## Facts

- Thomas I. Stewart used proceeds from a personal injury recovery to fund a ten-year trust administered by Merchants National Bank of Aurora.
- The trust instrument labeled Stewart’s attorney, William C. Murphy, as the “donor,” though Stewart supplied the trust property and was the named beneficiary.
- The trust was expressly “irrevocable” and described as a spendthrift arrangement intended to support Stewart’s rehabilitation and help with home-related expenses.
- If Stewart died during the term, the trustee was to pay estate-related expenses from remaining trust assets and, if Stewart died intestate, distribute any remainder to his “heirs.”
- About three years into the term, Stewart petitioned to revoke the trust and recover the corpus.
- The trial court denied the petition, reasoning that termination required consent of potential heirs, including minors and unborn heirs, whose consent could not be obtained.

## Issues

1. Whether Stewart was the true settlor because he furnished the consideration for the trust, despite the instrument naming Murphy as “donor.”
2. Whether the trust’s death-contingent “heirs” provisions created present beneficial interests requiring their consent to terminate the trust.
3. Whether Stewart, as sole settlor and sole beneficiary, could terminate an “irrevocable” trust before its stated term and before its protective purposes were accomplished.

## Decision

- The appellate court reversed and remanded with directions permitting termination of the trust.
- It held Stewart was the settlor because he provided the trust property.
- It held the “heirs” language did not create present enforceable beneficial interests in heirs.
- It held Stewart could terminate the trust unilaterally as sole settlor-beneficiary, notwithstanding the instrument’s “irrevocable” label and the trust’s protective aims.

## Legal Principles

- The person who supplies the consideration or trust res is treated as the settlor, regardless of formal labels in the trust instrument.
- Provisions directing payment of estate expenses and a remainder to “heirs” upon the beneficiary’s death do not, without clearer intent, create present vested or enforceable equitable interests in those heirs during the beneficiary’s lifetime.
- A trust may be terminated at the direction of a single individual who is both the settlor (in substance) and the sole beneficiary, even if the trust states it is irrevocable and even if the stated purposes are not yet fulfilled.

## Conclusion

Because Stewart funded the trust and was its only present beneficiary, and because the “heirs” clause did not grant others a present beneficial interest, he could revoke the trust and recover the trust property without obtaining consent from potential heirs.


Stewart v. Merchants Nat'l Bank of Aurora, 278 N.E.2d 10 (Ill. App. Ct. 1972)