Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.

If court feels the purpose of trust is prevented by restrictions it can make changes.

The Wills, Trusts & Estates Prof Blog recently published an article on a court’s right to ease restrictions placed on a trust that can defeat its purpose in “Rockefeller University Wins Legal Battle Over Will Restrictions.”

James P. Martin of New York created a testamentary trust in his will that named specific income beneficiaries. When the last of those beneficiaries passed away, the trust was to be dissolved and a new trust created that gave the remaining principle to Rockefeller University for the purposes of combating arteriosclerosis.

The university took control of the funds in 2007.

The will included many restrictions on how the university could invest the funds in the trust. There were restrictions about what stocks could be sold and what type of securities could be purchased. The result was that the trust investments severely underperformed the market and the university’s general endowment.

The university petitioned the court to ease the restrictions, which the court agreed to do.

This was a fairly straightforward case as some of the corporate stock not to be sold was in companies that no longer existed and many of the restrictions clashed with modern portfolio theory.

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