Brief Fact Summary. Franklin Anthony created a revocable intervivos trust payable to his three children, after he and his wife died. One of his children, John, did not survive Anthony. A lower court ruled that John’s interest did not vest until his father died and therefore lapsed when John failed to survive his father.
Synopsis of Rule of Law. The remainder man of a revocable intervivos trust has a present, vested interest at the time of the creation of the trust
Issue. Whether a gift to a beneficiary in a trust lapses where the beneficiary predeceased the settlor and the beneficiary did not have the right to receive a distribution until the settlor died?
Held. No. The beneficiary had a remainder interest in the trust that was present and vested at the time of the creation of the trust because the trust was revocable and created during the settlor’s lifetime. The beneficiary’s children had possession of his share when he died. The settlor did not choose to revoke the trust. The settlor did not indicate that survival was a requirement for receiving an interest in the trust. Therefore, his gift did not lapse when he predeceased the settlor.
Discussion. The beneficiary died before the settlor. However the settlor did not revoke the trust so did not intend to disinherit the beneficiary.