Downs v. Binns

When a trust states it becomes irrevocable upon the death of “a Grantor,” it becomes irrevocable upon the death of either grantor.

The defendant and her late husband, Dean, created a trust in 2007, naming their son, Dino, as the sole beneficiary. If Dino passed away before the trust was dispersed, then the entirety of the estate would go to their nephew, the plaintiff. Provision 2.1 of their trust states that, “upon the death or incapacity of a Grantor, this Trust becomes irrevocable.” In 2008, Dean passed away and in 2009, Dino passed away unexpectedly. After Dino’s passing, the defendant attempted to change the beneficiaries of the trust multiple times. Plaintiff brought this action seeking to remain the beneficiary should he outlive the defendant. The trial court found for the defendant. The plaintiff appealed.

On appeal the defendant again argues that trust provision 2.1’s “a grantor” is ambiguous and that it “could plausibly mean both grantors,” which would allow the trust to be revocable or changeable until her death. She also argues that ORS 130.225, which allows the modification of a trust to further the grantor’s tax purposes and ORS 130.205, which allows modification in light of unforeseen circumstances, permit the court to modify the trust.

The Court of Appeals disagreed with the defendant on both issues. They reasoned that “a grantor,” was intended to mean only one of the grantors of the trust and that there was no ambiguity in the language. The court also reasoned that the ORS provisions were inapplicable here and that modification under ORS 130.225 would do exactly what the provision protects against. They also reasoned that the unforeseen death of Dino was not the type of unanticipated circumstance anticipated under ORS 130.205. The Oregon Court of Appeals reversed and remanded the decision, holding that the trust unambiguously provides for the trust to become irrevocable upon the death of either grantor and that the trial court lacked authority under ORS 130.225 and ORS 130.205 to modify the trust agreement.