Trusts Must Always Be Read as a Whole, Even in MassHealth Trust Denial Cases

In most MassHealth trust denial cases, the Office of Medicaid now attempts to isolate phrases in the irrevocable trust out of context, but, under Massachusetts law, phrases in trusts must not be read independently; rather, phrases must be read as a whole, and the Office of Medicaid pushed that very point in the Massachusetts Appeals Court in Doherty v. Commissioner, 74 Mass. App. Ct. 439, 441 (2009): “[A]s MassHealth strongly presses upon us, this clause may not be read in isolation; rather, it must be construed and qualified in light of the trust instrument as a whole.” “Trust instruments must be construed to give effect to the intention of the settlor as ascertained from the language of the whole instrument considered in the light of the attendant circumstances. Groden v. Kelly, 382 Mass. 333, 335 (1981).” Harrison v. Marcus, 396 Mass. 424, 429 (1985). See also Schroeder v. Danielson, 37 Mass. App. Ct. 450, 453 (1994).

Overemphasis on one or two provisions of the trust is not permissible under Massachusetts trust law. “One or two expressions in the trust deed must not be so construed as to impair or destroy the whole scheme of the trust, when another and more reasonable construction is possible.” Shirk v. Walker, 298 Mass. 251, 261 (1937). If two provisions of the trust are in apparent contradiction to each other when each is read in isolation, construction must be found that will allow meaning to both provisions to resolve the apparent contradiction, as it is presumed that all provisions in a trust were intended by the Settlor to have meaning. Watson v. Baker, 444 Mass. 487, 491 (2005).

Even if a Trust is ambiguous with respect to any particular issue or matter, that ambiguity would not make the Trust assets countable resources. It is well established that any matter relating to the rights created by a trust is a question of law that turns on the Settlor’s intent as reflected in the words of the instrument. Steele v. Kelley, 46 Mass. App. Ct. 712, 731 (1999). See also Harrison v. Marcus, 396 Mass. 424, 429 (1985); Atwood v. First Natl. Bank, 366 Mass. 519, 523-24 (1974); Berry v. Kyes, 304 Mass. 56, 59 (1939); 4 Scott, Trusts §§ 329A, 334.1 and 335 (Fratcher 4th ed. 1989). This rule of construction applies to the nature and extent of a Trustee’s discretion and to the issue of whether a trust can be terminated. Guerriero v. Commissioner of the Division of Medical Assistance, 433 Mass. 628, 632 (2001) (Citing Restatement (Second) of Trusts § 164 (1959) (“… the nature and extent of a trustee’s discretion as to any issue is defined (1) by the terms of the trust instrument and (2) in the absence of any provision in the terms of the trust, by the rules governing the duties and powers of the trustee.”); West v. Third National Bank of Hampden County, 11 Mass. App. Ct. 577, 580 (1981); Steele v. Kelley at 731 (“[t]he issue of termination, like any other matter relating to rights created by a trust instrument, including the extent of a trustee’s discretion, initially is a question of law that turns on the settlor’s intention as reflected in the words of the instrument.”) The Court in Guerriero made clear that an important consideration was that if the Trustee violated the Trustee’s duty to a beneficiary, the Trustee would be liable for a “breach of trust.” Guerriero at 632.