In the Matter of Katherine E. Reece Trust, 541 P.3d 37, a division of the Colorado Court of Appeals addressed how to measure the "standard of living" to be provided to the surviving spouse by the Trustee under the terms of the late husband's Will.

Complicating this decision was the fact that the husband and the surviving spouse had been legally separated for three years prior to the husband's death. They had not yet divorced at the husband's death, due to his agreement not to seek a divorce until the couple had been married for 10 years. The 10-year marriage was needed by the surviving spouse to obtain Social Security benefits, and the husband died in a tragic accident one day before the end of this 10-year period.

The parties had entered into a separation agreement which specified a set amount of spousal support to be paid to the surviving spouse over a two-year period during their legal separation. Apparently, the surviving spouse had enjoyed a higher standard of living during the portion of the marriage before the separation.

The Will language in question was a suggestion to the Trustee to provide primarily for the support of the surviving spouse at "the standard of living enjoyed by my spouse during our marriage." The Will language suggested that the Trustee should also consider the surviving spouse's other means of support when exercising the Trustee’s discretion to make distributions.

The surviving spouse argued that the Trustee should disregard her standard of living during the period of the couple's legal separation. The court rejected this argument, since the period of separation was part of, and during, their marriage.

But the Court's decision went further. It held that the surviving spouse's standard of living during the legal separation was the only period to be considered by the Trustee. This conclusion was based in part on the rule set forth in Section 50 of the Restatement (Third) of Trusts. Under that section, the standard of living of the beneficiary is measured at the time of the testator's death. Further, the Court noted that the parties' standard of living had been affected by the separation, with limits on the support shared by the husband with the surviving spouse. Additionally, if the husband would have survived one more day, it is likely the couple would have started the formal process of seeking a divorce. The Court concluded that considering the surviving spouse's standard of living only during the couple’s legal separation immediately prior to the husband’s death was proper under the general rule and also under the particular facts of this situation.

Before closing its opinion, the Court made a couple of additional observations. First, the surviving spouse's standard of living was but one factor to be considered in the Trustee's discretion. Second, the Will stated the support of the surviving spouse as the trust's primary purpose. The Court noted that the surviving spouse's cost of living could increase over time in the future for the beneficiary's new needs, e.g. related to deteriorating health, and that the Trustee had the flexibility to make distributions to accommodate those needs.