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Factual Background:

The Michael H. Brams Trust #2 was created under the Last Will and Testament of Harriet Brams.  Mrs. Brams died in 2002.  Pursuant to the will, the Mr. Bram, as Trustee of the Brams Trust #2 was granted testamentary power of appointment. In 2005 Mr. Brams filed a petition seeking to terminate the Trust, claiming that the power of appointment provided to him under the trust provided him the right and power to represent the Trust beneficiaries, both ascertained and unascertained, and provided him the power to unilaterally seek termination. All beneficiaries and contingent remaindermen of the trust consented to the termination, except Loren Abel a decendant of Harriet Brams.  The Circuit Court of Jackson County, Forsyth, J., agreed, holding that the proper reading of MUTC §§ 456.3-301.2 and 456.3-302 created an ambiguity and provided the party holding power of appointment to represent all trust beneficiaries except whose interests could not be extinguished by the power of appointment.  So holding, the Circuit court reasoned that the interests of both Ms. Abel’s and all unascertained and unborn remaindermen could be extinguished by Mr. Bram’s power of appointment, and he could therefore represent their interests with regard to the trust termination.

On Appeal:

1. A literal reading of the language of MUTC §456.3-301.2 unambiguously provides that a party holding power of appointment may represent all trust beneficiaries except whose interests could not be extinguished by the power of appointment unless the person being represented objects to the representation in a timely fashion.  The ability to object and defeat virtual representation is not limited to persons holding “protectable interests” in trust property.
2. Even where unascertained and unborn remaindermen are virtually represented by a trustee holding testamentary power of appointment, the trustee must still show that the unascertained and unborn beneficiaries will benefit from termination of the trust—whether virtually represented or not, the petitioner must show the benefit of termination to these unascertained and unborn parties.

Rationale:

The trial court improperly found that MUTC §§ 456.3-301.2 and 456.3-302 created an “illogical and absurd result” and, in the mind of the trial court, provided a basis to examine the case beyond the wording of the statute itself.  Rather, the wording of §456.3-301.2 is clear and unambiguous in that it forbids virtual representation where a beneficiary or remainderman has timely filed an objection to said representation.  The trial court’s examination of the MUTC beyond the plain language of §456.3-301.2 was improper because of the clarity of this Section.  Here, Ms. Abel explicitly objected to termination of the trust, and this fact was conceded by Mr. Brams in his petition, and by the trial court itself.  By stating such an objection, this barred Mr. Bram from representing Ms. Abel with regard to termination of the Trust (the court left it to the trial court on remand to determine whether Ms. Abel had in fact interposed a timely and effective objection barring Mr. Brams representation of her interests).

The trial court also improperly held that Mr. Bram’s testamentary power of appointment eliminated his need to present evidence that termination of the Trust was in the best interest of unborn and unascertained beneficiaries.  MUTC §456.590.2 draws a clear distinction between the consent of non-disabled adult trust beneficiaries (which is self executing without court action or inquiry) and the consent of unascertained and unborn beneficiaries and remaindermen.  By drawing this distinction, §456.590.2 clearly indicates that, unlike non-disabled adult beneficiaries, the consent of unborn and unascertained beneficiaries and remaindermen must be provided through affirmative action of the court.  As a result, the mere consent to trust termination of unborn and unascertained beneficiaries gained through virtual representation does not obviate the need for a petitioner to show that those beneficiaries will be benefited by the trust termination.