## Facts

- Lotta M. Crabtree died in 1924 and left a will creating multiple charitable trusts; seven remained active during the litigation.
- Each trust was a separate entity with distinct charitable purposes and was administered by professional trustees.
- The largest trust, the Lotta Agricultural Fund (loan fund), directed trustees to (1) make interest-free loans to certain graduates pursuing agriculture and (2) distribute remaining income semiannually as financial aid to current students.
- In 1987, without court approval and contrary to the loan fund’s terms, the trustees created the “Lotta M. Crabtree Endowment,” funded with assets from the loan fund and administered by the University of Massachusetts Foundation.
- The endowment did not follow the will’s distribution scheme, including by failing to make the required semiannual distributions of trust income and using only part of the funds for student aid.
- The trustees used the loan fund as an “operating account” for all seven trusts: it paid administrative expenses and trustee fees for all trusts; other trusts reimbursed it at year end for expenses other than trustee fees, without interest.
- A guardian ad litem challenged the trustees’ administration and compensation as breaches of fiduciary duty and sought remedies.
- The Probate and Family Court found breaches, removed the trustees, and imposed a surcharge for excessive fees; the Appeals Court affirmed.

## Issues

1. Whether trustees breached fiduciary duties by deviating from the charitable trust terms, including by creating and funding an external endowment without court approval.
2. Whether trustees breached fiduciary duties by using one trust as an operating account for multiple separate trusts and allocating expenses and fees in a manner disadvantaging that trust.
3. Whether the trustees’ compensation was excessive and warranted a surcharge.
4. Whether the breaches justified removal of the trustees.

## Decision

- The Supreme Judicial Court of Massachusetts affirmed the findings that the trustees breached fiduciary duties in administering the charitable trusts.
- The court concluded the trustees improperly departed from the will’s terms by creating and funding the endowment without judicial authorization and by failing to comply with required income distributions.
- The court held that using the loan fund as an operating account for the other trusts, including shifting trustee-fee burdens to it, was improper given the separate identities and purposes of the trusts.
- The court affirmed the determination that trustee fees were excessive and upheld a surcharge (with adjustments described in the opinion).
- The court sustained removal of the trustees as an appropriate remedy given the seriousness and persistence of the departures from the donor’s instructions.

## Legal Principles

- Charitable trusts must be administered to carry out the donor’s intent as nearly as possible, and trustees must follow explicit trust terms absent court-authorized deviation.
- Trustees may not unilaterally restructure or redirect charitable trust administration in ways inconsistent with the instrument; material changes require judicial approval.
- Cy pres and equitable deviation are implemented through court supervision when compliance becomes impossible or impracticable; trustees cannot invoke these doctrines by self-help.
- When multiple trusts exist, trustees must respect each trust’s separate identity and act loyally and impartially; shifting expenses or fee burdens to one trust for administrative convenience can constitute a breach.
- Trustee compensation in charitable trusts must be reasonable and fairly allocated; excessive or improperly allocated fees may be surcharged to restore charitable assets.
- Removal of trustees is warranted when substantial, continuing breaches show disregard for the trust terms and threaten proper administration of charitable funds.

## Conclusion

The court enforced strict fidelity to charitable trust terms, holding that trustees who materially deviate without court approval, misallocate costs among separate trusts, and charge excessive fees may be surcharged and removed to protect donor intent and charitable purposes.


In re the Trusts Under the Will of Lotta M. Crabtree, 449 Mass. 128, 865 N.E.2d 1119 (Mass. 2007)