Opinion
Case No. 20-CA-308
07-06-2021
RE: Succession of Dean Allen Bradley
FREDERICKA H. WICKER JUDE G. GRAVOIS MARC E. JOHNSON ROBERT A. CHAISSON STEPHEN J. WINDHORST HANS J. LILJEBERG JOHN J. MOLAISON, JR. JUDGES
CURTIS B. PURSELL CLERK OF COURT
NANCY F. VEGA CHIEF DEPUTY CLERK
SUSAN S. BUCHHOLZ FIRST DEPUTY CLERK
MELISSA C. LEDET DIRECTOR OF CENTRAL STAFF
To all recipients of the opinion in the above referenced case:
Since issuing the opinion in the above case on March 31, 2021, the court has made the following corrections.
Page 7, Paragraph 2, lines 18 to 21
"creation. Inter vivos trusts are created upon execution of the trust instrument. La.R.S. 9:1822. In this matter, the Trust was executed on April 19, 2002. Thus, we must look to the laws that were in effect at that time and interpret them in conjunction with Donald, Sr.'s Will.5"
has been changed to
"creation. A testamentary trust is created at the moment of the settlor's death. La. R.S. 9:1821. Inter vivos trusts are created upon execution of the trust instrument. La. R.S. 9:1822. However, a court presumes the settlor used the words in the trust according to their common, ordinary meaning, and that the settlor knew the applicable law at the time the trust was drafted. 90 C.J.S. Trusts § 208 (2021). The court will strive to reconcile by reasonable interpretation any provision that apparently conflict before adopting a construction that would nullify any provision. Id. In this matter, although the Trust was not created until Donald Sr.'s death, it was executed on April 19, 2002. Thus, in order to determine the proper beneficiary of the Trust's interest, we must look to the laws that were in effect at that time and interpret them in conjunction with Donald, Sr.'s Will.5".
Pages 7 Footnotes
As a result of the additional text, footnotes were shifted from Page 7 to Page 8.
Pages 7 to Page 10
Although there is no change to the remaining text, the additional text on Page 7, in Paragraph 2, resulted in the remaining text being shifted requiring ail four pages be replaced.
Copies of the corrected pages are enclosed. Please substitute the corrected pages in the opinion previously sent.
Kind Regards,
/s/
Curtis B. Pursell
Clerk of Court CBP/nfv mandating that the deceased principal beneficiary's interest shall vest in the beneficiary's spouse or in the remaining trust created in the will, in the event the beneficiary dies without descendants or a spouse. Donald, Jr. argues that, if "heirs and legatees" are to be interpreted as Ms. Ladner suggests there would have been no reason to include the contingency provisions in Donald, Sr.'s Will, and those provisions would be rendered wholly ineffective and superfluous.
Donald, Jr. further contends that the language of Donald, Sr.'s Will mirrors the Louisiana Trust Code. He contends that only if a legitime interest is affected does any shift of a principal beneficiary require the beneficiary to die both intestate and without descendants. He maintains that the trial court recognized the law's provision for the shifting of a principal beneficiary, and moreover, the will's use of the term "however" to carry out that substitution of the principal beneficiary. Because Dean died without descendants or a spouse, Donald, Jr.'s trust interest was then vested in the remaining trust created by Donald, Sr.'s Will—the Donald R. Bradley, Jr. Testamentary Trust.
According to La. R.S. 9:2252, trusts that are created and any provisions or dispositions therein shall be governed by the laws in effect at the time of their creation. A testamentary trust is created at the moment of the settlor's death. La. R.S. 9:1821. Inter vivos trusts are created upon execution of the trust instrument. La. R.S. 9:1822. However, a court presumes the settlor used the words in the trust according to their common, ordinary meaning, and that the settlor knew the applicable law at the time the trust was drafted. 90 C.J.S. Trusts § 208 (2021). The court will strive to reconcile, by reasonable interpretation, any provisions that apparently conflict before adopting a construction that would nullify any provision. Id. In this matter, although the Trust is a testamentary trust and was not created until Donald Sr.'s death, it was executed on April 19, 2002. Thus, in order to determine the proper beneficiary of the Trust's interest, we must look to the laws that were in effect on April 19, 2002 and interpret them in conjunction with Donald, Sr.'s Will.
Questions of law, such as the proper interpretation of a statute, are reviewed under the de novo standard of review. City of Gretna v. Morice, 14-301 (La. App. 5 Cir. 12/30/14); 167 So.3d 823, 827.
Pursuant to the version of La. R.S. 9:1972 in effect in 2002, "[u]pon a principal beneficiary's death, his interest vests in his heirs or legatees, subject to the trust; provided, however, that the trust instrument may stipulate otherwise to the extent permitted by the following Sections of this Subpart and R.S. 9:1895." When setting forth the requirements for shifting interest in principal, La. R.S. 9:1973 provided,
La. R.S. 9:1972 was amended by Acts 2016, No. 544, § 1, which became effective on August 1, 2016.
La. R.S. 9:1973 was amended by Acts 2010, No. 390, § 1 and Acts 2016, No. 544, § 1. The statute currently provides:
A. (1) Except as to the legitime in trust, the trust instrument may provide that the interest of an original or a substitute principal beneficiary of an irrevocable trust vests in one or more of his descendants upon the death of the beneficiary either during the term of the trust or at its termination. The trust instrument may provide that the interest vests in another person if the beneficiary dies without descendants.
(2) With respect to the legitime in trust, the trust instrument may provide that the interest of an original or a substitute principal beneficiary vests in another person upon the death of the beneficiary either during the term of the trust or at its termination, only if a beneficiary dies intestate and without descendants.
B. The trust instrument may provide that the interest of a designated principal beneficiary of a revocable trust shifts to another person, if the substitution occurs no later than the date when the trust becomes irrevocable.
A. The trust instrument may provide that the interest of either an original or a substitute principal beneficiary who dies intestate and without descendants during the term of the trust or at its termination vests in some other person or persons, each of whom shall be substitute beneficiary.
B. Except as to the legitime in trust, the trust instrument may provide that the interest of either an original or a substitute principal beneficiary who dies without descendants during the term of the trust or at its termination vests in some other person or persons, each of whom shall be substitute beneficiary.
(Emphasis added).
In Baxter v. Roth, 19-113 (La. App. 1 Cir. 6/24/20); 307 So.3d 1047, the Louisiana First Circuit thoroughly explained the shifting of the principal's interest in the older versions of La. R.S. 9:1972 and 9:1973. The court concluded:
Collectively, LSA-R.S. 1973 and 1997 Comment (a) to LSA-R.S. 9:1978 state four different times that the exceptions to LSA-R.S. 9:1972 provided for by LSA-R.S. 9:1973 require that the principal beneficiary die without descendants. When considered together according to the rules of statutory interpretation, it is clear that LSA-R.S. 9:1972 and LSA-R.S. 9:1973 do not restrict a principal beneficiary from shifting his interest in a trust unless the beneficiary dies without descendants. Rather, LSA-R.S. 9:1972 and LSA-R.S. 9:1973 restrict a trust instrument - and thereby a settlor - from shifting a principal beneficiary's interest in a trust to substitute beneficiaries unless the beneficiary dies without descendants.
This interpretation of LSA-R.S. 9:1972 and LSA-R.S. 9:1973 is supported by Breazeale, 2017 WL 3573991, and Lewis v. Williams, 622 So.2d 281, 282 (La.App. 1 Cir. [1993]), writ denied, 629 So.2d 1170 (La. 1993). The Breazeale Court clearly stated that LSA-R.S. 9:1973(A) provides, by operation of law, that a principal beneficiary must die "intestate and without descendants" as a "prerequisite" for the settlor's substitution of a principal beneficiary's interest in a trust. This Court was even more clear in Lewis, wherein this Court considered whether a trust instrument could allow the trust corpus to bypass the succession of the principal beneficiary, when the beneficiary died testate and with descendants. The Lewis Court held...[t]he language of the Trust Instrument does not overcome or circumvent the requirement of the Trust Code that the beneficiary die intestate and without descendants in order for substitutions to be valid.
(Internal citations omitted).
In the case at bar, Dean, the principal beneficiary of the Trust, died without any descendants. However, Dean died testate. In his last will and testament, Dean bequeathed his entire estate and trust property to Ms. Ladner. Thus, under La. R.S. 9:1973(A), any substitution provided for by the Trust was necessarily predicated in every instance on the requirement that the original or substitute principal beneficiary die intestate and without descendants. Because Dean died testate, we find that his interest in the Trust vests in his legatee, Ms. Ladner. Furthermore, we find the language of Donald, Sr.'s Will cannot overcome or circumvent the requirement of the Trust Code that the beneficiary die intestate and without descendants in order for substitutions to be valid. See, Baxter, supra. Therefore, we pretermit consideration of the parties' arguments regarding interpretation of the language of Donald, Sr.'s Will as unnecessary.
DECREE
For the foregoing reasons, we reverse the summary judgment rendered by the trial court in favor of Donald R. Bradley, Jr., in his capacity as a trustee of the Donald R. Bradley Testamentary Trust. Furthermore, we find that Dean Bradley's principal beneficiary interest in the Donald R. Bradley Testamentary Trust vests in his legatee, Vicky Ann Ladner; render summary judgment in favor of Vicky Ann Ladner; and, dismiss the intervening action of Donald R. Bradley, Jr., in his capacity as a trustee of the Donald R. Bradley Testamentary Trust, with prejudice. Donald R. Bradley, Jr., in his capacity as a trustee of the Donald R. Bradley Testamentary Trust, is assessed the costs of this appeal.
REVERSED AND RENDERED