Opinion ID: 2517704
Heading Depth: 2
Heading Rank: 2

Heading: The Sternes' Intent in Creating the Trust

Text: The Sternes' intent in establishing a trust that becomes a part of The Denver Foundation [14] must be read in light of the entire trust instrument  the 1976 Trust Agreement, the 1925 Declaration, and the subsequent 1997 Declaration  as well as the circumstances surrounding the 1976 Trust Agreement's execution. Through that lens, we find the probate court's reading of the Sternes' intent, which broadly holds that the Trust is a permanent gift for the benefit of the Foundation, is, in our opinion, a sounder interpretation of the Sternes' fundamental goal in establishing the Trust than the court of appeals' narrow reading that the Sternes intended to create a perpetual charitable trust managed by a bank as trustee. At the outset, it bears repeating that the Sternes chose to bequeath a portion of their estate to The Denver Foundation, a community trust, which is not a traditional trust beneficiary but rather one that exists to develop, hold, and administer endowment gifts  not for itself but for other community charities. As a result, the Sternes granted The Denver Foundation unique powers affording it the flexibility to adapt to changing circumstances in the realm of charitable giving in perpetuity. As discussed above, the Sternes agreed to grant The Denver Foundation broad powers of amendment, modification, distribution, and construction, which evince their general wish that The Denver Foundation exercise substantial discretion in the administration of their gift. That the Sternes chose to entrust to The Denver Foundation crucial responsibilities and a wide array of discretionary powers not generally accorded to traditional trust beneficiaries reflects the fact that the usual tripartite trust relationship was of significantly less import to them than the existence of a perpetual trust administered by the Foundation. Accordingly, we cannot read the Sternes' essential purpose in creating the Trust to hinge on the traditional triangulated trust form. Instead, that tripartite form was merely the mechanism by which to achieve their essential purpose in giving the gift. This conclusion is borne out by the fact that the Sternes could not have designated The Denver Foundation as a trustee at the time of the execution of the Trust Agreement. In 1976, The Denver Foundation did not have a corporate entity capable of holding and administering assets; thus, at that time, a transfer of principal from the Sterne-Elder Trust to The Denver Foundation would have to have been distributed to end-user charities and the permanent endowment would have been lost, in contravention of the Sternes' wishes. Now, given structural changes permitting The Denver Foundation to hold and manage endowments, it is capable of administering the Trust principal as trustee of this permanent endowment without violating the Sternes' most essential purpose  that the Trust become part of the Denver Foundation. In light of this overriding purpose and the circumstances existing in 1976 that prevented the Sternes from appointing The Denver Foundation to act as trustee, and given The Denver Foundation's power to conclusively construe its own Declaration in good faith, we conclude that the 1976 Trust Agreement does not restrict The Denver Foundation from directing the transfer of principal to its nonprofit corporation to be held as part of the permanent endowment of The Denver Foundation community trust. [15]