah law expressly recognizes that, to the extent a trust is revocable and the settlor has capacity, beneficiary rights remain subject to the settlor’s control. The court lifted its stay and remanded for further proceedings after requiring transfer of the requested assets.
The panel rejected Ken’s attempt to distinguish between demanding particular assets and demanding the whole corpus. The agreement used broad language covering principal without reserving a minimum balance, and the legal definition of an unrestricted withdrawal power did not turn on whether Caron exercised it in one request or several. The court would not add a limitation the settlor’s document omitted.
Key Takeaways
- A mandatory trust provision requiring payment of principal on a settlor’s written request can create an unrestricted power of withdrawal even when the document calls the trust irrevocable.
- Under Utah law, an unrestricted withdrawal power may include the power to revoke and will prevail over an irreconcilable irrevocability clause.
- Broad trustee discretion, management powers, and spendthrift language do not override a more specific and mandatory distribution command.
Why It Matters
The decision is a practical drafting and administration warning for Utah estate-planning counsel. An “irrevocable” heading or declaration cannot do all the work if operative provisions let the settlor demand unlimited principal. Lawyers creating an irrevocable arrangement should examine every retained distribution, amendment, appointment, and withdrawal power and state any limits directly. Trustees should likewise resist relying on labels when a beneficiary or settlor invokes specific mandatory language.
For litigators, the opinion illustrates that courts first test whether provisions can genuinely be harmonized; they will not invent restrictions absent from the text merely to protect a general statement of purpose. It also confirms that an appellate court may affirm the result on a legal ground apparent from the record even when that ground cuts against an earlier interlocutory rationale that the appellee did not separately appeal.