McGuire v. McGuire

• Decision Date: 13 February 2003
• Docket Number: No. 02-0390.,02-0390.
• Parties: IN the MATTER OF the SEPARATE TRUSTS: John J. McGuire Marital Trust, John J. McGuire Marital Trust No. 2, John J. McGuire Family Trust established under the John J. McGuire Revocable Trust dated July 2, 1984: Theresa McGUIRE, Appellant, v. James P. McGUIRE, J. P. Cullen, Alfred P. Diotte, and Mary McGuire, Respondents.
• Court: Wisconsin Court of Appeals

260 Wis.2d 815

2003 WI App 44

660 N.W.2d 308

IN the MATTER OF the SEPARATE TRUSTS: John J. McGuire Marital Trust, John J. McGuire Marital Trust No. 2, John J. McGuire Family Trust established under the John J. McGuire Revocable Trust dated July 2, 1984:

Theresa McGUIRE, Appellant,¹ v. James P. McGUIRE, J. P. Cullen, Alfred P. Diotte, and Mary McGuire, Respondents.

No. 02-0390.

Court of Appeals of Wisconsin.

Submitted on briefs November 11, 2002.

Decided February 13, 2003.

On behalf of the appellant, the cause was submitted on the briefs of Douglas D. Hahn of Menn, Teetaert & Beisenstein, Ltd., Appleton.

On behalf of the respondents, the cause was submitted on the brief of Kathy L. Nusslock, Dianne S. Cauble, and Daniel J. Borowski of Davis & Kuelthau, S.C., Milwaukee; and George K. Steil, Sr., of Brennan, Steil, Basting & MacDougall, S.C., Janesville. Before Dykman, Roggensack and Lundsten, JJ.

¶ 1. DYKMAN, J.

Theresa McGuire appeals from an order granting the petition filed by the trustees of two family trusts and denying her motion to have a guardian ad litem appointed for her minor children. She argues that the trial court erred in finding that Article X of the John J. McGuire Revocable Trust is valid under Wisconsin law. She also asserts that it was an erroneous exercise of discretion for the trial court to approve the trust accountings from January 1, 1993, to December 31, 1999, thereby releasing the trustees of any further liability related to those accountings. Because we conclude that Article X is not contrary to Wisconsin law and the trial court properly exercised its discretion when it approved the trust accountings and denied the motion for appointment of a guardian ad litem, we affirm.

BACKGROUND

¶ 2. On July 12, 1984, John J. McGuire executed a revocable trust (the Trust) for the benefit of himself, his wife, Mary, and their four daughters, Therese, Patricia, Maureen and Megan. At his death in 1987, three new trusts were created by operation of Articles V and VI of the revocable trust: the John J. McGuire Marital Trust, the John J. McGuire Marital Trust No. 2 (the Marital Trusts) and the Family Trust. The current Trustees are James McGuire (John's brother), Mary McGuire, J.P. Cullen, and Alfred P. Diotte ¶ 3. In 2000, the Marital Trusts had assets valued in excess of $7,500,000. Mary receives all the income generated by these assets. In addition, she has access to the principal of the Marital Trusts if the criteria of Article V-B are met:

If the aforesaid payments of income from this Trust together with Donor's wife's income from all other sources shall not be sufficient, in the discretion of the Trustees, to provide for her reasonable support, care and comfort according to her standard of living during Donor's lifetime, the Trustees may pay to her or apply for her benefit so much of the principal of this Trust as the Trustees may deem proper or necessary for that purpose.

¶ 4. Mary also is entitled to the net income earned by the Family Trust. However, if the total of this and her other income is deemed by the Trustees to be more than sufficient to maintain her standard of living at the level she enjoyed when her husband was alive, Article VI provides:

[T]he Trustees may either accumulate such excess or distribute such excess in such shares, as they shall deem appropriate, to those of Donor's children who are under the age of twenty-eight (28) years, and whom my Trustees shall determine require funds for their support, maintenance and education (including post-high school education, not to exceed eight (8) years).

. . . . In exercising their discretion hereunder, the Trustees shall keep in mind that the Donor's primary purpose in establishing the Family Trust is to provide adequately for his wife during her lifetime, and after her death, to provide adequately for the support, maintenance and education of any of Donor's children who are under the age of twenty-eight (28) years.²

¶ 5. Upon Mary's death, the principal is to be divided equally into four separate trusts, one for each of John and Mary's daughters. The income from these trusts will then be distributed to Therese, Patricia, Maureen and Megan during their lifetimes, or, if these funds are not required for their support, the income will be accumulated in the respective trusts. Ultimately, the principal and income of each trust will go to John and Mary's grandchildren.

¶ 6. When ascertaining whether a beneficiary has a need that warrants making a distribution from the principal of a trust, Article VI directs that:

[T]he Trustees shall bear in mind that it is not Donor's intention to preserve principal for subsequent generations if the use of the principal for any current income beneficiary seems wise. The Trustees shall also take into account other resources available to the beneficiaries of which they have knowledge. Donor suggests, but does not require, that no distribution of principal shall be made to Donor's wife until the principal of the Martial Deduction Trust and Donor's wife's other assets, excluding any residence owned by Donor's wife, have been exhausted.

¶ 7. In February 2000, as part of her estate planning, Mary's attorney suggested that she transfer assets to her children to minimize the impact of the federal estate tax on her estate.³ By divesting her assets Mary would also enable the Trustees to exercise their discretion and distribute principal from the Marital Trusts to her, because she would no longer have sufficient assets of her own to provide for her support. Because these gifts would have to be substantial to realize the desired savings in estate tax, Mary's attorney sent releases to the contingent beneficiaries. The effect of the releases is to relieve the Trustees of any liability to the contingent beneficiaries that might arise from the distribution of trust principal to Mary. Although she is one of the Trustees, under Article VIII of the Trust, Mary is precluded from taking part in any discretionary decision to make distributions from the principal of a trust of which she is a beneficiary.

¶ 8. Therese McGuire, John and Mary's eldest daughter, has been estranged from her mother for several years and refused to sign the release because she was concerned that she might not receive a gift equal to those given to her sisters. Instead, Therese requested additional information from the Trustees regarding the amount and management of the Trust assets, including whether Mary had already made gifts to other family members. She also asked for copies of the accountings the Trustees provided to her mother. The Trustees denied much of Therese's request, but did provide her with an accounting of the Trust administration for the years 1993-99. ¶ 9. The Trustees then petitioned the trial court for a finding that Article X of the revocable trust was valid, that the Trustees had fulfilled their obligations under Article X, and that they were released from liability to any beneficiary for the administration of Trust property for the period of January 1, 1993, through December 31, 1999. Further, with respect to future accounts, the Trustees asked to be discharged of any liability to the beneficiaries, present or contingent, if no current or permissive income beneficiary submitted an objection to the accountings within six months of presentation. Therese opposed the petition, arguing that Article X was ambiguous and asking that the court appoint a guardian ad litem to represent the interests of her minor children. She also requested a protective order prohibiting the Trustees from making distributions of the Trust assets until the guardian ad litem had completed an investigation of the administration of the Trust. The trial court granted the Trustees' petition and denied Therese's motions. Therese appeals.

ANALYSIS

I. Application of Article X

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¶ 10. The construction of a testamentary document presents a question of law, which we review de novo. Furmanski v. Furmanski, 196 Wis. 2d 210, 214, 538 N.W.2d 566 (Ct. App. 1995). The same principles of construction, which are applicable to wills and testamentary trusts, also apply to inter vivos trusts. Id. Our obligation is to discern and uphold the settlor's intent. Weinberger v. Bowen, 2000 WI App 264, ¶ 12, 240 Wis. 2d 55, 622 N.W.2d 471. We determine the intent from the language of the document itself, considered in light of the circumstances surrounding the settlor at the time the document was executed. If there is no ambiguity in the language of the document, there is no need to look further to determine the testator's actual intent. Furmanski, 196 Wis. 2d at 215.

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¶ 11. Trustees owe a duty to all trust beneficiaries, including contingent beneficiaries. See Wisconsin Acad. v. First Nat'l Bank of Madison, 142 Wis. 2d 750, 758-59, 419 N.W.2d 301 (Ct. App. 1987). At issue here is whether the Trust provisions can limit the parties entitled to an accounting. Article X addresses the Trustees' obligations with respect to accountings:

After the death of Donor, the Trustees shall deliver copies of accounts at regular intervals to the beneficiaries then eligible to receive the income. If all of these beneficiaries execute a written instrument approving a particular account or if any of them fail within six (6) months after delivery of such account to them to object in writing to such account, the account shall stand approved and the Trustees shall be completely released and discharged with respect to the administration of the Trust property for the period covered by such an account, and neither the Trustees nor any successor shall have any responsibility for such account. If any of the beneficiaries be under a legal disability, the guardian or conservator of his estate or either of the parents of a minor beneficiary for whose estate no guardian has been appointed, may act on his behalf in approving such accounts, and delivery of the accounts to such

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