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Court Finds Vested Trust Created In Recent Will And Trust Case

In a recent case involving the interpretation of a will and a trust created in the will (a testamentary trust), the Tennessee Court of Appeals reversed the decision of a trial court that the corpus of the trust should be distributed to the brother of the deceased, and held that it should be distributed to the wife of the beneficiary of the trust. The case involved the will of a one Steve Woodward (the “Deceased”).

The Deceased’s Will provided that, at his death, a trust (the “Trust”) was to be created for the benefit of his son (the “Son”). Under the terms of the Trust, Son was to receive monthly payments of $1,000.00 per month until he reached the age of 50. When Son reached age 50, the trustee of the Trust was to distribute the corpus of the Trust to him. Son outlived his father, the Deceased, but died at the age of 33.

The brother of the Deceased (the “Brother”) was given all of the Deceased’s residual estate in the Will. (Residual estate refers to property of a testator (a person who makes a will) that is not specifically given to anyone else in a will). What the Deceased had apparently not planned for, and had definitely not specifically addressed in his Will, was what would happen to the property in the Trust if the Son did not live to be 50.

The Will did provide for what would happen to the property that was designated for the Trust if Son died before the Deceased (the father). In that event, under the Will, no trust was to be established, and all of the estate that was considered property of the Trust was to go to Brother.

The trial court found that it was the intent of the Deceased that, if Son did not live to be 50, all of the funds designated for the Trust would go to Brother under the residuary clause of the Will. At the time of the death, Son was married to Andrea Woodward (the “Wife”), but Son and Wife were separated. Wife appealed the decision of the trial court.

The Court of Appeals began its discussion and analysis by noting that the “cardinal rule” in construing a will is to discover the intent of the testator and give it effect. The court also pointed out a basic principle of law which anyone involved in a will contest or trust lawsuit should keep in mind (even though it may not sit well with them). The court pointed out that the issue which it had to resolve was the intention of the Deceased at the time he made the Will: The issue it had to resolve, said the court, was not whether, “if he had had the benefit of foresight,” would the Deceased have wanted the corpus of the Trust to go to Wife who was separated from Son at the time of Son’s death.

The court of appeals decided that the terms of the Will established that the Deceased intended for the Trust to vest in his Son at the time of the death of the Deceased. Nothing in the Will, said the court, indicated that the Deceased intended for the Trust to be contingent or that he wanted the Son divested of the Trust once it was created.

In reaching its decision, the court of appeals relied on two Tennessee cases with fairly similar facts, but noted that “precedents are of little value in the construction of wills because no two are identical.” Well said.