## Facts

- Robert C. Hynson owned substantial producing oil-and-gas interests.
- In his will, Hynson created the “Robert C. Hynson Marital Deduction Trust” (Trust A) and devised to it all of his interests in oil, gas, and similar minerals, including mineral rights, working interests, and royalty interests, while excluding mineral interests in, on, and under land where he also owned the surface.
- The will directed that “all of the income of the trust” be paid to his wife, Carolyn, during her lifetime.
- The will provided that, after Carolyn’s death, the trust remainder would be divided equally among three groups: (1) Carolyn’s descendants, (2) the descendants of Hynson’s daughter, Julie Jeffries, and (3) the descendants of Hynson’s son.
- After Hynson’s death, the trust received oil-and-gas royalty payments from producing properties.
- Carolyn asserted that, as the life beneficiary entitled to “all income,” she was entitled to all royalty payments; she relied on the will’s income clause, the open-mines doctrine, and Mississippi’s Uniform Principal and Income Law (UPIL).
- John L. Jeffries, a trustee, took the position that royalties should be treated as corpus for the remaindermen, invested, and that Carolyn was entitled only to the interest earned on those investments.
- The chancery court agreed with the trustee’s approach, held the UPIL inapplicable, and ruled Carolyn could receive only interest on invested royalties; Carolyn appealed.

## Issues

1. Did the chancery court err by refusing to apply Mississippi’s Uniform Principal and Income Law to the trust’s oil-and-gas royalty receipts on the ground that the will’s language and common-law doctrines supplied the allocation rule?
2. If the UPIL applies, must the royalty receipts be allocated between principal and income under the statute (including the statutory depletion allowance), rather than being treated entirely as principal with only investment interest payable to the life beneficiary?

## Decision

- Reversed and remanded.
- The Court of Appeals held the chancellor erred in concluding the UPIL did not apply to the trust.
- Because the will did not contain “contrary terms” that expressly displaced the UPIL’s allocation rules, the UPIL governed the classification of royalty receipts.
- Under the UPIL provision applicable to royalties, 27.5% of gross royalty receipts must be allocated to principal as an allowance for depletion, and the balance treated as income payable to the life beneficiary.
- The chancery court’s approach—treating all royalties as principal and limiting the life beneficiary to interest on invested royalties—was inconsistent with the statutory scheme.

## Legal Principles

- Mississippi’s Uniform Principal and Income Law applies to trust administration “in the absence of any contrary terms in the trust instrument.”
- A general direction that a spouse receive “all income” does not, by itself, constitute a contrary term that overrides the UPIL’s specific rules for allocating mineral receipts.
- When the UPIL governs, oil-and-gas royalties are divided by statute: 27.5% of gross royalty receipts is allocated to principal as a depletion allowance, with the remainder allocated to income.
- Common-law doctrines (including waste and open-mines rules) do not control principal-and-income allocations when the legislature has supplied a statutory allocation method and the governing instrument does not clearly provide a different method.
- A will’s stated intent to create a marital-deduction trust supports administering the trust in a manner that pays the spouse the income to which state law entitles her, unless the instrument clearly directs otherwise.

## Conclusion

The Mississippi Court of Appeals held that the Uniform Principal and Income Law governed the allocation of the trust’s oil-and-gas royalty receipts because the will did not clearly provide a different allocation method, and it required the statutory split of royalties between principal (including the 27.5% depletion allowance) and income payable to the surviving spouse.


Hynson v. Jeffries, 697 So.2d 792 (1997)