The cardinal rule in construing a trust instrument is to discern the intent of the settlor and to effectuate that intent within the language used and within what the law will permit.[1] Although the language of the trust will govern its construction, where an ambiguity exists, parol evidence may be considered.[2] For that reason, especially in the context of special needs trusts, a letter from the settlor expressing his or her intent often accompanies the trust. Letters of intent could be significant since any order modifying a trust must conform as nearly as practical to the settlor’s intent.[3]
Powers granted in a trust are limited by the trust terms. In Hargrove v. Rich, 278 Ga. 561 (2004), a testamentary trust granted Frances Rich a power of appointment over one-fourth of her mother’s estate, “to direct the Trustees to turn over any part or all of the property in this Trust to her brothers or sisters or her nieces and nephews, or descendants of deceased nieces and nephews, and in such manner, in Trust or otherwise, as [Frances Rich] may in such instrument direct or appoint, provided that she shall have no power to appoint such property to herself, to her estate, to her creditors or the creditors of her estate.” Frances attempted to appoint the trust estate to one niece, to the exclusion of other nieces and nephews. The court held that use of the conjunctive “nieces and nephews” indicated an intent to limit the power or appointment to preclude Frances from exercising it in favor of one niece to the exclusion of other nieces and nephews. “Powers are to be construed in accordance with the intention of the donor or grantor, as determined under the rules relating to the construction of instruments generally.”
Notes:
1. Smith v. Hallum, 286 Ga. 834 (2010).
2. O.C.G.A. § 53-12-27.
3. O.C.G.A. § 53-12-62(e). An article regarding the Letter of Intent appears in The Voice Newsletter, Vol. 7, Issue 6 (Special Needs Alliance, 2013).
