In re Trust D Created Under Last Will and Testament of Darby

In July 1986, Harry Darby executed his last will and testament, establishing several trusts for the benefit of his daughters and sister. Trust D (the trust) was to be established at Darby’s death by a specific bequest to the trustee of $240,000. The trustee was to pay Darby’s daughter, Marjorie D. Alford (plaintiff) the sum of $12,000 annually, in a manner and frequency determined by the trustee, coming first from income and then from principal, if the income was insufficient. Upon Alford’s death, the remaining trust funds were to be used to pay Alford’s three daughters $4,000 each at intervals for their lifetimes. Darby’s will also restricted the beneficiaries’ powers by providing that during the duration of the trusts, no beneficiary had power to convey any interest in the trust estate or income until it was actually paid into the beneficiary’s hands. In January 1987, Darby executed a codicil and increased the trust bequest to $480,000 and the annual distribution to Alford to $24,000 and to the second-generation beneficiaries to $8,000. In 2009, Alford sought to have the trust modified to increase her annual distribution to $40,000 because the trust was her sole source of income and it was not sufficient to satisfy her basic living expenses. She also sought to have the trust assets distributed to federal and state authorities upon her death for payment of estate taxes. All qualified beneficiaries entered an appearance and consented to the proposed modifications, which the district court approved. The district court found that under Kansas Statutes Annotated § 58a-411, it was authorized to modify the trust if the beneficiaries consented and the modification was not inconsistent with the material purpose of the trust. The district court found that modification was appropriate under § 58a-412 because the trust was not providing enough income for Alford to live on and circumstances existed that Darby had not anticipated. Finally, under § 58a-416, a substantial amount of federal generation-skipping transfer tax would accrue at Alford’s death, and modification would achieve Darby’s likely tax objectives in a way that was consistent with his probable intention.