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Massachusetts Appellate Decision Reverses Trial Court Ruling in Favor of Trustee’s Heirs

Trusts can provide a way for an owner to enjoy her or his property during life, while ensuring the property held in trust pass to certain parties after her or his death.  In Mond vs. Pitts (15-P-686), the Massachusetts Appeals Court reviewed whether property held in two trusts with the same primary trustee and beneficiaries terminated, allowing the property to pass to the trustee’s heirs, or remained intact, passing to the beneficiaries after the settlor’s death.  At trial, the judge of the Land Court held the trust terminated after one of the trustees resigned and assigned her interest as trustee in both trusts at issue.  The beneficiaries appealed, and the appellate court reversed the prior ruling, agreeing with their argument that the trust remained intact.

As with all trusts, the construction of the document is the first place administrators and courts look at to determine the intent of the trustee. Winter landBoth trusts in this case were created in the 1980s, for a term of forty hears and thirty years, unless the death of the settlor occurred first.  The 40 years trust named the settlor as the beneficiary, and then the two appellants, or their survivors, as the next beneficiaries if he died.  The trustees named in the document were the settlor and another woman, with a provision that either will become the sole trustee if the other dies or resigns.  The 30 years trust had similar language, with the same trustees and beneficiaries named.  It also had a similar provision assigning the remaining trustee as the sole trustee if one dies or resigns.  The settlor eventually became the sole trustee for both trusts after the other trustee resigned as trustee and assigned her interest.

The heirs of the settlor filed suit after his passing, arguing that the trusts terminated when the settlor became the sole trustee.  The land judge agreed, finding the paragraphs within the trust to be inconsistent with one another – with one paragraph naming the two appellants as beneficiaries and another within the trust document as heirs.  The judge also found that the doctrine of merger applied when the settlor became the sole trustee, becoming the sole lifetime beneficiary and trustee of each trust.  The appellate court disagreed with this analysis, finding that the second paragraph in question dictated the proceeds to be divided among the “beneficiaries if living”.  Both appellants were alive at the time of the settlor’s death.  The appellate court found reading the document as a whole consistently pointed to the appellants as beneficiaries of the trust.  The appellate court also disagreed with the land judge’s view of merger, pointing out that the designation of contingent beneficiaries precluded any merger.  The appellate court reversed the ruling of the land judge and remanded it to the lower court for the trust property to be distributed to the beneficiaries, as intended by the settlor.

Careful language construction of trusts is vital to effective and efficient distribution to any intended beneficiaries.  The Massachusetts wills and estates attorneys at Karsner & Meehan have the knowledge and experience to help you with your estate plans.  Contact our office today at 508.822.6600 for a free, confidential consultation.

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