Facts – The court had to address 6 issues.  Principal asset is real estate worth $35,000.  The testator left residue to grandchildren.  The property included in residuary maintained for the benefit of GC until youngest reaches age 21.  At T’s death, son was 30, and GCs ranged in age from 2 to 8.

2.    Issue 1: Is there a trust – the court found that the will created a trust, even though trust not specifically mentioned, because will specified that property “shall be maintained for the benefit” until youngest reaches 21.  You don’t need to use magic words if the intent to maintain for someone else’s benefit exists.

3.    Issue 2: Who is trustee? – Rule: no trust fails for lack of trustee.  The court followed the general rule that absent contrary intent, the executor should be trustee as they are already a fiduciary.

4.    Issue 3: How long will trust last? – The language of the will is “until the youngest of GC has reached 21 years of age.”  Court lists 4 options.

a.    When the youngest GC alive when will executed reaches 21

This option was dismissed w/o discussion.  Johanson (hereinafter J) says this one is obviously no good.

b.    When the youngest GC alive at T’s death reaches 21.

This one was also dismissed w/o discussion.  J says the use of “grandchildren” implies after-born kids OK.

c.    When the youngest GC on the scene at any one time reaches 21.

This is the option selected by court.

d.    When the youngest GC whenever born reaches 21.

This option eliminated under rule of convenience.

5.    Issue 4: Can the real estate be sold? – The court allows the property to be sold, in contradiction of the trust.  Trust law does not recognize rule against restraint on alienation.  For example, spendthrift clauses are examples of restraints which prevent a beneficiary from assigning and creditor from reaching trust assets.  Court allows in part because of later language about the potential necessity of selling.

In short, a court can reform a trust where it seems appropriate.  (devaluing assets account for 90% of trust reformations).  See In Re Pulitzer (holding that where T’s primary intent was to provide income for his family, preventing the sale of the stock when it was declining in value frustrated intent and so the court allowed the stock to be sold).

6.    Issue 5: Do we have to sell real estate to a family member? – No, expressions of testator’s desire or wish, called precatory language, are not binding.

a.    Examples of precatory language:  desire, wish, hope, suggest.

b.    Examples of mandatory language:  I direct, the trustee shall, even I want

7.    Issue 6: What happens to income? – The court says the general rule if the will is silent is to pay all of the beneficiaries as the income accrues.  Therefore, we pay income to all GC when living even if under 21, including those born later.

8.    Issue 7 – Was the interest contingent on being alive when trust terminated, or was gift vested with enjoyment postponed until age 21?  If the youngest dies at 17, and 3 years later, the now living youngest reaches 21, do GC get 1/4 or 1/5 shares? The answer is 1/5; the gift in vested with postponed enjoyment for reasons that will be made clear when Clobberies is discussed.