Wills, Trusts & Administration of Estates - Mary F. Radford

• Publication year: 1999

Wills, Trusts & Administration of Estatesby Mary F. Radford^*

This Article summarizes the major cases and legislative enactments relating to Georgia fiduciary law during the period June 1, 1998 through May 31, 1999. Most of the cases described in this Article were decided under Georgia's Probate Code as it existed prior to the extensive revisions that became effective on January 1, 1998. When appropriate, this Article will discuss briefly how the amendments that appear in the Revised Probate Code of 1998¹ will affect the issue under discussion.

I. Recent Decisions

A. Construction of Wills and Trusts

Four of the most important cases decided by the Georgia Supreme Court during the survey period involved the construction of the language of wills and trusts. In each case, the language in question was language that is commonly used by lawyers to effect the purposes of similar instruments. Absent the particular set of facts in each case, the language and operation of these instruments would probably never have come into question. However, in each case, unexpected circumstances arose that were not addressed directly by the instrument and thus caused the fiduciary to seek judicial construction. While an instrument can never provide for every possible future event, these cases illustrate situations that should be explored by lawyers and their clients and possibly addressed directly in the instrument. This initial investment of time and energy may well avoid the later substantial expenditure involved when the task of determining a testator's or grantor's intent falls to the courts.

In Linkous v. Candler,² the supreme court found that the words of a trust instrument prevented an acceleration³ of the interests of the remaindermen following renunciations by the life tenants.⁴ The Probate Code section that was relevant to the renunciations, former Official Code of Georgia Annotated ("O.C.G.A.") section 53-2-115, provided in part that "[u]nless the decedent or donee of the power has otherwise indicated by his or her will, the interest renounced and any future interest which is to take effect in possession or enjoyment at or after the termination renounced shall pass as if the person renouncing had predeceased the decedent."⁵ This provision reflected the common law theory that a remainder interest can be accelerated upon a renunciation absent any indication in the controlling document of a contrary intent.⁶

The trust in Candler was an irrevocable trust established in settlement of Mr. Candler's support obligations at the time Howard and Ruth Candler divorced. The trust left the income to Mrs. Candler for life.⁷ According to the supreme court's reading of the trust, at Mrs. Candler's death, the trust income was to be paid to the Candlers' four children until the death of the '"last survivor'" of them.⁸ In fact, the income distribution scheme was more complicated. The trust provided that if any Candler child had no living issue, that child was to receive a share of the income. If a Candler child had living issue, that child could request the trustee to distribute part of that child's share of the income to the child for support and health needs. Otherwise, that child's share of the income was to be distributed to his or her living children or the issue of any predeceased child. The trust then provided that when the last Candler child died, the corpus was to be distributed to the then living grandchildren of Howard and Ruth Candler, with the issue of any deceased grandchild to take per stirpes that child's deceased parent's share. The three Candler children who were living at the time of their mother's death all had living issue.⁹

The unanticipated event in this case occurred in 1997, when, upon the death of their mother, the three surviving Candler children filed renunciations of their interests in the trust. They filed a petition in superior court for a construction of the trust that would allow an acceleration of the remaindermen's interests in light of the life tenants' renunciation. William Linkous, Jr., as guardian ad litem for the "otherwise unrepresented descendants, born and unborn," opposed the acceleration. The superior court ordered the property distributed to the grandchildren because it found no language in the trust agreement that indicated an intent to prohibit acceleration.¹⁰ The guardian ad litem appealed, and the supreme court reversed the judgment of the superior court.¹¹

The supreme court focused on the wording of the Candler trust and found that the document manifested the intent to prohibit acceleration because it required a grandchild to survive his or her parent to be able to take.¹² Thus, the court held that no acceleration would be allowed.¹³ The court found that

[t]he class of remaindermen in the Candler trust is subject to open by the birth of more grandchildren .... Therefore, the remaindermen cannot be ascertained until the last child of Howard and Ruth Candler has died. To hold otherwise would be contrary to the intent of the Candlers and would deprive potential class members of their share of the trust.¹⁴

In reaching its decision in Candler, the supreme court reaffirmed its statement in Wetherbee v. First State Bank & Trust Co.,¹⁵ that "a contrary intent [that is, an intent to prohibit acceleration] is indicated if the testator has provided that the holder of the future interest must survive the holder of the renounced interest."¹⁶ The court in Candler noted, somewhat defensively, that this rule did not put Georgia "outside the mainstream in this regard."¹⁷ However, the cases from other jurisdictions that the court cited do not effectively support this conclusion.¹⁸ In any event, the results in Wetherbee and Candler indicate that lawyers and their clients should explore the possibility of future renunciation by life tenants and should consider including language that expressly indicates whether the testator or grantor intends for acceleration to occur.

The second of the construction cases, Lamb v. NationsBank, N.A.,¹⁹ involved a will that contained the following direction:

Upon the death of my last surviving daughter, the corpus of my estate is to be divided into two (2) equal parts, one of the parts to be immediately paid over and delivered to my nieces and nephews then living. In the event of the death of any of my nieces and nephews leaving children, the share of the parent shall be paid over and delivered to such children or their legal guardians. In the event at the time of the distribution hereinbefore provided for, any of my nieces and nephews are indebted to me or to my estate, the amount of such indebtedness shall be deducted from the share which would go to such niece or nephew, or to his or her children.²⁰

The unanticipated occurrence in this case was that Victoria, the last surviving daughter of the testator, lived to a fairly advanced age. When she died, no niece or nephew of the testator was still living. The testator had one nephew and one niece. The nephew died in 1965, leaving two children. One of the children, John, was still alive when Victoria died. The other child, Meredith Lamb, died before Victoria died but left two surviving children. The testator's niece had one child, but that child also died before Victoria. Therefore, when Victoria died, the survivors were the son of the testator's nephew (John) and two grandchildren of the testator's nephew (Meredith's children).²¹

The question that the court examined was whether the language of the will contemplated that the estate would be divided among the nieces' and nephews' surviving issue or only among the nieces' and nephews' surviving children.²² Phrased differently, the court examined whether the child of a niece or nephew had to survive the life tenant, Victoria, in order to have his or her interest vest and thus be passed on to that child's children if the child died intestate.²³ John claimed that he should receive all the assets because he was the only survivor of Victoria who met the description in the testator's will (that is, a niece or nephew, or the child of a niece or nephew, of the testator). The other parties, which included the nephew's grandchildren and the successors in interest of the estates of the predeceased grandnieces, cited Georgia's preference for early vesting of remainders²⁴ for their argument that they should take as the heirs of their parent. Under their theory, while the interest of the nieces and nephews was contingent upon surviving the life tenant, the interest of the child of a niece or nephew was not limited by a survival requirement and instead was to be paid over (that is, to vest) immediately upon the death of that individual's parent. This happened when Melissa's father died leaving children, thus causing his interest to become indefeasibly vested in his two children. When Melissa later died, her indefeasibly vested interest passed to her children.²⁵

The supreme court found in the words of the will an express condition that a niece or nephew must survive the last surviving daughter in order to take.²⁶ The court found further that this survivorship requirement also applied to the children of any niece or nephew because, although the will did not expressly require their survival, it granted payment to them, not to their parents' estates or their parents' heirs.²⁷ The court held that the reference to these children's legal guardians "demonstrates that the testator contemplated that the children would be in life."²⁸ The court also pointed out that the term "children" usually does not include other generations such as grandchildren.²⁹

The court looked not only to the above-quoted provision, but also to the rest of the will to support its conclusion that the testator's intent was "that his estate benefit only those persons and entities known and dear to him and over which he had some manner of influence."³⁰ The court also noted that the interpretation that was urged by the...