The time-honored principal of construing a will or trust as written and to determine the settlor’s intention from the unambiguous language of the instrument itself was ratified once more by the decision of the New York Appellate Division’s Second Department to partially affirm a decision written by Queens County Surrogate Robert Nahman in the Matter of Terranova 873 N.Y.S.2d 651(A.D. 2d Dept 2009). In this action, a trust beneficiary objected to a trust accounting on the grounds that the trustees had retained unproductive property and also that the trustees had purchased an insurance policy on the life of the beneficiary through a company which one of them had owned.The premiums were paid by making loans from the trust to the life insurance trust which owned the policies. Even though this certainly constituted self-dealing, the surrogate denied objectant’s motion for summary judgment on her objections.

On appeal, a somewhat different result was obtained with the lower court being reversed on its decision not to surcharge the trustees for the loans made from the trust to pay for the life insurance policies in the insurance trust. The court opined that "where unproductive property is placed in trust, a trustee ordinarily has the duty to convert the property in income-producing property and the duty to produce income is owing to the income beneficiary, not the remainderman".

The objections seeking to surcharge the trustees for the commissions earned by the company owned by one of them, however, were dismissed by the appellate court . The court found that the unambiguous language of the trust instrument evidenced the intention of the settlor (the creator of the trust) to allow the trustees to engage in business activity with companies they owned in the course of administering the trust.