Gafford v. Kirby

• Decision Date: 12 January 1981
• Citation: 512 So.2d 1356
• Parties: William F. GAFFORD, Individually and as Executor of the Estate of William F. Gafford, Jr., Deceased, and Juel Bass Gafford v. James KIRBY, as Trustee of the William Gafford Revocable Life Insurance Trust of
• Court: Alabama Supreme Court

Page 1356

512 So.2d 1356

William F. GAFFORD, Individually and as Executor of the Estate of William F. Gafford, Jr., Deceased, and Juel Bass Gafford v. James KIRBY, as Trustee of the William Gafford Revocable Life Insurance Trust of January 12, 1981, et al.

85-1011.

Supreme Court of Alabama.

Aug. 7, 1987.

Robert V. Woolridge III of Woolridge, Woolridge & Malone, Tuscaloosa, for appellants.

Ryan deGraffenried, Jr., of deGraffenried & Hawkins, Tuscaloosa and Arnold Lefkovits and Susan Salonimer of Berkowitz, Lefkovits, Isom & Kushner, Birmingham, for appellee.

BEATTY, Justice.

This is an appeal from a summary judgment entered on a petition seeking an interpretation of a trust instrument and instructions on the distribution of a trust estate. The petitioner, James Kirby, trustee of the William Gafford Revocable Life Insurance Trust ("Insurance Trust") named as respondents William Gafford, Juel Bass Gafford, Floyd O. Fitts, Jr., and Louise A. Fitts, in their various capacities.

The material facts in this case are not controverted; therefore, we adopt the facts as expressed in the trial court's order.

"On August 14, 1983, William F. Gafford, Jr. ('William'), his wife, Susan Fitts Gafford ('Susan'), and their three minor children, Catherine Louise Gafford, Allison Claire Gafford, and Claudia Suzanne Gafford, were killed in a tragic airplane crash in Washington County, Florida. For all that appears, they died simultaneously.

"There were no surviving issue of any of the five decedents, but William was survived by his parents, William F. Gafford and Juel Bass Gafford ('the Gaffords'), and Susan was survived by her parents, Floyd O. Fitts, Jr. and Louise A. Fitts ('the Fitts'). The only surviving heirs of each child were the paternal grandparents, the Gaffords, and the maternal grandparents, the Fitts.

"Both William and Susan died testate. William executed his Last Will and Testament on January 12, 1981. Susan executed her Last Will and testament about a month later, on February 14, 1981. Both wills 'pour' into the William Gafford Revocable Life Insurance Trust, a life insurance trust established by William for the benefit of Susan and their children.

"On August 22, 1983, the wills of William and Susan were admitted to probate in Tuscaloosa County. In accordance with the wishes expressed in each will, William's father, William F. Gafford, was named executor of both estates. Susan's father, Floyd O. Fitts, Jr., was named administrator of the estates of the children, who died intestate. Susan's uncle, James Kirby, succeeded her as trustee for the William Gafford Revocable Life Insurance Trust."

During the proceedings in the trial court, the respective parties moved for summary judgments. The trial court ultimately granted summary judgment,made final pursuant to Rule 54(b), A.R.Civ.P., and entered an extensive order that made the following determinations:

(1) The property held as joint tenants with the right of survivorship was allocable in equal shares to the estates of William and Susan pursuant to Code of 1975, § 43-7-4;

(2) William's personal effects became part of Susan's estate, since, by the terms of the instruments, she was presumed to have survived her husband in the event of their simultaneous deaths;

(3) Susan's estate, which consisted of her personal effects, William's personal effects, Trust Estate "A" and her one-half share of all property held in joint tenancy with right of survivorship, would descend by intestacy to her heirs at law, Floyd and Louise Fitts; and

(4) Trust Estate "B" would descend by the intestacy laws to William's heirs at law, William and Juel Bass Gafford.

The appellants, William F. Gafford, individually and in his capacity as executor of the estate of William F. Gafford, Jr., and Juel Bass Gafford (hereinafter "the Gaffords"), raise two issues on this appeal. First, the Gaffords argue that the court's instructions on the distribution of the trust estate were erroneous because the court failed to recognize that they, in their individual capacities, were the designated beneficiaries under Section V(9) of the trust agreement. Second, the Gaffords contend that the lower court erred by refusing to admit into evidence an affidavit of the attorney who drafted the instruments in question. The Gaffords object to the court's determination that the admission of this evidence would violate the parol evidence rule.

We affirm the judgment of the lower court.

The resolution of both questions on this appeal necessitates our construction of three interrelated documents--the individual wills of William F. Gafford, Jr., and Susan Fitts Gafford and the trust agreement of the Insurance Trust, since all three instruments interact to form the scenario of the Gaffords' estate planning effort.

William's Will

Other than his personal effects, which he devised to his wife, or to his children should his wife predecease him, the rest, remainder, and residue of his estate by the terms of William's will, "poured over" into the corpus of the Insurance Trust. The terms of this trust, which was to be created at his death "for the use and benefit of [his] wife and lineal descendants," were incorporated by reference into his will.

Two other items in this will must be noted. In Item IV, William stipulated that his wife should be presumed to have survived him in the event of their simultaneous deaths. Second, the will did not provide a contingent beneficiary should this trust fail for any reason. His will merely directed, in that event, that the trustee, nevertheless, should abide by the terms of the trust agreement in the administration of his estate.

Susan's Will

The plan of distribution in Susan's will was similar to the format utilized in William's will. Her personal effects were devised to her husband or to her children should William predecease her. The remainder and residue of her estate was devised to her husband, provided he survived her by at least six months. Should her husband not satisfy this condition, the remainder of her estate would "pour over" and become a part of the corpus of the Insurance Trust, which presumably, at her husband's death, either would have been, or was in the process of being, administered by its trustee. Her will also incorporated this trust agreement by reference and in Section V reiterated the presumption of her surviving her husband in the event of their simultaneous deaths. The final similarity in these wills concerned the contingency of a failed trust. In that event, her will directed the trustee to implement the terms of the trust agreement, previously incorporated as a testamentary trust. The will provided for no other contingent beneficiaries in the event her husband and children should all predecease her.

The Trust Instrument

At the execution of the trust agreement in 1981, William Gafford, Jr., surrendered various life insurance policies to the trustee of the Insurance Trust and designated this trustee as the beneficiary of the proceeds of these policies, as well as any other properties that the grantor might add to the trust in the future. Apparently, at the time of the execution of this trust instrument, the proceeds from these policies constituted the bulk of the trust res.

The terms of the trust agreement in § III(2) empowered the trustee, at the grantor's death, to apportion the trust res into two estates: Trust Estate "A" and Trust Estate "B." The trust's principal would first fund Estate "A," which was to consist of the greater of $250,000 or 50% of William's adjusted gross estate. So long as Susan survived her husband, Estate "A" would vest absolutely in her, free of the trust; however, a lapse of this estate would occur if she predeceased her husband or if she exercised her disclaimer option pursuant to § III(2)(b)(ii). In the event of either, the trustee was directed to merge the sum allocated for Trust Estate "A" into the principal of Trust Estate "B."

Trust Estate "B" consisted of the remainder of the trust property. Section III(2)(b)(ii) described Trust Estate "B" as having been "established for the benefit of grantor's said wife and lineal descendants as is hereinafter provided in Section V hereof." Section III(2)(c) directed the trustee to hold this estate for the "uses and purposes set forth in Section V of the trust agreement."

The crucial element of the trial court's ruling, and the crux of the present appeal, was that court's determination that, at Susan's death, the Insurance Trust failed for the lack of a beneficiary. Thus, her estate could not "pour over" into Trust Estate "B" at her death. Susan having provided for no other beneficiaries in her will, her estate descended to her heirs at law under the laws of intestate succession, Code of 1975, §§ 43-8-40, -42.

The trial court also held that the lack of a beneficiary at Susan's death also forced Trust Estate "B" to fail. That court held that Section V(9) of the trust instrument had no applicability because its reference to "any child ... entitled to share" related back to Section V(5) and meant any child or children who were still alive at Susan's death. In the instant case, due to Code of 1975, § 43-7-2, all the children were presumed to have predeceased both parents. Since the trust instrument provided for no other contingent beneficiary, the court distributed the res of Trust Estate "B" to the grantor's heirs-at-law, the Gaffords, by intestacy.

The Gaffords contest the trial court's ruling. They argue that they were the intended beneficiaries of Section V(9) because the phrase "child ... entitled to share" merely designated Catherine Louise Gafford, who was in being at the time of the execution of the trust agreement, and any other children subsequently born to or adopted by the grantor. They submit that this phrase served only to limit the class that it was intended to benefit and that it had no effect on the grantor's plans of distribution as evidenced by Section V(9) by...