In the Matter of the John P. Harris Testamentary Trust

Summary

The Supreme Court of Kansas reviews the reformation and modification of the John P. Harris Testamentary Trust. The court applies the Kansas Uniform Trust Code and affirms changes limiting distributions to an ascertainable support standard, preserving trustee discretion, and facilitating qualification as a Subchapter S trust. The court holds that the requested changes were supported by clear and convincing evidence of the settlor's intent and were consistent with the purposes of the trust.

Holdings

1. The Kansas Uniform Trust Code applied to the trust and the judicial proceeding because its application would not substantially interfere with the proceeding or prejudice the parties, and its rules of construction applied to the trust instrument.
2. Appellate review was de novo because the case was decided on documents and stipulated or undisputed facts.
3. The trust could be reformed to limit distributions of corpus to an ascertainable standard relating to beneficiary support because clear and convincing evidence established that both the settlor's intent and the trust terms were affected by a mistake.
4. The district court properly modified the trust by changing "shall" to "may" in the discretionary distribution provision because an intervening legal decision could have defeated the discretionary nature of the power, and the modification furthered the trust's purposes and accorded with the settlor's probable intent.
5. The district court properly authorized division of the trust into three separate shares for the beneficiaries to enable qualified Subchapter S trust treatment.

Questions Presented

1. Whether the Kansas Uniform Trust Code applied to the trust and the pending judicial proceeding.
2. Whether the trust terms could be reformed to limit discretionary principal distributions to an ascertainable standard consistent with the settlor's tax objectives.
3. Whether the trust terms could be modified by changing "shall" to "may" to preserve the trustees' discretionary authority and protect trust assets from beneficiary creditors.
4. Whether the trustees could be authorized to divide the trust into three separate shares to qualify for Subchapter S tax treatment.
5. What standard of review governed the appellate review of the district court's order.

Disposition

affirmed