George E. McClure, John W. McClure, and Verlayn G. McManus v. Ruth Elsie Stiller Miller McClure

Summary

The Montana Supreme Court held that the trust agreement was ambiguous and, when read with related trustee instructions, required creation and funding of both a Survivor’s Trust and a Decedent’s Trust. The court therefore reversed the determination that a trust amendment benefiting the surviving spouse was invalid and remanded for valuation and allocation of trust assets, including reconsideration of a life estate. The court affirmed that the beneficiaries did not forfeit their interests under the trust and will’s no-contest provisions.

Holdings

1. The trust agreement is ambiguous because the provision requiring funding of the Decedent's Trust up to the unified tax credit conflicts with provisions requiring division of the entire trust estate into a revocable Survivor's Trust and an irrevocable Decedent's Trust and with the trust's stated purposes.
2. The Survivor's Trust came into existence and was required to be funded; therefore, John had authority to amend the revocable Survivor's Trust, and the amendment benefiting Ruth was not invalid on the ground that no Survivor's Trust existed.
3. Assets John accumulated after Dixie's death were his separate property and belonged to the Survivor's Trust, making them subject to the amendment.
4. The children did not forfeit their interests in the trust or estate because their proceedings sought to ascertain the meaning of the trust and address alleged fiduciary misconduct rather than contest the validity of the trust or will.

Questions Presented

1. Whether the trust agreement was ambiguous concerning the creation and funding of the Survivor's Trust and Decedent's Trust.
2. Whether the Survivor's Trust came into existence and whether John had authority to amend it in favor of Ruth.
3. Whether assets John accumulated after Dixie's death belonged to the Survivor's Trust.
4. Whether the children forfeited their trust and estate interests under the no-contest provisions by seeking construction of the trust and pursuing claims against Ruth.

Disposition

reversed_and_remanded