Oregon Court of Appeals
156 P.3d 89 (2007)
Leo and Marcene Howard (plaintiff), spouses who had both been previously married with children from those marriages, created trust agreements to replace their earlier wills. Since Leo had three children and Marcene had two children, they placed sixty percent of their estate in Leo’s trust and forty percent in Marcene’s trust in order to provide the children equal shares. After amending their trusts, Leo’s trust provided that his assets were to be divided into two trusts if Marcene survived him for estate tax reasons – a family trust and a marital trust. Marcene was to receive all of the net income from both trusts and the assets of the family trust were to be distributed to Leo’s children after Marcene died. Leo’s trust further provided that he intentionally made no provision for his stepchildren and that the support and comfort of his surviving spouse was to be preferred over the rights of the remaindermen. In addition, the trust authorized the trustee to consider other income and support in making discretionary distributions to the issue of Leo’s deceased children until they reached the age of 25, and when making discretionary distributions in the event of Leo’s incapacity. When Marcene and Leo’s son, Coy Howard (defendant), were serving as co-trustees after Leo’s death, they disagreed regarding interpretation of certain terms of the trust. When Marcene petitioned the court to request interpretation of the trusts’ terms, the trial court held that Marcene’s interests were to be preferred over the interests of the remaindermen and directed Coy, as co-trustee, not to consider Marcene’s other resources in administering the trust. Coy appealed the second determination, asserting that the trustees must consider Marcene’s other resources in making investment decisions that favor income over growing the principal. Coy argued on appeal that favoring income without considering Marcene’s other resources allowed Marcene to direct some of that income to her children, which was contrary to Leo’s intent that his trust provide for his natural children, and not for his stepchildren.
Rule of Law
Holding and Reasoning (Ortega, J.)
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