Court Opinion

ID: 9604553
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:23:32.196644+00
Date Added: 2024-06-11T09:15:09.381143
License: Public Domain

Tom Glaze, Justice, concurring. I concur. In my view, there is a simple reason for affirming the chancery court in this matter. As the trustee states, it appears clear that no trust ever existed. Even in jurisdictions where spendthrift trusts are permitted, it is against public policy to allow a settlor to create a spendthrift trust for her own benefit. See William F. Fratcher, Scott on Trusts § 156 (4th ed. 1987). The reason for this policy is that an owner of property should not be allowed to enjoy an interest in that property while at the same time preventing her creditors from reaching it. Id. See, also, Restatement (Second) of Trusts § 156; George G. Bogert, The Law of Trusts and Trustees § 223 (2d ed. 1992). Also, in Arkansas, a spendthrift trust cannot be created without the settlor passing legal title and absolute control of the trust corpus to a trustee. See Cotham v. First National Bank of Hot Springs, 287 Ark. 167, 697 S.W.2d 101 (1985); Clemenson v. Rebsamen, 205 Ark. 123, 168 S.W.2d 195 (1943); Bowlin v. Citizens Bank & Trust Co., 131 Ark. 97, 198 S.W. 288 (1917). Such control was not transferred in the attempt to create the trusts in this case. Instead, Ms. Blaisdell retained control of the trusts whereby she managed investments, controlled the flow of income from the trusts and even paid income taxes from the profits made from the trusts. Because Ms. Blaisdell did not create valid trusts and did not provide for what was to happen to any residual amounts remaining in the trusts upon her death, the chancery court’s decision to transfer the assets of the trusts back into her estate was correct. The court reached that decision by accepting the stipulation and agreement of all parties below that the trusts should be modified and terminated. The court modified the trusts to allow the trustee to purchase a lifetime annuity for appellant Thompson to be paid the $750 per month installments which were intended for any of the named beneficiaries surviving Ms. Blaisdell. The parties below stipulated that Thompson was the last surviving express beneficiary of the trusts. The court’s order then would terminate the trusts and all residual of the trusts would create a resulting trust which would be transferred back into the estate for distribution to the residual devisees of Blaisdell’s will, Barbara Laney and David Thompson. The chancery court was authorized by state law to accept just such a stipulated agreement to modify and terminate the trusts pursuant to Ark. Code Ann. §§ 28-69-401 and 28-69-402 (Supp. 1999). These statutes allow modification and termination of a trust and protect the trustee from liability provided that (1) all beneficiaries give written consent; (2) the court finds that the trust’s purposes are not being fulfilled or are frustrated; (3) the court consents on behalf of a deceased settlor by finding that a general family benefit will accrue, and (4) a guardian ad litem appointed to represent any unnamed beneficiaries and the personal representative of the decedent’s estate may rely on the accrual of a general, family benefit. Id. That appears to be what happened in this case. The chancery court specifically cited to these statutes in its order granting the modification and termination of the trusts, and, as to this point, none of the appellants dispute the validity of the modification and termination.