Court of Chancery Denies Petition that Sought to Modify Trust Under the Cy Pres Doctrine

In the Matter of The Mary R. Latimer Trust U/A/D 12/3/1924 C.M. No. 17254-N-VCL (August 19, 2013)

The Court of Chancery, per Vice Chancellor Laster, denied a joint petition filed by the trustee bank and a cemetery to modify a trust established for the maintenance of two burial lots in the cemetery. The petitioners argued that the language of the Trust regarding the application of income and/or principal of the Trust could be read broadly to include surrounding areas of the Cemetery and asked the Court to modify the Trust so as to permit the Trustee to distribute a unitrust amount to the Cemetery annually.  In support the petitioners argued that the doctrine of cy pres, as reflected in the common law and as reflected in the cy pres statute,  warranted the use of the trust’s funds to support the needed maintenance of a broader area of the cemetery, which would in turn benefit the lots. The Vice Chancellor, however, concluded that the trust was not a charitable trust;  that it provided only for the preservation and maintenance of two specific burial lots and their immediate surroundings; and that there was no impossibility of purpose, etc. As a result, the Court found that cy pres was unavailable. Important in the Court’s ruling was the acknowledgment that under Delaware’s codification of the cy pres doctrine, even though expanded to include noncharitable trusts, a court’s power to modify a trust requires a first inquiry into  whether the trust is unlawful or no longer serves any charitable or noncharitable purpose, and not whether it is excessively funded or wasteful. The Court also held that the statutory cy pres doctrine is not available to trusts for the maintenance of cemetery plots, by its terms.