Surrogate Nora Anderson
Co-trustees asked the court to reform Article Second of the will under the doctrine of equitable deviation. They noted they followed the testator’s specific directions and invested solely in United States obligations, but alleged the income from such obligations over the last 10 years decreased from 6 percent in 2000 to .6 percent in 2009, and it was no longer in the best interests of the current beneficiary or the remaindermen to follow the investment restriction. Trustees argued that diversification would further the testator’s primary intentto ensure the financial welfare of his wife and daughterand may increase trust income and principal appreciation with a minimal amount of increased risk. The court noted the trust was created in 1982 and interest rates of U.S. obligations have decreased significantly since that time. Thus, as the testator’s primary concern was his wife and daughter’s welfare, it was reasonable to conclude he did not anticipate such a substantial change in economic conditions to produce insufficient income for his beneficiaries. Hence, strict compliance with the restriction would frustrate the testator’s primary objective, warranting application of the equitable deviation doctrine. Trustee’s motion to reform was granted.
