As noted, the plain meaning rule has been criticized as a barrier to applying a settlor’s actual intent when interpreting a document.
The Restatement (Property: Wills and Other Donative Transfers) Third “disapproves” of the plain meaning rule.[1] Thus, § 12.1 (“Reforming Donative Documents to Correct Mistakes”) permits extrinsic evidence of settlor intent “to conform the text (of the Will or testamentary trust) to donor’s intention even if the text of the document is unambiguous:
When a donative document is unambiguous, evidence suggesting that the terms of the document vary from intention is inherently suspect but possibly correct. The law deals with situations of inherently suspicious but possibly correct evidence in either of two ways. One is to exclude the evidence altogether, in effect denying a remedy in cases in which the evidence is genuine and persuasive. The other is to consider the evidence, but guard against giving effect to fraudulent or mistaken evidence by imposing an above-normal standard of proof. In choosing between exclusion and high-safeguard allowance of extrinsic evidence, this Restatement adopts the latter. Only high-safeguard allowance of extrinsic evidence achieves the primary objective of giving effect to the donor’s intention.
Restatement (Property: Wills and Other Donative Transfers) Third § 12.1, cmt. (b).
U.T.C. § 415 follows a similar approach:
SECTION 415. REFORMATION TO CORRECT MISTAKES. The 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.
Both approaches impose a “clear and convincing” standard to guard against fraudulent testimony.
It is clear from the comments under U.T.C. § 415 that it is meant to abolish the plain meaning rule for testamentary trusts and accordingly make the proof issue the same for a testamentary trust as with an inter vivos trust.
U.T.C. § 415 accordingly makes a radical change to the proof of settlor intent for testamentary trusts. On its face, however, U.T.C. § 415 appears rather benign. Given the long history of courts embracing the plain meaning rule, it may be necessary to demonstrate that U.T.C. § 415 was specifically meant to incorporate the approach of the Restatement (Property: Wills and Other Donative Transfers) Third § 12.1 to counteract the rich case law that relied on the plain meaning rule to exclude extrinsic evidence in those circumstances.
