Can a settlor transfer irrevocable trust property through his will? Nolan v. Hoopiiaina Explained

In Nolan v. Hoopiiaina, the Utah Court of Appeals addressed whether a settlor can transfer property held in irrevocable trusts through his will and the application of statutes of limitations to various trust-related claims.

Background and Facts

In 1974, Malualani Hoopiiaina (Malu) created two irrevocable trusts with real property in Salt Lake City. The trusts named his daughter Inez and two other individuals as trustees, with Inez’s children (Michelle and Michael) as ultimate beneficiaries. The trust agreements explicitly stated: “This Trust shall be irrevocable. At no time shall any beneficial interest in the Trust property inure to the Settlor.” When Malu died in 1997, his will made no mention of the trusts but bequeathed “the 349 West properties 700 South” to his widow Cuma. The estate’s attorney told the grandchildren no trusts existed and they had no interest in the estate. Cuma later deeded the trust properties to herself and her son. The grandchildren did not discover the trust documents until 2002, when they promptly filed suit.

Key Legal Issues

The case presented two primary issues: (1) whether Malu could transfer trust property through his will despite the trusts’ irrevocable nature, and (2) whether the grandchildren’s claims were time-barred by applicable statutes of limitations.

Court’s Analysis and Holding

The court emphasized fundamental trust law principles: once an irrevocable trust is created, “the settlor is no longer the owner of the trust property and has only such ability to deal with it as is expressly reserved to him in the trust instrument.” Since Malu reserved no power to revoke or modify the trusts, he could not transfer the trust assets through his will. The court distinguished between different types of relief sought, finding that quiet title actions to remove clouds on title and appointments of successor trustees are not subject to limitation periods, while claims for damages and accounting remain subject to such limitations. The court applied the equitable discovery rule and found genuine issues of material fact regarding whether the defendants’ concealment tolled the limitations period.

Practice Implications

This decision reinforces that irrevocable trusts create permanent property interests that cannot be undone by the settlor’s subsequent testamentary dispositions. Practitioners should note the court’s distinction between time-barred claims for affirmative relief versus non-time-barred actions to quiet title or appoint trustees. The ruling also demonstrates the importance of the equitable discovery rule in trust disputes involving concealment or misleading conduct by fiduciaries.