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Harris Trust and Savings Bank v. Beach

Brief Fact Summary. Testator Frank P. Hixon (Testator) created two trusts, the income of each payable to his wife, Alice Green (Wife), for life. Appellants Testator’s Descendants (Appellants) challenge the Appellate Court’s decision which granted summary judgment in favor of Appellee Charities.

Synopsis of Rule of Law. Unless otherwise specified, a Testator intends that his heirs be those who would take at his death under intestate succession; however, if the heirs taking is dependent on the cessation of another created interest, then heirs refers to those individuals who would take as of the date of that interest’s cessation.

Points of Law - Legal Principles in this Case for Law Students.

But the general rule is subject to an exception so well established and universally recognized as to practically constitute another general rule, which is: though a gift arises wholly out of directions to pay or distribute in futuro, yet if such payment or distribution is not deferred for reasons personal to the legatee, but merely because the testator desired to appropriate the subject matter of the legacy to the use and benefit of another for and during the life of such other, the vesting of the gift in remainder will not be postponed but will vest at once, the right of enjoyment only being deferred.

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Facts. Testator died in 1931 at the age of 69 years. His wife died 51 years later. Testator and Wife had signed a prenuptial agreement in which Wife agreed to forego any potential interest in Testator’s estate in consideration for the life income from a trust created for wife’s benefit. Testator also created a second trust for Wife. The income from each trust was paid to Wife for her life. At wife’s death, 51 years after Testator’s, the issue arose as to whether or not Testator intended the principal of the trusts to pass to his heirs as ascertained at his death, or whether or Testator intended that his heirs be determined at Wife’s death. The Appellate Court granted summary judgment in favor of Appellees in the will contest. Appellants contend that Testator’s intent was that the gift vest at Wife’s death rather than at Testator’s death.

Issue. Was Testator’s intent that his heirs be ascertained at his death?

Held. No. Testator’s intent was that the heirs be determined at the death of his wife, who was the life tenant of the estate. The evidence surrounding the trust creation and will language points to this fact. If the heirs were those who survived at Testator’s death, the trust estates pass to charities under the wills of decedent’s daughters. If, however, the heirs are to be determined at the time of Wife’s death, the trust estates are divided among Testator’s now-living descendants. The circumstances under which Testator created the trust provide additional evidence of his intent to vest the gift at Wife’s death. Testator specified that the trust was to be devised and distributed to his heirs and created a reversion in himself if his wife predeceased him, thus conditioning the duration of the trust on her survival. This provision which allows for reversion should Testator’s wife have predeceased him supports Appellants’ argument in favor of vesting at Wife’s death. If Testator’s heir
s were determined at Testator’s and not Wife’s death, then this would have the same effect as if the reversion had occurred. The gift should be distributed per stirpes because there is sufficient indication that Testator intended the remainder to be divided in accordance with the laws of descent and distribution. Therefore, we reverse and remand.

Discussion. Here again the Court aims to give effect to the Testator’s apparent intent. While the terms of the trust are not completely clear, the effect that the terms would have should one perspective versus the other be chosen indicates that Testator intended that his heirs be determined at Wife’s death.

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