Opinion ID: 1843576
Heading Depth: 1
Heading Rank: 5

Heading: Trustees' Revocation of Funding Offer.

Text: We turn now to MCCI's claim that the trustees acted unreasonably in revoking the funding it offered to MCCI. MCCI identifies two particular ways in which it claims the trustees were unreasonable: (1) in insisting that their personal preferences with respect to the building plan had to be followed if MCCI was to receive funds from the trust; and (2) in setting a timetable of conditions unlike those that had been required of other communities, knowing the timetable could not be met. Because the will setting up this charitable trust identified the beneficiaries of the trust quite broadly, the trustees had the discretion to select the specific beneficiaries. Iowa Code § 633.5101 (If the terms of the trust do not indicate a particular charitable purpose or beneficiaries, the trustee may select one or more charitable purposes or beneficiaries.); see In re Estate of Ditz, 254 Iowa at 450-52, 117 N.W.2d at 828-30 (finding trust did not fail for lack of specific beneficiaries since testator could rely on trustees to use their good judgment in choosing beneficiaries). When a trustee has discretionary power, the trustee must use that power within the bounds of reasonable judgment and in accordance with applicable fiduciary principles and the terms of the trust. Iowa Code § 633.4214(1). Absent an abuse of discretion, a trustee's exercise of discretion is not subject to control by a court. Id. § 633.4214(2); accord Arnette v. Watson, 203 Iowa 552, 554, 213 N.W. 270, 271 (1927). Thus, we will not interfere with the administration of a trust based simply on a difference in judgment with respect to what should be done and who in particular should benefit from the trust. In re Clark, 174 Iowa 449, 455, 154 N.W. 759, 760 (1915); Restatement (Second) § 187 cmt. e, at 403. In determining whether a trustee has abused his or her discretion in exercising or failing to exercise a power, we consider (1) the intended breadth of the trustee's discretion under the trust instrument; (2) the purpose of the trust; (3) the nature of the power at issue; (4) the existence... of an external standard by which the reasonableness of the trustee's conduct can be judged and the definiteness of that standard; (5) the motives of the trustee in exercising or refraining from exercising the power; and (6) whether the trustee has an interest in conflict with the beneficiaries' interest. In re Estate of Manahan, 255 Iowa 1060, 1066, 125 N.W.2d 135, 138 (1963); accord In re Tone's Estate, 240 Iowa 1315, 1321, 39 N.W.2d 401, 405 (1949); Restatement (Second) § 187, cmt. d, at 403. When we apply these considerations, we conclude, as did the district court, that the trustees did not act unreasonably and did not abuse their discretion. We first note that the testator gave the trustees broad discretion in determining what activities and programs would benefit the elderly in the designated geographical areas. The breadth of this discretion is magnified by the lack of any external, definite standard. Thus, it fell upon the trustees to impose conditions on any funding that would ensure the needs of senior citizens were in fact being addressed and met by the entities receiving trust monies. Many of the efforts viewed by MCCI as micro-managing by Vos were actually attempts by Vos to make certain that funds were not obtained under the promise that a senior citizen center would be established when in reality the recipient intended to use the contribution to build a community center that would be available to elderly citizens on the same basis as any other members of the community. It appears Vos wanted to make sure senior citizens had a designated and identifiable space where they would feel comfortable and welcome. He also tried to ensure that conveniences seniors would need while at the center were available and easily accessible. These goals were consistent with the testator's intent to promote programs and activities for senior citizens. Therefore, while Vos may have been over-zealous in this regard, as the trial court observed, we agree that he was not unreasonable. MCCI complains that the conditions and timetable imposed on it were more onerous than those imposed on other communities receiving contributions from the Clement Charitable Trust. It is true that the trustees handled each situation somewhat differently, but not entirely so. As noted earlier the trustees developed five guidelines for funding projects that they applied to all applicants. While not all communities were given a deadline within which to comply with the conditions imposed by the trustees, funding for a community center in the town of Mingo was also contingent on the community's ability to raise funds within a certain time period. Importantly, there is no cause to believe that the trustees had anything at heart in imposing conditions on their offer to MCCI other than their perception of the testator's wishes and the special needs of the senior citizens who were to benefit from the trust's expenditures. Like the trial court, we conclude the trustees did not abuse their considerable discretion in requiring MCCI to meet the trust's conditions in order to receive funding for its community center, including the imposition of a timetable for the accomplishment of those conditions. Nor did the trustees abuse their discretion in refusing to make a contribution when these conditions were not timely satisfied. The trustees clearly informed MCCI that it could reapply for a grant despite its initial inability to meet the requirements imposed by the trustees. The communications between the parties thereafter reveal that the stumbling block for funding was MCCI's refusal to alter its building to accommodate the concerns of the trustees, a condition we have found not to be an abuse of the trustees' discretion. Therefore, MCCI's failure to meet the original deadline set by the trustees was, in the end, not the cause of its inability to obtain monies from the Clement Charitable Trust.