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Trust Documents and the Settlor’s Intent

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Settlors intent

The settlor of a trust — the person (or, often, the two people) who signed the trust — of course gets to set the terms of distribution. In fact, one of the key elements of trust law is to determine and carry out the settlor’s intent.

But when a successor trustee is administering the trust, they often ask about changing the precise terms as spelled out. Perhaps they are certain that the settlor intended to include someone who was left out of the document, or they want to vary the timing or conditions for distributions. Can the trustee change the trust distribution terms, at least if they have good evidence of what the settlor really wanted?

Follow the document

Here’s the starting point for analyzing the trustee’s authority: read the trust itself. Ordinarily, distributions follow what is spelled out in the document. That’s the best evidence of the settlor’s intent.

For example, consider the treatment of step-children, or others important in the setttlor’s life. Does the trust document say that its assets should be divided among the settlor’s three children? Then the trustee does not have the power to add the settlor’s stepdaughter as a beneficiary, even though he may have treated her as his own daughter for years. The trustee does not get to decide to make a small distribution to each of the settlor’s grandchildren, either.

But what if the settlor told the trustee to make those distributions? Usually, an oral instruction is insufficient. If the settlor wanted to vary the terms of the trust, they should have followed the trust amendment procedure spelled out in the document itself. That probably meant a written modification, specifying the exact terms to be added (or deleted).

What about changes in circumstances?

There are some exceptions to the strict application of trust terms. Arizona law protects children born after the trust was executed. Divorces and marriages. The application of those principles is mostly logical: if your trust leaves everything to your three children and you don’t get around to modifying it after the birth of your fourth (mazel tov!), then the law assumes that the settlor’s intent was to divide everything four ways.

Similarly, a divorce will usually remove the (now) former spouse from the trust. The law infers that the settlor’s intent was to remove an ex-spouse, and it treats the ex as if he or she had died before the settlor. Similar laws affect other elements of the settlor’s estate plan, too — like life insurance and beneficiary designations.

But those modifications imposed by the law are unusual. And the rely on the notion that the settlor just didn’t have time to get around to making changes nearly anyone would have made. They are different from the changes that the trustee is pretty sure the settlor was planning on making.

Can beneficiaries modify the settlor’s intent?

Under Arizona trust law, all of the beneficiaries of a trust might be able to agree to a different distribution. But note that there are several key elements to this authority:

  1. All of the beneficiaries need to agree. Usually even the beneficiaries who would not be affected must consent.
  2. The modification can not change a “material purpose” of the trust. So if the trust says it continues for Charlie and is intended to protect him from his spendthrift ways, it might not be possible to modify the terms to give Charlie his share outright. Sorry, Charlie.
  3. The modification is reduced to a writing and, in some cases, approved by a court (though it is possible in Arizona to make an agreement among beneficiaries that does not have to be submitted to the court).

The mechanism for and limits of an agreement to modify the trust terms can be tricky. A trustee considering taking such a step should really consult the trust’s attorney to review the process.

Trustee discretion

Some trust documents give the trustee clear discretion to make decisions on their own. For instance, the trust might say that the trustee may make distributions to a beneficiary “in her sole and absolute discretion.” That’s when the trustee gets to apply the settlor’s intent as she (the trustee) interprets it.

A key concept of modern trust law is that the settlor’s intent should control. But the law ordinarily limits interpretation to the terms of the document. Only ambiguities or changed circumstances allow the trustee to fill in blanks. Unless, that is, the trustee’s discretion is explicit.

A trustee’s discretion, for example, is a key element of special needs trusts. Unless the trustee has authority to make the decisions, the trust’s assets might be “available” to the beneficiary. That could defeat the very purpose of the trust.

When a trustee has discretion, she should still try to follow the settlor’s intent. That intent might be apparent in a separate document. The settlor might have signed a “letter of instruction” or something similar. Or the trustee might rely on conversations and instructions from the settlor during life.

How to interpret the settlor’s intent

You might not be surprised that we suggest you consult with an attorney. A trustee must carefully protect the settlor’s intent. She must also document her decisions, interpretations and actions.

The process of interpreting the settlor’s intent need not be arduous. It should involve careful consideration and clear paths, however. That’s where a good trust attorney can be helpful — and can help protect the trustee.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

Famous people's wills

Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.