## Facts

- Jennie Shire executed a 1947 will creating a trust funded with $125,000 and directing fixed monthly payments of $500 to her daughter (Ruth) for life, then to her granddaughter (Shirley) for life after Shirley reached age 25.
- The will provided that upon the death of the survivor of Ruth and Shirley, the remaining trust assets would be added to the residuary estate and distributed to designated individual and charitable beneficiaries.
- Shire died in 1948; Ruth received $500 per month until her death in 1983; Shirley thereafter received $500 per month.
- By 2016, the trust principal had grown to about $981,874.58, with expected annual return (before fees and taxes) estimated at roughly $64,000 to $81,000.
- Evidence showed inflation had substantially reduced the real value of the $500 payment since 1948; Shirley had limited income and minimal savings aside from the trust distribution.
- The trustee identified multiple remainder beneficiaries and requested appointment of counsel to represent any unknown or undiscovered heirs who might take under the residuary clause.
- Counsel for the unknown/undiscovered heirs opposed increasing Shirley’s monthly payment; the other identified beneficiaries and the Attorney General (for charitable beneficiaries) participated.

## Issues

1. Whether the trust could be modified under Neb. Rev. Stat. § 30-3837 based on beneficiary consent when not all beneficiaries consented, and whether nonconsenting beneficiaries’ interests would be adequately protected.
2. Whether inflation and substantial growth of the trust corpus constituted circumstances “not anticipated by the settlor” authorizing modification under Neb. Rev. Stat. § 30-3838.
3. Whether a modification could be justified under the common-law doctrine of deviation when that theory was not presented to or ruled on by the county court.

## Decision

- The Nebraska Supreme Court affirmed the county court’s denial of the petition to increase Shirley’s monthly payments.
- The court held modification was not authorized under § 30-3837 because not all beneficiaries consented and the interests of nonconsenting beneficiaries, including unknown/undiscovered heirs, were not adequately protected.
- The court held § 30-3838 did not apply because the asserted changes (inflation and trust growth) did not qualify as unanticipated circumstances warranting alteration of the settlor’s distribution plan.
- The court declined to consider common-law deviation because it was not raised and decided in the county court.

## Legal Principles

- Trust modification by consent under Neb. Rev. Stat. § 30-3837 generally requires consent of all beneficiaries; absent unanimous consent, a court may approve modification only if it could have been approved with unanimity and nonconsenting beneficiaries’ interests are adequately protected.
- A proposed modification that materially reduces the remainder available to nonconsenting beneficiaries may fail the “adequate protection” requirement, including where those beneficiaries are future, unknown, or undiscovered.
- Under Neb. Rev. Stat. § 30-3838, modification for unanticipated circumstances requires a showing that circumstances not anticipated by the settlor make modification necessary to further the trust’s purposes; inflation and investment growth alone may be insufficient when the trust’s structure indicates an intent to preserve a substantial remainder for residuary beneficiaries.
- Appellate courts generally will not decide a modification theory not presented to and ruled on by the trial court.

## Conclusion

The court enforced the trust’s fixed-payment scheme and refused to increase lifetime distributions where unanimity was lacking and the proposed change would impair nonconsenting remainder interests, including potential unknown heirs, and where the asserted economic changes did not satisfy the statutory standard for unanticipated circumstances.


In re Trust of Shire, 299 Neb. 25, 907 N.W.2d 263 (Neb. 2018)