Can an irrevocable trust's payment provision give the settlor an unrestricted withdrawal right? Jenson v. Jenson Explained

Background and facts

Caron Jenson established a revocable living trust, naming herself as trustee and funding it with roughly 216 acres of farmland near Nephi, Utah, and brokerage accounts worth approximately $345,000. After resigning as trustee and appointing her son Ken as successor trustee, Caron amended the trust to declare it irrevocable. The amendment left all other provisions intact, including a Payment Provision in Article Four stating that “[t]he [t]rustee shall further pay principal, to the [settlor] upon written request.” When Caron later demanded that Ken transfer specific trust assets—ultimately the Fairground property and forty-two irrigation company shares—Ken refused. Caron sued for breach of fiduciary duty and sought a declaratory judgment that Ken was required to comply.

Key legal issues

The central question was whether the Payment Provision, read alongside the trust’s irrevocability clause, obligated Ken to transfer specific assets on Caron’s written request. The district court initially found a latent ambiguity when Caron requested all trust assets, but granted partial summary judgment when she requested less than all assets. On interlocutory appeal, the Court of Appeals confronted whether the Payment Provision constituted an unrestricted power of withdrawal and, if so, whether it prevailed over the irrevocability provision as a matter of law.

Court’s analysis and holding

Applying contract interpretation principles to the trust instrument, the court held that the Payment Provision granted Caron a presently exercisable general power of appointment under Utah Code sections 75A-4-102 and 75B-2-103—in other words, an unrestricted power of withdrawal. Because an unrestricted power of withdrawal includes the power to revoke a trust, the court then applied the rule from Dahl v. Dahl, 2015 UT 79, which establishes that when a settlor expressly reserves an unrestricted power that in effect allows revocation, the trust is revocable even if it contains an irrevocability provision. The court rejected Ken’s argument that the trustee’s general discretionary powers under Articles Four, Six, and Ten should be read to condition Caron’s withdrawal right on trustee approval, concluding that harmonizing the provisions did not permit abandoning the Payment Provision’s plain mandatory language. The court also noted that Utah Code section 75B-2-603 expressly permits a trustee to follow a settlor’s direction contrary to trust terms to the extent the trust is revocable—resolving any remaining tension with the trustee’s management powers and the spendthrift clause. The court affirmed the grant of partial summary judgment and remanded for further proceedings, simultaneously lifting its stay of the asset-transfer order.

Practice implications

This decision extends Dahl beyond amendment-power scenarios to withdrawal-power provisions, confirming that any trust language giving a settlor an unqualified right to demand principal operates as a de facto revocation power that overrides a boilerplate irrevocability clause. Practitioners drafting irrevocable trusts must carefully tailor or eliminate open-ended principal-distribution provisions, or expressly condition them on trustee discretion, to preserve the trust’s intended irrevocable character. Litigators should also note that the court affirmed on a legal theory—the unrestricted withdrawal power—that effectively reversed the district court’s earlier denial of summary judgment, reinforcing Utah’s rule that an appellate court may affirm on any legal ground apparent in the record.