Opinion ID: 1927641
Heading Depth: 1
Heading Rank: 2

Heading: Trust instrument

Text: The Arms certificate holders contend that trust paragraph 9, providing an unlimited power of sale should be read as obligating the trustees to use that power to liquidate all trust assets as trust termination approaches. We do not agree. It is true that trust paragraph 9 contains no limit on the power of sale and that trust paragraph 4 permits distribution of proceeds without requiring reinvestment. But these unambiguous trust provisions clearly do not require the trustees to exercise the powers conferred. The decision to exercise the powers is left to the trustees' discretion. [8] The Arms certificate holders also contend that trust paragraph 17, directing the trustees to wind up trust affairs at the end of a trust term 1 year short of the statutorily allowed perpetuities period, [9] should be read as requiring liquidation of all trust assets during the final year of the trust period solely for the benefit of the certificate holders. The Arms cite a number of cases in support of the proposition that a direction to wind up the affairs of a partnership, corporation, or other business association means to convert all assets to cash for proper proportional distribution among creditors and owners. [10] Relying upon these cases, they seek to attribute a similar meaning to the words wind up in trust paragraph 17. In our view, the words wind up in the context of paragraph 17 cannot reasonably bear the meaning attributed to them by the certificate holders. The cases cited by the Arms are not applicable. Unlike those cases, this litigation does not concern a partnership or business association in which wind[ing] up would require liquidation of all assets in order to fairly distribute proportions corresponding to proportional ownership or creditors' interests in each asset. The words wind up can mean different things in different contexts. In the context of trust paragraph 17, the meaning intended is further defined:    After paying or providing for all expenses or obligations of the trust they shall distribute ratably among the certificate holders all moneys remaining in their hands as such trustees, and shall convey and transfer unto the party of the first part, or its successors, or assigns, all property, save said moneys, held by them under said trust. Had the settlor intended to require conversion of all trust assets to cash, it could have so provided. Instead, a reversion was provided for unconverted, noncash properties. [11] The Arms also assert that the provision to wind up the trust 1 year before it is legally required to be terminated, evidences an intent that the potentially lengthy process of converting all trust assets to cash be undertaken. We find this argument unpersuasive as well. During the period when the trust was drawn, trusts were commonly drafted to last for lives in being plus 20 years rather than the statutorily allowed lives plus 21 years, without regard to whether liquidation of trust assets were contemplated. See, e. g., Minnesota Loan & Trust Co. v. Douglas, 135 Minn. 413, 161 N.W. 158 (1917). The trust instrument plainly does not impose any duty to exercise or not to exercise the powers of sale and distribution granted in paragraphs 4 and 9.