Has the Uniform Trust Code's liberal facilitation of mistake-based reformations rendered the cy pres action obsolete?

Charles E. Rounds, Jr.

Has UTC § 415 (mistake-based reformation of a trust’s terms) rendered classic non-statutory cy pres obsolete and UTC § 413 (statutory cy pres in the charitable trust context) redundant? UTC § 415 provides that “[t]he court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s intention if it is proved by clear and convincing evidence what the settlor’s intention was and that the terms of the trust were affected by a mistake of fact or law, whether in expression or inducement.” Assume that a trust with either a limited or a general charitable purpose fails for whatever reason (the “failure event”). Invoking UTC § 415, the state A.G., the trustee, and anyone else with standing to seek a failed trust’s continued judicial enforcement need merely assert the self-evident, namely that the settlor (or the scrivener) had mistakenly failed to anticipate and/or address the failure event. That being the case, the court should “reform” the trust’s terms to conform them to the settlor’s true intentions. Assuming that UTC § 415 would regulate the mistake-based reformation of charitable trusts, as well as non-charitable trusts, and it appears by virtue of UTC § 102 that it would do just that, then in UTC § 415 we may well have a cy pres-substitute. The doctrine of cy pres is taken up generally in §9.4.3 of Loring and Rounds: A Trustee’s Handbook (2019), which section is reproduced in its entirety in the Appendix below.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Charles E. Rounds, Jr.

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