{ "id": 9190595, "name": "HELEN CROWDER FINCH, Plaintiff v. WACHOVIA BANK & TRUST CO., N.A., individually and as Trustee under a Trust Established by Harry Browne Finch; CHARLES FINCH, and SHARON FINCH, Defendants", "name_abbreviation": "Finch v. Wachovia Bank & Trust Co.", "decision_date": "2003-03-04", "docket_number": "No. COA02-583", "first_page": "343", "last_page": "350", "citations": [ { "type": "official", "cite": "156 N.C. App. 343" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "169 S.E. 417", "category": "reporters:state_regional", "reporter": "S.E.", "weight": 2, "year": 1933, "pin_cites": [ { "page": "418" }, { "page": "418" } ], "opinion_index": 0 }, { "cite": "204 N.C. 672", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8623819 ], "weight": 2, "year": 1933, "pin_cites": [ { "page": "674" }, { "page": "674" } ], "opinion_index": 0, "case_paths": [ "/nc/204/0672-01" ] }, { "cite": "299 S.E.2d 207", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1983, "pin_cites": [ { "page": "211" } ], "opinion_index": 0 }, { "cite": "307 N.C. 485", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8563923 ], "year": 1983, "pin_cites": [ { "page": "492" } ], "opinion_index": 0, "case_paths": [ "/nc/307/0485-01" ] }, { "cite": "117 S.E.2d 465", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1960, "pin_cites": [ { "page": "468" } ], "opinion_index": 0 }, { "cite": "253 N.C. 515", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8626129 ], "year": 1960, "pin_cites": [ { "page": "520" } ], "opinion_index": 0, "case_paths": [ "/nc/253/0515-01" ] }, { "cite": "430 S.E.2d 235", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1993, "pin_cites": [ { "page": "240", "parenthetical": "quoting Clark v. Connor, 253 N.C. 515, 520, 117 S.E.2d 465, 468 (1960)" } ], "opinion_index": 0 }, { "cite": "333 N.C. 706", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2546855 ], "year": 1993, "pin_cites": [ { "page": "712", "parenthetical": "quoting Clark v. Connor, 253 N.C. 515, 520, 117 S.E.2d 465, 468 (1960)" } ], "opinion_index": 0, "case_paths": [ "/nc/333/0706-01" ] }, { "cite": "67 S.E.2d 639", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1951, "pin_cites": [ { "page": "644", "parenthetical": "setting forth other abuses of discretion including acting dishonestly, acting with an improper motive, failing to use judgment, or acting' beyond the bounds of a reasonable judgment." }, { "page": "644" } ], "opinion_index": 0 }, { "cite": "234 N.C. 463", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8623503 ], "weight": 2, "year": 1951, "pin_cites": [ { "page": "471", "parenthetical": "setting forth other abuses of discretion including acting dishonestly, acting with an improper motive, failing to use judgment, or acting' beyond the bounds of a reasonable judgment." }, { "page": "471" } ], "opinion_index": 0, "case_paths": [ "/nc/234/0463-01" ] }, { "cite": "281 S.E.2d 652", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "303 N.C. 315", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8573123, 8573162, 8573104, 8573175, 8573144 ], "year": 1981, "opinion_index": 0, "case_paths": [ "/nc/303/0315-02", "/nc/303/0315-04", "/nc/303/0315-01", "/nc/303/0315-05", "/nc/303/0315-03" ] }, { "cite": "51 N.C. App. 654", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 2643753 ], "year": 1981, "pin_cites": [ { "page": "657" } ], "opinion_index": 0, "case_paths": [ "/nc-app/51/0654-01" ] }, { "cite": "467 S.E.2d 717", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1996, "pin_cites": [ { "parenthetical": "citing Insurance Co. v. Allison, 51 N.C. App. 654, 657, 277 S.E.2d473, 475, disc. review denied, 303 N.C. 315, 281 S.E.2d 652 (1981)" } ], "opinion_index": 0 }, { "cite": "342 N.C. 657", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 795904, 796097, 796003, 795940, 796060 ], "year": 1996, "pin_cites": [ { "parenthetical": "citing Insurance Co. v. Allison, 51 N.C. App. 654, 657, 277 S.E.2d473, 475, disc. review denied, 303 N.C. 315, 281 S.E.2d 652 (1981)" } ], "opinion_index": 0, "case_paths": [ "/nc/342/0657-01", "/nc/342/0657-05", "/nc/342/0657-04", "/nc/342/0657-03", "/nc/342/0657-02" ] }, { "cite": "464 S.E.2d 64", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1995, "pin_cites": [ { "page": "67" } ], "opinion_index": 0 }, { "cite": "120 N.C. App. 559", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11916760 ], "year": 1995, "pin_cites": [ { "page": "562" } ], "opinion_index": 0, "case_paths": [ "/nc-app/120/0559-01" ] } ], "analysis": { "cardinality": 751, "char_count": 16384, "ocr_confidence": 0.747, "pagerank": { "raw": 2.606058004879814e-07, "percentile": 0.8199524373814844 }, "sha256": "bfff4c9532ba5e87cb79490c59b81fcdac3a613a699f4bd38a326e9f623587b9", "simhash": "1:9fa9c96286c708f3", "word_count": 2601 }, "last_updated": "2023-07-14T21:05:49.893248+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges TIMMONS-GOODSON and LEVINSON concur." ], "parties": [ "HELEN CROWDER FINCH, Plaintiff v. WACHOVIA BANK & TRUST CO., N.A., individually and as Trustee under a Trust Established by Harry Browne Finch; CHARLES FINCH, and SHARON FINCH, Defendants" ], "opinions": [ { "text": "TYSON, Judge\nI. Background\nHelen Crowder Finch, (\u201cplaintiff\u2019) is the 83-year-olds widow of Harry Browne Finch, (\u201ctestator\u201d). The Finches were married for 46 years and raised three children, Sharon, Charles, and Bruce. Testator died 19 January 1988 and left a will giving (1) 15% of his total estate to charity and (2) a marital trust for the benefit of plaintiff during her lifetime with the remainder to go to the children. Wachovia Bank & Trust Company was named the sole trustee of the marital trust.\nTestator\u2019s testamentary intent was incorporated with minor changes into a Family Settlement Agreement, approved by the Davidson County Superior Court on 14 May 1990. This settlement was reached after plaintiff dissented from the will and Bruce filed a caveat. Neither plaintiff nor Bruce wanted their interests under the will to be held in trust.\nThe final distribution of the estate on 9 June 1991 resulted in the following sums being paid: $1,663,512.19 to Wachovia Bank & Trust Company, Trustee for Helen Crowder Finch, $303,084.64 to Charles Finch, $303,084.63 to Sharon Finch, and $303,084.63 to Wachovia Bank & Trust Company, Trustee for Bruce Finch. Bruce died in 1991. At Bruce\u2019s death, the assets in his trust were divided between Sharon and Charles as Bruce had no descendants.\nPlaintiff\u2019s trust provided that she would receive the entire net income derived from the principal, and further provided as follows:\nIf, in the judgment of the Trustee, the income payable to Helen in accordance with the provision of paragraph 3) above, supplemented by income (other than corporate gains) from other sources to her, shall not be sufficient to meet the reasonable needs of Helen in her station in life \u2014 as to all of which the judgment of the Trustee shall be conclusive \u2014 then, and in that event, the Trustee will be authorized to pay or apply for the benefit of Helen so much of the principal of this trust as the Trustee, in its sole discretion, shall from time to time deem requisite or desirable to meet the reasonable needs of Helen \u2014 even to the full extent of the entire principal of this Trust.\n(Emphasis supplied).\nInitially, Wachovia paid plaintiff $6,782.22 a month. The amount was reduced to $5,000.00 in June 1992; but the payments increased to $5,500.00 a month in June of 1996. In June 1997, the payments increased to $6,250.00, and in June 1998, to $6,750.00 per month.' All increases were made upon plaintiffs requests. These payments exceeded the net income from the principal resulting in a continuing decrease in the principal and converted the trust into a wasting trust.\nIn 1999, plaintiff requested another cost of living increase. In April 2000, Wachovia requested that plaintiff submit a statement of her expenses. She filed a statement of estimated annual living expenses which totaled $116,400.00 per year, or $9,700.00 per month. This estimated budget included $28,000 or 25% of her estimate to be given away each year by plaintiff to her family, church and charities.\nAt the time Wachovia considered the request, the net income of the trust had decreased to $31,114.00 per year, and the approximate value of the corpus was $1,257 million. During deposition testimony, Wachovia representative Lois T. Morris testified that the value of the principal had further decreased to \u201cjust under $1.1 million\u201d, a decrease of more than $500,000 in ten years. Wachovia\u2019s trust committee considered plaintiffs new request and concluded that the trust instrument did not allow for an invasion of principal to support substantial gifts by plaintiff, the income beneficiary. Wachovia stated, \u201c[w]e do not believe [the statement] \u2018meet the reasonable needs of Mrs. Finch\u2019 is broad enough to allow us to distribute trust assets to her to make gifts.\u2019 \u201d Wachovia reduced plaintiff\u2019s request by $28,000.00 and decided that plaintiff\u2019s request for funds to pay taxes and travel would be met by providing direct reimbursements after these expenses were incurred and not lump sum payments in advance. Wachovia considered plaintiff\u2019s social security income and interest income from her certificates of deposit and concluded that her additional monthly income requirements were $3,700.00. Plaintiff\u2019s income payments were decreased to that amount in August 2000.\nPlaintiff made gifts to her children and grandchildren after Testator died. The gifts spanned the time period from 1990 to 2000 and totaled over $90,000.00, which plaintiff contends came mostly from her savings and other resources.\nOn 31 August 2000, plaintiff filed a declaratory judgment action against Wachovia and the remainder beneficiaries, Charles Finch and Sharon Finch, to interpret paragraph 5 of the Family Settlement Agreement, Trust A, Marital Trust. Plaintiff also alleged that Wachovia had breached its fiduciary duty to plaintiff in its management of the trust, had failed to follow the \u201cprudent investor rule\u201d pursuant to N.C.G.S. \u00a7 36A-161, and had failed to provide sufficient income in order for plaintiff to be able to make gifts as she did prior to her husband\u2019s death. Defendant Wachovia answered and defended on the basis that it as trustee had the \u201csole discretion\u201d to determine plaintiffs \u201creasonable needs\u201d and that after having studied plaintiffs request, had exercised its discretion and fiduciary responsibilities in an objective manner. Defendant pled the three year statute of limitations defense to all actions prior to 31 August 2000.\nSharon Finch answered the complaint aligning herself with her mother. Charles Finch answered the complaint supporting the actions of Wachovia. Judgment was entered by the trial court on 11 December 2001, finding the making of reasonable gifts to family, church and charities to be a normal practice for persons who had attained plaintiffs \u201cstation in life\u201d and that Wachovia abused its discretion in finding that it had no authority to invade the principal for such purpose. The trial court ordered Wachovia to exercise its discretion and \u201cdetermine a reasonable annual amount\u201d to give to plaintiff which also provided for her desire to gift. The judgment applied prospectively. Plaintiff received no reimbursement for Wachovia\u2019s prior lack of providing funds for gifts. Costs and attorneys\u2019 fees were taxed against the estate. Defendant Charles Finch brought this appeal. Defendant Wachovia filed a supporting brief and counsel for both defendants orally argued their positions.\nII. Issue\nThe issue is whether the trial court erred in concluding that Wachovia abused its discretion as trustee by asserting that it had no authority to invade the principal to distribute amounts to plaintiff to enable her to make substantial gifts to her church, charities, and family members and ordering Wachovia to \u201cexercise the discretion ... as Trustee . . . and determine a reasonable annual amount, on a percentage or other reasonable basis, as it deems requisite or desirable to meet Plaintiff\u2019s reasonable needs in her current station in life, to distribute to Plaintiff for \u2018gifting\u2019 purposes, be it to her chinch, charities of her choice or members of her family.\u201d\nIII. Standard of Review\nThe standard of review of a judgment rendered under the declaratory judgment act is the same as in other cases. N.C. Gen. Stat.\n\u00a7 1-258. Thus, where a declaratory judgment action is heard without a jury and the trial court resolves issues of fact, the court\u2019s findings of fact are conclusive on appeal if supported by competent evidence in the record, even if there exists evidence to the contrary, and a judgment supported by such findings will be affirmed.\nMiesch v. Ocean Dunes Homeowners Assn., 120 N.C. App. 559, 562, 464 S.E.2d 64, 67 (1995), disc. review denied, 342 N.C. 657, 467 S.E.2d 717 (1996) (citing Insurance Co. v. Allison, 51 N.C. App. 654, 657, 277 S.E.2d473, 475, disc. review denied, 303 N.C. 315, 281 S.E.2d 652 (1981)).\nIV. Abuse of Discretion\nThe parties argue the issue quite differently. Plaintiff contends that Wachovia abused its discretion by asserting that it did not have authority to make discretionary payments to plaintiff for gifting purposes. Defendant appeals from the trial court\u2019s conclusion that Wachovia abused its discretion as trustee by refusing to invade the principal to provide funds to plaintiff to make gifts. The trial court found that defendant Wachovia abused its discretion as trustee by contending that it had no authority to invade the corpus to allow plaintiff, as lifetime beneficiary, to make gifts. We agree with the trial court\u2019s conclusion of law that Wachovia abused its discretion by not considering plaintiff\u2019s desire to gift on the basis that the trust does not provide authority for such consideration. We vacate that portion of the order requiring Wachovia, as trustee, to consider plaintiff\u2019s gifting desires and \u201cdetermine a reasonable annual amount ... to distribute to Plaintiff for \u2018gifting\u2019 purposes. . . .\u201d Enforcement of the trial court\u2019s order would impermissibly invade the discretion established by the trust.\nThe trustee of a discretionary trust must exercise its discretion and its judgment in considering the proper way to administer the trust. Failure to exercise judgment is one way a trustee can abuse its discretion. Woodard v. Mordecai, 234 N.C. 463, 471, 67 S.E.2d 639, 644 (1951) (setting forth other abuses of discretion including acting dishonestly, acting with an improper motive, failing to use judgment, or acting' beyond the bounds of a reasonable judgment.) Plaintiff argues and the trial court found that Wachovia failed to exercise any judgment by asserting the position that they lacked the authority to consider plaintiff\u2019s gift requests in determining her reasonable needs. We agree.\nWe hold that the trial court\u2019s conclusion of law that Wachovia abused its discretion is based upon the trial court\u2019s findings of fact which are supported by competent evidence, particularly Wachovia\u2019s letter of 6 July 2000 to plaintiff. The letter states that Wachovia does \u201cnot believe [its] discretionary authority is broad enough to permit [it] to invade principal of the trust to enable Mrs. Finch to make gifts.\u201d Given the broad discretion allowed by the trust in determining plaintiff\u2019s \u201creasonable needs\u201d and the lack of an express prohibition, we hold that Wachovia failed to exercise judgment and abused its discretion in failing to consider plaintiff\u2019s request.\nV. Effect of Trial Court\u2019s Order\nA. Net Income and Invasions into Principal\nThe only monies that plaintiff is entitled to as,a matter of right from the trust are the net income generated from the principal. Any additional sums paid to plaintiff beyond the annual net income are solely and entirely within the trustee\u2019s discretion. The trustee\u2019s discretion to invade the corpus is further limited to making distributions from the principal only \u201c[i]f in the judgment of the Trustee, ...\u201d the net income payable plus plaintiff\u2019s income from other sources is insufficient to meet \u201cthe reasonable needs of Helen in her station in life \u2014 as to all of which the judgment of the Trustee shall be conclusive.\u201d (Emphasis supplied).\nCourts are not inclined to and should not interfere with the discretion of the trustee. See Woodard, 234 N.C. at 471, 67 S.E.2d at 644. Here, the trust language gives Wachovia the sole authority to determine plaintiff\u2019s \u201creasonable needs\u201d and then to determine whether an invasion of the corpus is required.\nThe trial court\u2019s order mandates that Wachovia determine a \u201creasonable annual amount\u201d to give to plaintiff for \u201cgifting\u201d purposes. The order leaves that \u201camount\u201d to be determined by the trustee. Although the Trustee may determine the amount as it wishes, it must, according to the language, \u201cdetermine a reasonable annual amount ... to distribute to Plaintiff for \u2018gifting\u2019 purposes . . . .\u201d This order conflicts with the trust language which states that the Trustee\u2019s decision to determine plaintiff\u2019s \u201creasonable needs\u201d shall be \u201cconclusive\u201d. Enforcing the trial court\u2019s order would strip discretion from the trustee and replace it with the judgment of the court. Wachovia has the authority, but cannot be forced, to pay over any sums out of the corpus to satisfy the gifting desires of plaintiff.\nB. Intent, of Testator\nTo enforce the trial court\u2019s order and substitute the court\u2019s discretion for that of the trustee would also undermine the intent of the testator and settlor of the trust. The intent of the testator is the polar star in the interpretation of wills. Hollowell v. Hollowell, 333 N.C. 706, 712, 430 S.E.2d 235, 240 (1993) (quoting Clark v. Connor, 253 N.C. 515, 520, 117 S.E.2d 465, 468 (1960)), Pittman v. Thomas, 307 N.C. 485, 492, 299 S.E.2d 207, 211 (1983), Jolley v. Humphries, 204 N.C. 672, 674, 169 S.E. 417,418 (1933). This intent is \u201cascertained from the four comers of the will, considering for the purpose the will and any codicil or codiciles (sic) as constituting but one instrument.\u201d Jolley, 204 N.C. at 674, 169 S.E. at 418.\nThe will of testator leaves the majority of testator\u2019s assets in marital trust for the benefit of his wife during her lifetime, and then to his children as remaindermen. Testator clearly intended that plaintiff not receive his estate outright. The provisions of the marital trust established by will concerning the discretion of the trustee are identical to the provisions of the trust contained in the family settlement agreement. Enforcing the plain language from the four corners of the trust instrument is essential to upholding testator\u2019s intent.\nThe factual circumstances surrounding testator\u2019s intent are even more compelling. Testator was a member of the local Wachovia Board of Directors, and trusted Wachovia\u2019s decision-making capabilities. Wachovia, at the time of plaintiff\u2019s instant request, was concerned about further invading the trust principal, as the value of the trust corpus was approximately $1,257,000.00, and the annual net income was $31,114.00. Wachovia was concerned about plaintiff\u2019s increased health care needs and expenses as she aged. Testator\u2019s will gave 15% off the top of his estate to various charities, raising an inference that he did not intend for the remaining money in the trust to be gifted.\nVI. Conclusion\nWe affirm that portion of the trial court\u2019s order concluding that Wachovia abused its discretion by failing to consider plaintiff\u2019s gift requests in determining her reasonable needs. We vacate that portion of the trial court\u2019s decree ordering Wachovia to distribute an annual amount to plaintiff for gifting purposes. We remand for entry of an order consistent with this opinion, to include a provision that Wachovia has the sole discretion whether to disburse any funds from the corpus to meet plaintiff\u2019s gifting desires.\nAffirmed in part, vacated in part and remanded.\nJudges TIMMONS-GOODSON and LEVINSON concur.", "type": "majority", "author": "TYSON, Judge" } ], "attorneys": [ "Brinkley Walser, by Walter F. Brinkley and David E. Inabinett, for plaintiff.", "Hill, Evans, Duncan, Jordan & Beatty, P.L.L.C., by R. Thompson Wright and Tommy S. Blalock, for defendant Charles Finch.", "Morgan, Herring, Morgan, Green, Rosenblutt & Gill, PLLC, by John Haworth, for defendant Wachovia Bank & Trust Co." ], "corrections": "", "head_matter": "HELEN CROWDER FINCH, Plaintiff v. WACHOVIA BANK & TRUST CO., N.A., individually and as Trustee under a Trust Established by Harry Browne Finch; CHARLES FINCH, and SHARON FINCH, Defendants\nNo. COA02-583\n(Filed 4 March 2003)\nTrusts\u2014 discretionary \u2014 reasonable needs \u2014 use of trust assets to make gifts\nThe trial court did not err in a declaratory judgment action by concluding that defendant bank abused its discretion as trustee by asserting that it had no authority to invade the principal of plaintiff lifetime beneficiary\u2019s trust to distribute amounts to plaintiff to enable her to make substantial gifts to church, charities, and family members, but the trial court erred by ordering defendant bank to exercise its discretion as trustee to determine a reasonable annual amount as it deems requisite or desirable to meet plaintiffs reasonable needs in her current station in life and to distribute that amount to plaintiff for gifting purposes, because enforcement of the trial court\u2019s order would impermissibly invade the discretion established by the trust.\nAppeal by defendants from judgment entered 11 December 2001 by Judge Charles C. Lamm, Jr. in Davidson County Superior Court. Heard in the Court of Appeals 29 January 2003.\nBrinkley Walser, by Walter F. Brinkley and David E. Inabinett, for plaintiff.\nHill, Evans, Duncan, Jordan & Beatty, P.L.L.C., by R. Thompson Wright and Tommy S. Blalock, for defendant Charles Finch.\nMorgan, Herring, Morgan, Green, Rosenblutt & Gill, PLLC, by John Haworth, for defendant Wachovia Bank & Trust Co." }, "file_name": "0343-01", "first_page_order": 373, "last_page_order": 380 }