Horgan v. Cosden

Yvonne Cosden, decedent, established the Yvonne S. Cosden Revocable Trust in 1993. Under the trust, Yvonne’s son, Christopher Cosden (defendant), was to receive quarterly distributions from the trust’s net income for life. After Christopher’s death, the trust corpus would be distributed between three different educational institutions (the remainder beneficiaries). The trust also contained a spendthrift provision protecting the trust’s income and corpus from Christopher’s creditors and his own improvident spending. The trust did not explicitly prohibit early termination. Following Yvonne’s death, the trust became irrevocable, and Christopher and Joseph Horgan (plaintiff) became successor co-trustees. The trust covered all administration costs. Subsequently, Christopher and the remainder beneficiaries reached an agreement to terminate the trust early and distribute the present-value trust proceeds between themselves. Horgan refused to consent to the early termination. Christopher filed a complaint against Horgan to force the termination of the trust, arguing that (1) termination fulfilled Yvonne’s intent to benefit Christopher and the remainder beneficiaries, (2) early termination would avoid wasting trust assets on trust administration costs, and (3) early termination avoided the risk of market fluctuations. Horgan countered, arguing that early termination would frustrate Yvonne’s settlor’s intent because giving Christopher and the remainder beneficiaries immediate lump-sum distributions undermined Yvonne’s distribution plan. The trial court held that early termination of the trust was permitted because it was in the beneficiaries’ best interest and doing so would fulfill the trust’s purpose. Horgan appealed.