Hoggan v. Hoggan

2007 UT 78
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
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John E. Hoggan a.k.a. Jack E. No. 20051104
Hoggan,
Plaintiff, Appellant, and
Counterclaim Defendant,
v.
William E. Hoggan, Trustee;
William E. Hoggan; and Bonnie
Jilene Weber, F I L E D
Defendants, Appellees, and
Counterclaim Plaintiffs. October 5, 2007
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Third District, Salt Lake
The Honorable Glenn Iwasaki
No. 020912454
Attorneys: J. Jay Bullock, Clinton J. Bullock, Karen Bullock
Kreeck, Salt Lake City, for plaintiff
Matthew C. Barneck, Brian C. Webber, Steven W. Call,
Salt Lake City, for defendants
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PARRISH, Justice:
INTRODUCTION
¶1 Shortly before she passed away, Leona Hoggan (“Leona”)
amended a trust that she had created some fifteen years earlier.
The amendment provided that, upon Leona’s death, her son John
Hoggan (a.k.a. “Jack”) would be forgiven a loan Leona made to
him, rather than receiving a one-third interest in the trust
property. Jack asserts that the language of the trust document
did not authorize Leona to effect such an amendment. We
disagree. Under our previous interpretations of very similar
trust language in Banks v. Means, 2002 UT 65, 52 P.3d 1190, and
Flake v. Flake (In re Estate of Flake), 2003 UT 17, 71 P.3d 589,
Leona retained the power to modify Jack’s interest.
BACKGROUND

No. 20051104 2
¶2 Leona executed the original trust document in 1987.
Under the terms of the trust, the trust property was to be used
for Leona’s benefit during her lifetime. Upon her death, the
trust property was to be distributed equally among her three
children--Jack, Bonnie Weber (“Bonnie”), and William Hoggan
(“William”). Article XI of the trust, entitled “Revocation and
Amendment,” provides: “As long as the Undersigned is alive, she
reserves the right[] to amend, modify, revoke, or remove from
this Trust any and all property that she has contributed, in
whole or in part, including the principal, and the present or
past undisbursed income from such principal.” This section also
contains the following sentence: “The interest of the
beneficiaries is a present interest which shall continue until
this Trust is revoked or terminated other than by death.”
¶3 In 2002, Leona signed an amendment to the trust that
modified the allocation of the trust property upon her death.
Under the amended distribution scheme, William was to receive an
automobile, while the remainder of the trust property was to be
either divided between William and Bonnie or transferred to the
survivor of the two. As his only share of the trust property,
Jack was to be forgiven any remaining indebtedness he owed to
Leona at the time of her death. Leona passed away two months
after executing the amendment.
¶4 Later that same year, Jack filed suit against William
and Bonnie individually and against William in his capacity as
trustee. The lawsuit sought to invalidate the amendment under
various theories. Specifically, Jack asserted that the amendment
was the result of undue influence on the part of William and that
Leona suffered from diminished capacity. Jack also sought to
invalidate the amendment and reform the trust documents under the
theory that the amendment violated the terms of the trust. Jack
subsequently filed a motion for partial summary judgment under
the latter theory. William and Bonnie then filed cross-motions
for partial summary judgment, arguing that the second amendment
was valid or, in the alternative, that the terms of the trust
should be reformed to reflect Leona’s intent.
¶5 In a memorandum decision, the district court ruled that
the amendment was valid and that William and Bonnie were
therefore entitled to partial summary judgment. William and
Bonnie then submitted to the district court proposed findings of
fact and conclusions of law. Jack objected on the basis that the
proposed factual findings and legal conclusions exceeded the
scope of the issues addressed in the district court’s memorandum
decision. The district court overruled Jack’s objections and

3 No. 20051104
entered an order consistent with William and Bonnie’s proposed
findings and conclusions.
¶6 The parties stipulated that Jack’s claims of undue
influence and reduced capacity would be dismissed with prejudice
so that the partial summary judgment would become final and
appealable. Jack now appeals the partial summary judgment.
STANDARD OF REVIEW
¶7 “On summary judgment, we review the [district] court’s
legal conclusions for correctness.” Quaid v. U.S. Healthcare,
Inc., 2007 UT 27, ¶ 8, 158 P.3d 525. So long as a court confines
its analysis to the language of the trust instrument and does not
resort to extrinsic evidence of intent, the interpretation of a
trust is an issue of law. See Kimball v. Campbell, 699 P.2d 714,
716 (Utah 1985) (“A contract’s interpretation may be either a
question of law, determined by the words of the agreement, or a
question of fact, determined by extrinsic evidence of intent.”).
Because we restrict our review in this case to the language of
the trust instrument, we cede no deference to the district court.
ANALYSIS
¶8 Jack has raised two challenges to the summary judgment
entered by the district court. First, he argues that the
district court erred in concluding that the 2002 amendment was
valid. Second, he asserts that the court erred when it entered
findings of fact and conclusions of law that exceeded the
findings and conclusions articulated in its initial memorandum
decision.
I. VALIDITY OF THE 2002 AMENDMENT
¶9 “Absent fraud or mistake, a settlor ‘has the power to
modify a trust only if and to the extent that such a power was
reserved by the terms of the trust.’” Flake v. Flake (In re
Estate of Flake), 2003 UT 17, ¶ 13, 71 P.3d 589 (quoting Kline v.
Utah Dep’t of Health, 776 P.2d 57, 61 (Utah Ct. App. 1989));
accord Banks v. Means, 2002 UT 65, ¶ 9, 52 P.3d 1190; Restatement
(Second) of Trusts § 331 (1959). We accordingly begin by
analyzing the terms of the trust to determine whether Leona
reserved the right to amend the trust document. Because we find
that she did, we then examine the scope of her authority to amend
the trust and whether she exceeded any limitations placed upon
that power.
¶10 Leona retained a broad grant of authority to amend the
trust. Article XI of the trust instrument provides: “As long as

1 The analogous Flake trust language read:
As long as the Undersigned is alive, he
reserves the right, without the consent or
approval of any other, to amend, modify,
revoke, or remove from this Trust the
property that he has contributed, in whole or
in part, including the principal and the
present or past undisbursed income from such
principal.
2003 UT 17, ¶ 14.
2 Language asserting that beneficiaries have a “present
interest” or a “presently vested interest” in a trust has
apparently become common within trusts drafted in Utah. We
suspect that drafters include such language with the intent of
warding off potential challenges to the trust on grounds that it
is illusory. See Banks, 2002 UT 65, ¶¶ 12-13. Unfortunately,
such phrases have been the focus of recent litigation and have
the potential to produce results not within the contemplation of
the drafters of trusts or their clients. Indeed, the potential
for confusion is great because in many living trusts, like the
one at issue here, the beneficiaries have no immediate right of
possession or enjoyment of the trust property. In such
instances, the insertion of language proclaiming that the
beneficiaries have a “present interest” simply contradicts the
(continued...)
No. 20051104 4
the Undersigned is alive, she reserves the right[] to amend,
modify, revoke, or remove from this Trust any and all property
that she has contributed, in whole or in part, including the
principal, and the present or past undisbursed income from such
principal.” Under a literal reading of the trust language, the
object of the phrase “to amend, modify, [and] revoke” is the
trust property, rather than the trust instrument. This reading
is nonsensical, however, because one does not typically amend,
modify, or revoke property, but rather, written legal documents.
In interpreting nearly identical trust language in Flake, 2003 UT
17, ¶ 14,1 we eschewed this rather odd literal reading and
interpreted the language to mean that the settlor had reserved
the right to amend, modify, or revoke the trust. Consistent with
this precedent, we hold that Leona retained the right to amend
the trust instrument.
¶11 Her power to amend the trust, however, was
circumscribed. Article XI of the trust also states, “The
interest of the beneficiaries is a present interest which shall
continue until this Trust is revoked or terminated other than by
death.”2 In Banks, we held that very similar trust

2 (...continued)
operative terms of the trust. See Black’s Law Dictionary 816
(7th ed. 1999) (defining a present interest as “[a] property
interest in which the privilege of possession or enjoyment is
present and not merely future; an interest entitling the holder
to immediate possession”). Similarly, trusts in which the
settlor retains the right to amend or revoke the instrument do
not convey “presently vested rights” to beneficiaries because
their interests are contingent upon the settlor not amending or
revoking the trust. See id. at 1557 (defining the term “vested”
as a “consummated right for present or future enjoyment; not
contingent; unconditional; absolute”).
The impetus for including such phrases within trust
agreements appears to originate, unfortunately, from our holding
that a trust is invalid unless the beneficiary’s interest vests
during the settlor’s lifetime. Alexander v. Zion’s Sav. Bank &
Trust Co., 273 P.2d 173, 174 (Utah 1954), aff’d on reh’g, 287
P.2d 665 (Utah 1955). But see Restatement (Second) of Trusts
§ 59 cmt. c (1959) (“A provision in the terms of the trust under
which interests of the beneficiaries do not vest until a future
time is not invalid unless such interests may not vest within the
period of the rule against perpetuities . . . .”). In an
apparent effort to uphold prior precedent while at the same time
avoiding the invalidation of countless trusts intended to serve
as substitutes for wills, we later said that such trusts created
vested interests that were subject to divestment. Horn v. First
Sec. Bank of Utah, N.A., 548 P.2d 1265, 1267 (Utah 1976).
Although the term “vested interest subject to divestment” is more
of an oxymoron than a meaningful legal term, over the decades
this phrase has been used by this court to uphold trusts in which
the beneficiaries’ interests were not vested under the
traditional meaning of the term. See Banks, 2002 UT 65, ¶ 13;
Groesbeck v. Groesbeck (In re Estate of Groesbeck), 935 P.2d
1255, 1257-58 (Utah 1997).
We hereby disavow the use of this phrase and the antiquated
and now widely discredited rule articulated in Alexander that
gave rise to it. We agree with the analysis of the Restatement
(Third) of Trusts, which advocates the abandonment of such
confusing and disingenuous terminology in favor of an open
recognition that there is no requirement that a beneficiary’s
interest be either present or vested:
Issues are obscured and litigation invited by
confusing or unsound dicta often found in
opinions that attempt to explain why
something is or is not a present trust.
Asking whether something is a “trust” or a
(continued...)
5 No. 20051104

2 (...continued)
“mere agency” is at best question begging.
So is the suggestion in many opinions that,
in order to uphold a disposition, a court
must find a “present” or “vested” interest in
one or more beneficiaries other than the
settlor; in fact these statements are untrue
unless they mean, simply, “presently
existing” interests. And assertions that a
settlor must relinquish “dominion and
control” over the property are merely
erroneous dicta.
These statements confuse the issue, and
maybe the reader, ignoring the reality that
these very courts regularly and properly find
valid trusts where settlors have retained
complete control, and where the other
beneficiaries usually, if drafting is
competent, have only future interests that
are not only defeasible (by revocation or
amendment) but also “contingent” upon
surviving the settlor and maybe other events
as well . . . .
Restatement (Third) of Trusts § 25 reporter’s notes, cmt. b
(2003).
3 The analogous Banks trust language read: “The interests
of the beneficiaries are presently vested interests subject to
divestment which shall continue until this Trust is revoked or
terminated other than by death.” 2002 UT 65, ¶ 4.
No. 20051104 6
language3 required “a complete revocation . . . to divest the
beneficiaries of their vested interests.” 2002 UT 65, ¶ 12. In
accordance with this interpretation of the trust language, we
invalidated an amendment to the Banks trust that completely
divested named beneficiaries of their interests. Id. ¶¶ 15-16.
Therefore, under the very similar language of the Hoggan trust,
Leona could not amend the trust to completely divest one of the
beneficiaries of his or her interest without first revoking the
trust. Jack relies on Banks in arguing that the amendment
violated the terms of the trust.
¶12 Jack’s reliance is misplaced in light of our subsequent
decision in Flake. We clarified in Flake that such trust
language invalidates only amendments that effect a complete
divestment of an interest in the trust. In interpreting trust

4 The analogous Flake trust language read: “The interest of
the beneficiaries is a present vested interest which shall
continue until the Trust is revoked or terminated other than by
death.” 2003 UT 17, ¶ 17.
7 No. 20051104
language very similar to that in Banks and nearly identical to
the language found in the Hoggan trust,4 we held:
The beneficial interest of Mrs. Flake was
merely amended, and not completely divested
as was the case in Banks. The dispositive
issue in the present case is whether there
was a complete divestiture of a beneficial
interest as in Banks, or whether there was
simply a change in the quality, or scope, of
the beneficial interest. We held in Banks
that revocation was required when terminating
a vested beneficial interest. Here, we find
that there is no requirement of revocation
where the beneficial interest is simply
modified or amended but not terminated.
Flake, 2003 UT 17, ¶ 17 (citation omitted).
¶13 Under the clear precedent of Banks and Flake, if the
2002 amendment completely divested Jack of any interest in the
trust, the amendment would violate a condition placed upon the
power to amend because Leona failed to revoke the trust first.
If the amendment merely changed the quality or scope of Jack’s
beneficial interest, however, it would be valid. The amendment
changed Jack’s interest in the trust from an equal share in the
trust property to forgiveness of any remaining indebtedness to
Leona at the time of her death. Jack does not contest that he
still owed his debt to Leona at the time of her death and that
the forgiveness of this legal obligation to pay the debt is a
benefit conferred upon him under the amendment. Because Jack’s
interest in the trust was not completely divested but only
modified, the amendment does not violate the terms of the trust
and is therefore valid.
¶14 Jack argues that we should overrule Flake because the
holding in that case would allow settlors to effectively
eliminate a beneficiary’s interest in a trust by merely modifying
that interest to a negligible amount. We decline such an
invitation. First, Jack does not assert that the benefit he
received from the trust was nominal. Therefore, his argument
applies only to hypothetical future cases and would not be
dispositive in this case. Second, the potential outcome that

No. 20051104 8
Jack finds objectionable is under the control of the drafters of
trust instruments. If a settlor deems such an outcome to be
unpalatable, it can easily be avoided through careful drafting.
II. FINDINGS AND CONCLUSIONS OF THE DISTRICT COURT
¶15 Jack also argues that the district court erred in
adopting findings of fact and conclusions of law that were not
articulated in its original memorandum decision. He primarily
asserts that the additional findings of fact relating to Leona’s
state of mind and her intent in including certain provisions of
the trust were improper and that we should therefore refuse to
consider these additional findings. We need not address the
merits of this argument because the findings to which Jack
objects are unnecessary to our holding. The only facts necessary
to our holding are the terms of the trust and the undisputed
existence of Leona’s outstanding loan to Jack. The additional
findings and conclusions to which Jack objects are simply
irrelevant.
CONCLUSION
¶16 Because the 2002 amendment merely modified Jack’s
interest in Leona’s trust, the amendment is valid, and we
therefore affirm the summary judgment entered by the district
court.
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¶17 Chief Justice Durham, Justice Durrant, Justice Nehring,
and Judge Ludlow concur in Justice Parrish’s opinion.
¶18 Having disqualified himself, Associate Chief Justice
Wilkins does not participate herein; District Judge Eric A.
Ludlow sat.