United States: Court Reversed Trial Court On Interpretation Of Trust Regarding Per Stirpes Versus Per Capita Distributions

Upon the death of both Trustors, the primary residuary beneficiaries of this Trust are the children of the Trustors, BARBARA JEAN RILEY JONES, BRENDA JUNE RILEY BRAGG, STEPHEN MARCUS RILEY, and ELAINE RILEY, and their descendants. For purposes of this Trust Agreement, the terms "issue" or "descendant" shall not include any child adopted by a grandchild of the Trustors.

The parties do not dispute that the Trust imposes a condition of survivorship. They do, however, interpret the condition differently. Appellants suggest that only the children and grandchildren who survived both Trustors take, in equal shares. On the other hand, appellees contend the trial court did not err in determining that all surviving descendants of Trustors take, per stirpes. We note, however, that appellees' interpretation of the trial court's order to include those descendants who survived Trustors, is an inaccurate interpretation as not all descendants were apportioned a share. Rather the trial court's order divided the Trust into four equal portions: one for each child of the Trustors; and because Brenda did not survive both Trustors, the trial court divided her 1/4 share amongst her six children, one of whom was deceased and his share was given to his daughter, Brenda's grandchild. Accordingly, the trial court's order did not divide the Trust amongst all the Trustors' descendants "in equal shares," as implied by appellees.

Appellees argue that we must find that section 6.01(b) of the Trust affirms, rather than contradicts, section 2.01, however "we must give effect to, and harmonize, all the language, even if the second and third clauses might initially appear inconsistent or contradictory to the entire first clause." Having read the entire Trust and examined the relevant clauses and definitions, we also consider the document's structure for indications of intent. While section 2.01 is the "identification of beneficiaries," we note that article six states specifically that it "shall control the disposition of all property of the Trustor's upon the death of the surviving Trustor." Article six does not conflict with the identification of beneficiaries, but rather it serves to clarify who takes and in what amount. Accordingly, to give full effect to section 2.01, we read it to identify who the beneficiaries of the Trust are and note that per the definition, beneficiaries "may" be entitled to take in distribution of the Trust. We construe section 6.01 as controlling the distribution of the Trust, distributing in "equal shares" to the "children and grandchildren of the Trustors who survive both Trustors."