Estate of Holt, Matter of, 16488

• Decision Date: 16 September 1993
• Docket Number: No. 16488,16488
• Citation: 857 P.2d 1355,75 Haw. 224
• Parties: In the Matter of the ESTATE OF George H. HOLT, Deceased.
• Court: Hawaii Supreme Court

Page 1355

857 P.2d 1355

75 Haw. 224

In the Matter of the ESTATE OF George H. HOLT, Deceased.

No. 16488.

Supreme Court of Hawai'i.

Sept. 16, 1993.

Reconsideration Denied Oct. 6, 1993.

Syllabus by the Court

1. When a gift is made in a will to heirs of a designated person, the word "heirs" means persons who succeed to the property of such designated person under the law which governs intestate succession.

2. Heirs of a designated person are ordinarily determined as of the date of death of such person, unless the testator shows a contrary intent. Where a gift to heirs is postponed until the termination of a preceding estate, a contrary intent is shown and the heirs will be determined as of the date of the termination of the preceding estate.

3. Conclusions of law are reviewed under the right/wrong standard.

4. The common law rule against perpetuities provides that no interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest. Such life in being is commonly referred to as the "measuring life."

5. The terms of a testamentary trust become operational at the death of the testator.

6. Courts have generally held that if an explicit termination date is lacking, but specific beneficiaries are named in the trust instrument, then such beneficiaries are the applicable measuring lives for a calculation of legal trust duration under the rule against perpetuities.

Scott A. Makuakane and Bruce L. Lamon of Goodsill, Anderson, Quinn & Stifel, on the briefs, Honolulu, for guardian ad litem-appellant.

Christian P. Porter and Robert F. Miller of Foley, Maehara, Judge, Nip & Chang, on the briefs, Honolulu, for income and contingent beneficiaries-appellees.

Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.

MOON, Chief Justice.

The trustee of a testamentary trust filed a petition for instructions in circuit court to determine the correct termination date of the trust. The circuit court held that in order to avoid violating the Rule Against Perpetuities, the trust must terminate twenty-one years after the death of the last survivor among the testator's eleven children. Because the last survivor died in 1986, the court held that the trust must terminate in the year 2007. The guardian ad litem, appointed by the court to represent the interests of unascertained or yet unborn trust beneficiaries, now appeals to this court, contending that the trust should not terminate until twenty-one years after the death of the last survivor of the testator's grandchildren who were alive at the time of the testator's death. We disagree and affirm the ruling of the circuit court.

I. BACKGROUND

The testamentary trust, which is the subject of this appeal, was created by the 1914 will of George H. Holt (Holt), who died in 1929. The testamentary trust was the subject of a prior appeal decided by this court in In re Trust Estate of George H. Holt, Deceased, 42 Haw. 129 (1957) (Holt I ). Both this court's 1957 decision and the instant appeal focus on the following provision of Holt's will:

All the rest, residue and remainder of my estate I give, devise and bequeath to my trustees hereinafter named, and their successor or successors in trust: In trust to hold, care for and manage the same for as long a period as is legally possible; determination or ending of said trust to take place when the law requires it under the Statute; and during the pendency of said trust to pay the income from the same to my said wife during her life, or so long as she shall remain a widow, and after her death or future marriage, to stand possessed thereof, in trust as aforesaid, and to pay the income to all of my heirs in equal shares per stirpes, and upon the final ending of the term of said trust, as aforesaid, to divide my trust estate among the persons entitled to the same at that time under the Law per stirpes.

There are currently fifty-three income beneficiaries, twelve of whom are Holt's grandchildren, who were living at the time of Holt's death.

The question confronting this court in Holt I was how to correctly interpret the trust phrase, "and to pay income to all of my heirs in equal share per stirpes." All of Holt's eleven children had survived Holt and his wife, who died in 1934. Following Holt's wife's death, the income from the trust estate was divided into eleven equal shares and distributed to the Holt children.

Over the next fifteen years, five of the children died; three died leaving natural children surviving them, one daughter died childless, and one son, Christopher, died leaving a wife and an adopted daughter. Following the death of the childless daughter, the trust income was divided into ten equal parts and distributed to the surviving Holt children and to Holt's grandchildren whose parent in the Holt line of descent had died.

However, following Christopher's death, the estate's trustee requested instructions from the circuit court as to the disposition of Christopher's one-tenth share in the trust income. The circuit court ruled that Christopher's interest in the trust income was "an estate of inheritance which he could dispose of by will or by assignment." Id. at 131. The court further ruled that if Christopher had died intestate, his adopted child would have inherited his trust income share, but that not being the case, his surviving spouse must be given the share because Christopher had provided for such in his will. Id. The circuit court stated that, according to the terms of Holt's testamentary trust, "[a]t the time of distribution, upon termination of the trust, [the adopted daughter] and her children will be in the line of descent, and entitled to a share of the corpus, the amount to be taken to be determined at that time dependent upon who is alive to take and the degree of kinship." Id. at 132. The trustee appealed. ¹

This court began by noting that the phrase at issue provided that trust income would be distributed specifically to Holt's "heirs" upon the death or remarriage of his widow. We then pointed out that

[w]hen a gift is made in a will to heirs of a designated person, the word "heirs" means persons who succeed to the property of such designated person under the law which governs intestate succession.

Heirs of a designated person are ordinarily determined as of the date of death of such person, unless the testator shows a contrary intent. This court has held that where a gift to heirs is postponed until the termination of a preceding estate a contrary intent is shown and that the heirs will be determined as of the date of the termination of the preceding estate.

In this case the testator gave the income of the trust to his widow for life and thereafter to his heirs. So, the heirs were, initially, determinable as of the date of death of the widow. Testator's heirs on such date were his eleven surviving children.

Id. at 132-33 (citations omitted).

We then stated that the issue presented was whether the word "heirs" was to be limited to Holt's children, or whether "heirs" should "include persons who were his heirs from time to time as the income accrued[.]" Id. at 133. We noted that if the word were limited to the children, then the circuit court's decision was correct, and it would therefore be possible "that such heir's right to the share of the income would go, after his death, to persons who would not be in the line of descent from the testator." Id. at 134. If, however, "heirs" were construed to include "persons who were [Holt's] heirs from time to time as the income accrued," then

each of the persons who were initially determined to be his heirs would only be entitled to his proportionate share of the income which accrued during his life. Such heir would have no control over the disposition of the share of the income which accrued after his death. The share of income accruing after his death would go to persons who would be testator's heirs and who traced their descent through such heir.

Id. (citation omitted).

We decided that the latter construction was the correct one, reasoning that

[t]he testator provided that upon the termination of the trust the corpus be divided among "the persons entitled to the same at that time under the law per stirpes." We construe this provision to mean that the corpus is to be distributed, per stirpes, to persons who are testator's heirs at the termination of the trust. If the provision for the payment of the income is considered in connection with the provision for the distribution of the corpus, it is apparent that the testator intended to benefit all persons who were his heirs at any time between the date of the death of the widow and the termination of the trust. There is no indication in the will that the testator intended to benefit only persons who were his heirs at the time of the death of the widow and persons who were his heirs at the termination of the trust and to exclude from its provisions persons who were his heirs at any time during the intervening period.

The foregoing construction of the provision for the payment of the income is the same construction that has been placed by the trustee. Thus, when [one of Holt's daughters] died, the trustee paid the share of the income which was formerly paid to [that daughter] to her children, who upon her death became testator's heirs per stirpes through her.

Id. at 135. We concluded that "the interest of Christopher in the income of the trust was not an estate of inheritance and that after his death [his adopted daughter] became entitled to such interest as [Holt's] heir per stirpes through [Christopher]." Id. at 140.

On January 10, 1991, Bishop Trust Company, Ltd. (trustee), current trustee of the Holt testamentary trust, filed in the circuit court a petition for instructions asking the court to determine the correct termination date of said trust. The trustee stated that twelve of the fifty-three currently living heirs...