I.
FACTUAL AND PROCEDURAL HISTORY
The
issues raised in this appeal involve the administration of a
testamentary generation-skipping exempt trust established
under the last will and testament of John E. Sullivan
("Testator").[2] The relevant background facts are not
disputed.
In
April 2005, Testator executed a will that contained specific
gifts of tangible personal property and directed that the
residuary of his estate be allocated to marital and family
trusts if his wife survived him, and to the family trust
should his wife not survive him. The family trust established
under Article Seven of Testator's will provides, in
relevant part:
Upon the death of the last to die of my spouse and me (the
"division date"), the trustee shall allocate the
remaining principal of all trusts then held under this
instrument, which is not otherwise effectively disposed of,
among as many separate equal trusts as shall be necessary to
establish one trust named for each child of mine who is
either living on the division date or then deceased leaving
one or more descendants then living. Each GST Exempt Trust
named for a child of mine that is created pursuant to the
provisions of this paragraph and the GST administration
provisions of this instrument, or was created under Article
Five, shall be administered as provided in Article Eight of
this instrument. Any trust named for any of my children that
is not GST Exempt shall be designated "non-exempt and
shall be administered as provided in Article Nine of this
instrument.
Article Eight provides:
Any GST Exempt Trust named for any child of mine shall be
administered as follows:
A. Commencing as of the division date, the trustee shall
distribute to any one or more of my child and my child's
descendants living at the time of the distribution as much of
the net income and principal of the trust, even to the extent
of exhausting principal, as the trustee determines from time
to time to be required for the health, education, maintenance
and support of my child and my child's descendants;
provided, however, that:
1. The trustee shall add any undistributed net income to
principal from time to time, as the trustee determines;
2. My primary concern during the period described in this
paragraph is to preserve trust principal for ultimate
distribution to the child's descendants while at the same
time reasonably providing for the health, education,
maintenance and support of the child and the child's
descendants;
3. No distribution made under this paragraph to a descendant
of the child shall be charged as an advancement; and
4. The trustee may make unequal distributions to the
beneficiaries or may at any time make a distribution to fewer
than all of them, and shall have no duty to equalize those
distributions.
B. If the child for whom the trust is named is living on the
division date, then upon the death of the child, the trustee
shall distribute the remaining principal of the trust to such
one or more of my descendants as the child may appoint by
will.
C. At such time at or after the death of the child for whom
the trust is named, or, if later, the division date, the
trustee shall distribute the principal of the trust not
otherwise effectively disposed of in equal shares to the then
living descendants of the child per stirpes or if none to my
then living descendants per stirpes, and each share shall be
held in a separate trust and administered as set forth in
Article Ten, paragraph B.
Article
Ten provides, in relevant part:
B. Despite the preceding provisions of this instrument, upon
termination of any trust at the end of its stated term under
this instrument:
1. Principal which is not effectively appointed and is
otherwise distributable to a beneficiary for whom a trust
then held hereunder is named shall be added to that trust;
and
2. The trustee shall withhold any principal which is not
effectively appointed and is otherwise required to be
distributed to a beneficiary not covered by subparagraph 1 of
this paragraph, who has not attained the age of forty (40)
years or is disabled. The trustee shall retain any principal
so withheld in a separate trust named for that beneficiary,
to be administered as follows: a. The trustee shall
distribute to the beneficiary as much of the net income and
principal of the trust, even to the extent of exhausting
principal, as the trustee determines from time to time to be
required for the health, education, maintenance and support
of the beneficiary.
b. The trustee also shall distribute to the beneficiary if
the beneficiary has attained the age of thirty (30) years,
such amounts of the principal of the trust as the beneficiary
may from time to time request by written instrument delivered
to the trustee during the life of the beneficiary, but until
such time as the beneficiary has attained the age of
thirty-five (35) years, the beneficiary may not request more
than one-half (1/2) in value of the principal of the trust
determined as of the date the beneficiary has attained the
age of thirty (30) years.
c. The trustee also shall distribute to the beneficiary if
the beneficiary has attained the age of thirty-five (35)
years, such amounts of the principal of the trust as the
beneficiary may from time to time request by written
instrument delivered to the trustee during the life of the
beneficiary, but until such time as the beneficiary has
attained the age of forty (40) years, the beneficiary may not
request more than one-half (1/2) in value of the principal of
the trust determined as of the date the beneficiary has
attained the age of thirty-five (35) years.
d. The trustee also shall distribute to the beneficiary if
the beneficiary has attained the age of forty (40) years,
such amounts of the principal of the trust, even to the
extent of exhausting the principal, as the beneficiary may
from time to time request by written instrument delivered to
the trustee during the life of the beneficiary, even to the
extent of exhausting principal, and upon distribution of all
trust assets, the trust shall terminate.
e. Upon the death of the beneficiary for whom the trust is
named before withdrawal of the entire balance or complete
distribution of the trust, or on the division date if that
occurs after the death of the child, the trust shall
terminate and the trustee shall distribute the principal of
the trust as follows:
(1) If the child is living on the division date, to such one
or more of the child's descendants as the child may
appoint by will; or
(2) In default of effective appointment, in equal shares to
the then living descendants of the child, per stirpes, or, if
none, to my then living descendants, per stirpes and each
share shall be held in a separate trust and administered as
set forth in this paragraph B.
Testator
died in August 2019. In October 2019, the generation-skipping
exempt trust ("the Trust") established for one of
Testator's children, John E. Sullivan Jr. (Mr. Sullivan),
received its first distribution from Testator's estate.
In 2020, Mr. Sullivan made several distributions from the
Trust to his children, Frank G. Sullivan ("FGS")
and John E. Sullivan, III ("JES"), and in May 2020
Mr. Sullivan appointed David M. Sullivan as cotrustee and
successor trustee of the Trust. Mr. Sullivan died in November
2020, and David M. Sullivan ("Trustee") assumed
duties as the sole trustee. JES was 35 years of age when Mr.
Sullivan died; FGS was 33. They each had one minor child
(collectively, "the greatgrandchildren").
In
August 2021, Trustee filed a complaint for declaratory
judgment against FGS and JES (together,
"Appellees") in the Probate Court for Shelby
County. In his complaint, Trustee asserted that the
controversy between the parties concerned:
(1) [Appelees'] entitlement to immediate distributions of
trust principal; (2) the withholding of distributions to
[Appellees] who are disabled; (3) the share of the trust
principal that [Appellees'] two minor children are
entitled to receive and whether a guardian ad litem
should be appointed for them; and (4) what reports, if any,
the trustee must give to [Appellees] when the trust
instrument provides (a) the trustee in his sole discretion
shall make accountings to beneficiaries when he deems
advisable, and (b) the trustee is not required to make any
current reports or accountings to any court or beneficiaries.
Trustee
prayed for a declaratory judgment as to four counts:
