## Facts

- A decedent created an irrevocable testamentary trust (“Trust D”) for his daughter, providing fixed annual payments in monthly installments, payable first from income and then from principal if income was insufficient.
- A codicil increased the trust’s funding and doubled the daughter’s annual distribution; it also set fixed lifetime annual distributions for the daughter’s three children after the daughter’s death, with remainder to each child’s issue per stirpes.
- The trust included a spendthrift-type restriction preventing beneficiaries from transferring or encumbering trust interests before actual receipt.
- By 2009, the daughter asserted the trust was her sole income and inadequate for basic living expenses.
- The daughter petitioned to modify the trust to (1) increase her annual distribution and (2) redirect the remaining trust assets at her death to taxing authorities to pay anticipated estate and generation-skipping transfer taxes.
- All qualified beneficiaries consented to the proposed modifications.
- The district court approved the modifications under Kansas trust-code provisions addressing beneficiary-consented modification, unanticipated circumstances, and tax-objective modification.
- The daughter appealed to obtain a decision from the state’s highest court for federal tax purposes.

## Issues

1. Whether unanimous beneficiary consent permitted modification of an irrevocable, noncharitable trust when the changes would be inconsistent with a material purpose of the trust.
2. Whether the daughter’s financial circumstances constituted unanticipated circumstances justifying modification that would further the trust’s purposes.
3. Whether tax-motivated modifications were authorized when the proposed changes materially altered the trust’s dispositive plan for later generations.

## Decision

- The Kansas Supreme Court reversed the district court’s order approving the modifications.
- The court held the proposed changes were inconsistent with the trust’s material purposes, including controlled distributions, preservation of principal for later generations, and spendthrift protections.
- The court concluded the modification statutes cited by the district court did not authorize the requested increase in distributions and redirection of the remainder for tax payments under these facts.

## Legal Principles

- A court may not modify a noncharitable irrevocable trust based solely on unanimous beneficiary consent if the modification is inconsistent with a material purpose of the trust.
- Modification for unanticipated circumstances requires circumstances not contemplated by the settlor and a change that furthers, rather than rewrites, the settlor’s intended trust purposes.
- Tax-objective modification is permitted only to the extent it is consistent with the settlor’s probable intent; anticipated tax savings cannot justify changes that defeat the trust’s core dispositive structure.
- When a modification is pursued to affect federal tax consequences, the state’s highest court must independently apply state law and determine the settlor’s intent; party agreement and a lower-court decree do not substitute for that determination.

## Conclusion

The court disapproved beneficiary-consented, tax-motivated modifications that would substantially increase the primary beneficiary’s payments and divert the remainder away from descendants, holding that Kansas trust-modification statutes cannot be used to override the trust’s material purposes and multigenerational plan.


In re Trust D Created Under Last Will & Testament of Darby, 234 P.3d 793 (Kan. 2010)