## Facts

- A revocable trust created in 1934 was funded largely with shares of a holding company that controlled Carnation, reflecting an intent to provide for descendants while preserving family influence over the business holdings.
- The trust paid income to beneficiaries and permitted invasion of principal only if trust income was insufficient to provide properly for a beneficiary’s “support, maintenance, benefit and education,” and only with trust-advisor approval.
- The trust structure included protective features to avoid forced stock sales, including a direction to consider borrowing before selling shares.
- Dwight Lyman Stuart, a grandson of the settlor, served both as a beneficiary and as one of two trust advisors; the other advisor was Jane S. Whitman.
- Dwight requested an invasion of principal of approximately $4.5 million to purchase a private jet for his personal use.
- Whitman refused to approve the request, and the trustee, Wilmington Trust Company, declined to proceed without court guidance.
- The trustee and Whitman sought instructions in the Court of Chancery on (i) whether the trust permitted the requested principal invasion and (ii) whether Dwight could participate as an advisor in approving an invasion for his own benefit.
- The Chancellor ruled that (i) “benefit” did not authorize a non-necessary invasion unrelated to the support/maintenance/education standard and (ii) Dwight was disqualified from acting as an advisor on a request that would directly benefit him.
- Dwight appealed.

## Issues

1. Whether the invasion-of-principal clause allowing invasion when income is insufficient for the beneficiary’s “support, maintenance, benefit and education” permits an invasion solely for the beneficiary’s personal “benefit” without a showing of need.
2. Whether a beneficiary who is also a trust advisor may act and vote in that fiduciary capacity to approve an invasion of principal for his own personal advantage.

## Decision

- The Delaware Supreme Court affirmed the Court of Chancery’s judgment.
- The Court held the trust did not authorize the requested invasion of principal absent a showing that income was insufficient to provide properly for the beneficiary under the trust’s support/maintenance/benefit/education standard.
- The Court held Dwight was disqualified from acting and voting as trust advisor on the proposed invasion because of his direct self-interest.
- The Court noted prospectively that different facts might present circumstances where a beneficiary-advisor would not necessarily be disqualified, but no such circumstance was shown here.

## Legal Principles

- A trust provision permitting invasion of principal when income is insufficient to provide properly for a beneficiary’s “support, maintenance, benefit and education” is construed as a conjunctive, needs-based limitation; “benefit” is not an unlimited authorization for discretionary luxury expenditures.
- Trust terms are interpreted in light of the settlor’s overall plan, including structural protections designed to preserve key trust assets and the trust’s long-term purposes.
- A person exercising trust-approval powers as a trust advisor acts in a fiduciary capacity and is generally barred from participating in a decision that constitutes self-dealing, such as approving a distribution of principal for the fiduciary’s own direct personal advantage.

## Conclusion

The court enforced a needs-based reading of a support/maintenance/benefit/education invasion standard and refused to treat “benefit” as a standalone license for discretionary spending; it also barred a beneficiary serving as trust advisor from voting on an invasion of principal sought for his own personal purchase.


Stuart v. Wilmington Tr. Co., 474 A.2d 121 (Del. 1984)