Opinion
Docket No.: CL19-2652
02-04-2020
Re: Steven A. Mirman, Administrator c.t.a. of the Estate of Richard A. Rutyna, v. Mary E. Clements, et al.
Stephan J. Lipskis, Esquire
Todd D. Rothlisberger, Esquire
Poole Brooke Plumlee PC
4705 Columbus Street, Suite 100
Virginia Beach, Virginia 23462 C. Wiley Grandy, Esquire
Crenshaw, Ware & Martin, P.L.C.
150 W. Main Street, Suite 1500
Norfolk, Virginia 23510 Neal P. Brodsky, Esquire
NB Law Group, PLLC
999 Waterside Drive, Suite 2204
Norfolk, Virginia 23510 Andrew Fox, Esquire
Margaret A. Kelly, Esquire
Office of the Norfolk City Attorney
810 Union Street
900 City Hall Building
Norfolk, Virginia 23510 M. Bradley Brickhouse, Esquire
Ashley B. Horbal, Esquire
Oast & Taylor PLC
277 Bendix Road, Suite 400
Virginia Beach, Virginia 23542 Dear Counsel:
Today the Court rules on the "Petition for Aid and Direction and Motion for Administrative Powers" (the "Petition") filed by Steven A. Mirman, administrator of the estate of Richard A. Rutyna (the "Administrator"). The Administrator seeks guidance interpreting Rutyna's will, including, inter alia, a determination of the proper residuary beneficiaries and whether a purported trust described therein is valid. If the trust is valid, income from the residuary estate would go to the trust beneficiaries—charitable organizations Norfolk Society for the Prevention of Cruelty to Animals; Children's Hospital of the King's Daughters, Inc.; the Chrysler Museum; and the Wounded Warrior Project (the "Charities"). If the trust is not valid, the residuary estate would go to Rutyna's intestate heirs, despite Rutyna's apparent testamentary intent not to have his "relatives by blood" inherit any of his estate.
The Court finds that Rutyna's intent was to establish a trust, with a designated trustee, to benefit the Charities and have his heirs inherit nothing. Although the designated trustee predeceased Rutyna, the Court finds that the applicable statutory elements for creation of a valid trust have been satisfied. Rutyna's residuary estate therefore will be held in trust for the benefit of the Charities, as income beneficiaries, and the Administrator is directed to coordinate with the Charities to support appointment of a trustee in accordance with section 64.2-757 of the Code of Virginia.
Background
Richard A. Rutyna died on March 13, 2018. He had executed his "Last Will and Testament" (the "Will") almost five years earlier, on April 2, 2013. The Will provides that, with respect to Rutyna, "[a]t the time of the execution of this Will, I am unmarried and have no children. I am not unmindful of other relatives by blood, but choose not to make provision in this Will for them." (Ex. 1, at 1.) Rutyna's heirs-at-law are Mary E. Clements, Nancy R. Cash, and Charles S. Rutyna (the "Heirs").
Article II of the Will devises all of Rutyna's "right, title, and interest" in certain real property located at 1228 Lowery Court in the City of Norfolk to Dolores Monaco. (Id. Art. II.) Article II also bequeaths to Monaco the "contents of the residential dwelling house and all other appurtenant structures, all other tangible personal property . . . , including, but not limited to, jewelry, cash, furnishings, books and papers, and all automobiles." (Id.) Finally, Article III of the Will bequeaths sixty percent of the residuary estate to Monaco and the remaining forty percent to Monaco, "in trust, for the following purposes":
Monaco was not related or married to Rutyna.
1. The trust shall be called the Rutyna Family Foundation.
2. The annual income, after expenses of the trust, shall be distributed in equal shares to the following organizations . . . . :
(Id. Art. III.)a) Norfolk Society for the Prevention of Cruelty to Animals.
b) Children's Hospital of the King's Daughter's, in Norfolk.
c) Chrysler Museum in Norfolk, to help maintain its fine arts collection.
d) Wounded Warriors Project.
The parties agree that, although the names of the entities identified in the Will do not exactly match any known organizations, they are the parties named in this suit.
Monaco predeceased Rutyna, and Mirman qualified as administrator of Rutyna's estate after Rutyna's death. On March 18, 2019, the Administrator filed the Petition, seeking the Court's assistance in interpreting the Will, including the purported trust identified in the Will. The Court heard argument from the parties—the Administrator, the Charities, and the Heirs—on December 9, 2019.
Monaco died the same day as Rutyna, but for purposes of interpreting the Will she is deemed as a matter of law to have predeceased Rutyna. Va. Code § 64.2-2202 (2016 Repl. Vol.).
At the conclusion of the hearing, the Court granted in part the Petition, authorizing the Administrator to sell the real and personal property of the decedent. (See Jan. 13, 2020, Order on Pet. Aid Direction and Mot. Admin. Powers.) The Court took the remainder of the Petition under advisement and granted the parties leave to file post-hearing briefs.
Positions of the Parties
The Administrator's Position
The Administrator requests that the Court determine the proper residuary beneficiaries; determine whether the purported trust described in Article III of the Will is valid; and, if the trust is valid, determine whether the trust can be accomplished through an endowed fund with the Hampton Roads Community Foundation. Apart from seeking the aid above, the Administrator takes no position as to who is entitled to the residuary estate, trust corpus, or trust income.
The Administrator also sought permission to liquidate the real and personal property of the estate, which the Court granted at the conclusion of the hearing. (See Jan. 13, 2020, Order on Pet. Aid Direction and Mot. Admin. Powers.)
The Charities' Position
The Charities argue in favor of what they claim to be the testator's intent as expressed in the Will. Interpreting Article III, the Charities assert that all necessary requirements for the creation of a trust have been satisfied. They maintain that Monaco was designated as a trustee and not a trust beneficiary; the trust cannot fail for lack of a trustee; and the residuary estate should be distributed to the trust, with the Heirs inheriting nothing. (Charities' Bench Mem. Following Trial 2.) Specifically, the Charities assert that a valid trust was created pursuant to the statutory requirements in section 64.2-720 of the Code of Virginia. They also argue that, as a matter of law, there is "no need at common law or from a principle of equity for the court to impose a distinction between an income beneficiary and a principal beneficiary for a trust to be created." (Id. at 7.) The Charities claim that the only requirement to create a valid trust with respect to beneficiary designations is that there be a "definite beneficiary," and the Charities assert that they qualify as definite beneficiaries. (Id. at 4-5.) They further argue that they not only are definite beneficiaries establishing valid trust creation but that the trust is a charitable trust subject to a separate beneficiary standard. (Id. at 8.)
The Charities also argue that Monaco is the designated trustee for the Rutyna Family Foundation. Although she predeceased Rutyna, the Charites assert that her death does not negate trust creation. Additionally, the Charities note that the role of the trustee—regardless of who replaces Monaco—would be to assume the normal duties of a trustee, including "fiduciary duties to safeguard the trust and administer the trust according to its terms." (Id. at 9.) Finally, the Charities dispute the Heirs' assertion that Monaco is a beneficiary as opposed to a trustee. They point out that the express language of the Will states, "To Dolores M. Monaco, forty percent (40%), in trust." (Id. at 9.) The Charities argue that the words "in trust" created a fiduciary duty, not a beneficial interest. (Id. at 12.)
In addition to filing its bench memorandum, the Chrysler Museum asserts its interest as a charitable beneficiary and filed a Notice and Motion to Appoint Trustee, recommending that the Court appoint the Hampton Roads Community Foundation as trustee of the Rutyna Family Foundation. (Notice and Motion to Appoint Trustee.)
The Heirs' Position
The Heirs argue that the purported trust fails and that the entire estate must pass via intestacy to Rutyna's heirs. They contend that the identical language in Article III, sections A and B of the Will—"To Dolores M. Monaco"—should induce identical treatment. (Heirs' Post-Trial Br. 2-3.) Specifically, they assert that the residuary bequest in Section A and the trust purpose in Section B both fail because Monaco predeceased Rutyna. (Id. at 3.) Accordingly, they claim that the bequests identified in both sections A and B should revert to the heirs at law. (Id.)
Alternatively, the Heirs argue that, in the event that a testamentary trust was created by the Will, they are the trust beneficiaries—via a "resulting trust"—due to Monaco predeceasing Rutyna and Rutyna failing to name an alternate or residuary beneficiary. (Id. at 3.) They assert that Monaco was the designated trust beneficiary but that the bequest fails because she predeceased the testator. The beneficial interest therefore falls into intestacy, the charities are income beneficiaries only, and the Will fails to name a trustee. (Id.)
The Heirs draw a distinction between principal, alternative, and income beneficiaries. (Id. at 4.) They contend that the Rutyna Family Foundation irreparably lacks a principal beneficiary because Monaco predeceased Rutyna and no alternative beneficiary is designated. (Id. at 3.) The Heirs argue that the Charities cannot serve as alternative beneficiaries because their interest is limited by their express designation as income beneficiaries. (Id. at 4.) The Heirs contend that, without a principal beneficiary, the trust language in the Will favors them.
Analysis
Legal Standard
Pursuant to section 64.2-710 of the Code of Virginia, a court "may intervene in the administration of a trust to the extent its jurisdiction is invoked by an interested person or as provided by law . . . [,] including a request for instructions and an action to declare rights." Va. Code § 64.2-710 (2016 Repl. Vol.).
Wills are construed in a manner similar to the interpretation of contracts. "The paramount rule in will construction is that the testator's intention controls; the problem is to ascertain it." Westmoreland Cty. Volunteer Rescue Squad v. Melnick, 243 Va. 222, 224, 414 S.E.2d 817, 818, (1992) (quoting Gillespie v. Davis, 242 Va. 300, 303, 410 S.E.2d 613, 615 (1991)). "This intention must be ascertained, if possible, from the language of the document." Id.; see also Harbour v. SunTrust Bank, 278 Va. 514, 519-20, 685 S.E.2d 838, 841 (2009) (applying the same rules of construction to trusts).
Unless a contrary intention appears in the will or trust instrument, . . . : 1. If a devise, bequest, or distribution other than a residuary devise, bequest, or distribution fails for any reason, it shall become a part of the residue; and 2. If the residue is devised, bequeathed, or otherwise required to be distributed to two or more persons and the
share of one fails for any reason, such share shall pass to the other residuary devisees, legatees, or beneficiaries in proportion to their interests in the residue.Va. Code § 64.2-416(B).
"Subsection B applies to trusts and trust provisions only to the extent the trust instrument or provision revocable immediately before the settlor's death on or after July 1, 2018, and the devise, bequest, or distribution occurs by reason of the settlor's death." Va. Code § 64.2-416(D).
"A trust may be created by . . . [f]ransfer of property to another person as trustee during the settlor's lifetime by the settlor or by the settlor's agent . . . by will or other disposition takin effect upon the settlor's death." Id. § 64.2-719.
A trust is created only if:
1. The settlor has capacity to create a trust . . . ;
2. The settlor . . . indicates an intention to create the trust;
3. The trust has a definite beneficiary or is:
a. A charitable trust;
b. A trust for the care of an animal, as provided in § 64.2-726; or
c. A trust for a noncharitable purpose, as provided in § 64.2-727;
Id. § 64.2-720. "A beneficiary is definite if the beneficiary can be ascertained now or in the future, subject to any applicable rule against perpetuities." Id.
4. The trustee has duties to perform; and
5. The same person is not the sole trustee and sole beneficiary.
"[E]quity will not permit a trust to fail for want of a trustee." Fitzgerald v. Doggett's Ex'r, 155 Va. 112, 129, 155 S.E. 129, 134 (1930).
If a trustee named in a will, deed, or other writing . . . dies, . . . the circuit court in which such will was admitted to probate . . . may on motion of any interested party, and upon satisfactory evidence of [appropriate] conditions . . . , appoint a trustee in place of the trustee named in the instrument.Va. Code § 64.2-1405.
Discussion
The Court has considered the pleadings, argument from counsel, and applicable authorities. The Court now rules on Mirman's motion.
The parties agree that Article II of the Will devises certain real property and bequeaths certain personal property to Monaco without a provision for further distribution of that property should Monaco predecease Rutyna. The parties also agree that Monaco predeceased Rutyna and that, as a result, the distributions to Monaco under Article II fail as a matter of law. Va. Code § 64.2-416(B) (2016 Repl. Vol.). Hence, the specified real and personal property in Article II became part of the residuary estate. Id. ("If a devise, bequest, or distribution other than a residuary devise, bequest, or distribution fails for any reason, it shall become a part of the residue . . . ."). In other words, Rutyna's entire estate consists of the residuary estate.
Article III of the Will bequeaths sixty percent of the residuary estate to Monaco. The parties agree that, as a result of Monaco predeceasing Rutyna, the bequest of her sixty-percent share of the residuary estate fails. The purported trust—or Rutyna's heirs, if the trust is not valid—therefore is entitled to one hundred percent of the residuary estate. Id. ("If the residue is devised, bequeathed, or otherwise required to be distributed to two or more persons and the share of one fails for any reason, such share shall pass to the other residuary devisees, legatees, or beneficiaries in proportion to their interests in the residue."); see also Stone's Ex'r v. Nicholson, 68 Va. 1, 8, 27 Gratt. 1, 5 (1876) ("[W]hen a residuary devise or bequest fails from any cause, the subject of it, to the extent of such failure, goes to the heirs or distributes at law of the testator."); cf. Sims v. Sims, 94 Va. 580, 584, 27 S.E. 436, 437 ("Where a trust is created by a Will, if the beneficiary is not disclosed or cannot be discovered from the will itself, the trustee holds the devise or bequest for the benefit of the heirs or distributees of the testator.").
The Charities and the Heirs both argue that they are entitled to the whole of Rutyna's estate. Identifying the proper beneficiaries requires interpreting the validity of the purported trust set out in the Will. A. The Rutyna Family Foundation Is a Validly Created Trust.
A trust generally is "inseparable from the parties related to it, and the trust does not have separate legal status . . . . [It is] a fiduciary relationship between already existing parties, be they real persons or other legal entities." Jimenz v. Corr, 288 Va. 395, 412, 764 S.E.2d 115, 121 (2014). The parties to a trust include "the 'settlor,' or the 'person who creates a trust,' the 'trustee,' or the 'person holding property in trust,' and the 'beneficiary,' or the 'person for whose benefit property is held in trust.'" Id. (quoting Restatement (Second) of Trusts § 3 (1959)). The trustee typically acquires legal title to the trust property, while "the beneficiary is the equitable owner of trust property, in whole or in part." Fletcher v. Fletcher, 253 Va. 30, 35, 480 S.E.2d 488, 491 (1997). A trust can be created by a transfer of property to another person—the trustee—by a will or other disposition that takes effect upon the settlor's death. Va. Code § 64.2-719 (2016 Repl. Vol.).
Under circumstances such as those present here, the following elements are required to create a trust: (1) the settlor has capacity to create a trust; (2) the settlor indicates an intention to create the trust; (3) the trust has a definite beneficiary or is a charitable trust, a trust for the care of an animal, or a trust for certain noncharitable purposes; (4) the trustee has duties to perform; and (5) the same person is not the sole trustee and sole beneficiary. Id. § 64.2-720. Further, a trust can only be created if "its purposes are lawful, not contrary to public policy, and possible to achieve." Id. § 64.2-722. Additionally, it is well established that no particular words are required to create a trust. Lawless v. Lawless, 187 Va. 511, 521, 47 S.E.2d 431, 436 (1948).
Here, the parties agree that the first two elements have been met: none of the parties contest Rutyna's capacity, and the express language in Article III of the Will—"[t]he trust shall be called the Rutyna Family Foundation"—manifests Rutyna's intent to create a trust, with distributions funded by the forty percent of the residuary estate. The parties disagree about whether the trust has a definite beneficiary, which is discussed below.
With respect to the last two elements, to the extent that Monaco is the designated trustee, it is undisputed that the trustee has duties to perform—including distributing trust income to the Charities annually—and that the same person is not the sole trustee and the sole beneficiary. The parties disagree regarding whether Monaco is the designated trustee, however. The Heirs argue that Monaco is the purported trust beneficiary and that there is no designated trustee. As discussed below, the Court ultimately holds that the person designated in the Will to hold the funds "in trust"—Monaco—has the typical fiduciary duties of a trustee, including the duty to carry out the settlor's express instructions for distribution of the trust income. Even if Monaco were not the designated trustee, arguendo, "equity will not permit a trust to fail for want of a trustee." Fitzgerald v. Doggett's Ex'r, 155 Va. 112, 129, 155 S.E. 129, 134 (1930). The Court can appoint a trustee if necessary. Va. Code § 1405. B. The Will Designates the Charities as Definite Beneficiaries.
The Heirs argue that the trust fails to identify a definite beneficiary. While they acknowledge that the Charities are expressly named as income beneficiaries, they assert that the designation is void and that the trust fails because an income beneficiary cannot exist without a principal beneficiary. They contend that Monaco was named in the Will as the principal trust beneficiary and, because Monaco predeceased Rutyna and no alternative principal beneficiary is named, the trust irreparably lacks a beneficiary. The Charities, on the other hand, assert that they qualify as definite beneficiaries because an income beneficiary designation is sufficiently definite. The Court holds that a properly designated income beneficiary can constitute a definite beneficiary and that, under appropriate circumstances, a trust does not require a principal beneficiary.
Despite the expert testimony they elicited at the hearing, the Heirs have not cited any authority to support their position that an income beneficiary alone is insufficient to satisfy the definite-beneficiary requirement. Further, the income and principal designations are immaterial in the trust formation analysis. The Virginia Uniform Trust Code—as well as the Restatement (Third) of Trusts—acknowledges that trust beneficiaries may be entitled to an equitable interest in either the trust principal or the trust income, and such a distinction is not a disqualifying criterion for trust creation. In fact, the Virginia Uniform Trust Code acknowledges both principal and income beneficiaries as "qualified beneficiaries." See Va . Code § 64.2-701 (2016 Repl. Vol.).
Moreover, the Restatement (Third) of Trusts impliedly suggests that a principal trust beneficiary is unnecessary if there is an income beneficiary: "If by the terms of a trust a person is entitled to the income from the trust property perpetually and there is no other disposition of the beneficial interest, that person is the sole beneficiary of the trust and has the full and absolute equitable interest in the trust property." § 49 cmt. c. (2003).
As noted above, section 64.2-720 requires that a valid trust have a "definite beneficiary." Id. § 64.2-720(A)(3). The Virginia Uniform Trust Code defines a "beneficiary" as a person that "has a present or future, vested or contingent, beneficial interest in a trust; holds a power of appointment over trust property; or is an identified charitable organization that will or may receive distributions under the terms of the trust." Id. § 64.2-701 (emphasis added). The only descriptive requirement regarding beneficiaries for the creation of a valid trust is that they be "definite." Definiteness as applied to a testamentary trust requires that the beneficiary be an ascertainable person that has been disclosed by the will itself. See Lawless v. Lawless, 187 Va. 511, 520, 47 S.E.2d 431, 436 (1948). A beneficiary is sufficiently definite where it is "specifically named or capable of ascertainment from facts existing at the time the trust or interest is to be created; or capable of becoming existent and ascertainable in the future from facts that will be determinable within the period and terms of the rule against perpetuities." Restatement (Third) of Trusts § 44 cmt. A (2003).
The Heirs correctly assert that a trust that fails to disclose any beneficiary may become a resulting trust for the benefit of the testator's heirs. "When a trust is created by a will, if the beneficiary is not disclosed or cannot be discovered from the will itself, the trustee holds the devise or bequest for the benefit of the heirs or distributees of the testator. The equitable interest goes to them by way of a resulting trust." Lawless, 187 Va. at 520, 47 S.E. 2d at 436 (1948) (quoting Sims v. Sims, 94 Va. 580, 584, 27 S.E. 436, 437 (1897)). In this case, however, trust beneficiaries—the Charities—are disclosed in the Will. The central issue is whether the Charities are sufficiently definite pursuant to section 64.2-720.
As a matter law and policy, the definite-beneficiary requirement supports the rule against perpetuities, i.e., that a valid future interest must vest, if at all, within twenty-one years after the death of a life in being at the time that the interest was created. See Va . Code § 64.2-720(B). Apart from section 64.2-701's apparent focus on ascertainability and preserving the testator's intent, there do not appear to be any additional requirements distinguishing a principal beneficiary from an income beneficiary for purposes of trust creation. Although principal and income distinctions may affect trust execution, the Court finds that both types of beneficiaries qualify as definite beneficiaries so long as they are specifically named or capable of being ascertained.
Here, the Charities are expressly identified by the Will in Article III. Each of the charitable organizations is ascertainable, and the purpose of Article III.B of the trust is to fund each of them, "or their legal successors, for as long as they exist and carry on their current purposes." The Court finds that the Charities therefore are definite beneficiaries as defined by section 64.2-720 of the Code of Virginia.
Alternatively, the Charities argue that the trust does not fail for lack of a definite beneficiary because the Rutyna Family Foundation qualifies as a "charitable trust." A charitable trust is a "trust, or portion of a trust, created for a charitable purpose." Va. Code § 64.2-701. Charitable purposes include relief of poverty, advancement of education or religion, the promotion of health, or other purposes that benefit the community. Id. § 64.2-723. The Virginia Uniform Trust Code impliedly acknowledges the possibility of a charitable organization designated to receive distributions under the terms of a charitable trust; it characterizes these organizations as qualified beneficiaries if the organization, on the date of determination, "is a distributee or permissible distributee of trust income or principal." Id. § 64.2-708 (emphasis added).
The Rutyna Family Foundation appears to be a charitable trust with specifically designated charities as distributees, i.e., income beneficiaries. Although the trust is not expressly labeled as a charitable trust and does not specifically identify a charitable purpose, the instructions set out in Article III.B.2 of the Will include the condition, "for as long as they exist and carry on their current purposes." All of the named beneficiaries that follow this condition possess charitable purposes that benefit the community. Specifically, CHKD and Wounded Warrior Project work toward the promotion of health and relief of poverty; Chrysler Museum in Norfolk works toward the advancement of education; and the Norfolk Society for the Prevention of Cruelty to Animals works toward the care of animals. All of the aforementioned purposes are statutorily recognized charitable purposes. The Court therefore finds that the Rutyna Family Foundation is a valid charitable trust. As such, the trust is not bound be the definite-beneficiary requirement, even if a definite beneficiary were limited to a principal beneficiary as opposed to an income beneficiary. C. The Will Designates Monaco as Trustee.
Concerns regarding the rule against perpetuities with respect to charitable trusts are addressed by the cy pres doctrine, which provides that when the original objective of the testator becomes impossible or impracticable to perform, the court can amend the terms of the charitable trust as closely as possible to the original intention of the testator to prevent the trust from failing. Va. Code § 64.2-731. Hence, "[a] charitable trust is not invalid although by its terms it is to continue for an indefinite or unlimited period of time." Restatement (Third) of Trusts § 28(d) (2003).
The Heirs also argue that a logical reading of the Will is that the trust creation language in Article III fails to name a trustee despite designating Dolores Monaco as the principal beneficiary and the Charities as income beneficiaries. They further assert that, as a result of Monaco predeceasing Rutyna, Monaco's interest as the principal beneficiary passes via intestacy to the Heirs, and the Charities remain income beneficiaries.
This theoretically would allow the Heirs, as principal beneficiaries, to deplete the trust corpus and preclude any future distributions to the Charities, as income beneficiaries.
The relevant language regarding trustee designation in the Will is the clause, "To Dolores M. Monaco, forty per cent (40%), in trust." It is well settled that use of the clause "in trust' in a will is instructive language that identifies a trustee responsible for holding and distributing the trust corpus to the applicable beneficiaries. See, e.g., King v. Mitchell, 33 U.S. 326, 352 (1834) (concluding, with respect to the phrase "in trust," that "the ordinary sense of the term is descriptive of a fiduciary estate or technical trust; and this sense ought to be retained, until the other sense is clearly established to be that intended by the testator"). Accordingly, a plain reading of the Will and testamentary trust language indicates that forty percent of the residuary estate is to be given to Monaco, as trustee, to hold, manage, and distribute the income derived therefrom to the Charities as income beneficiaries.
The parties agree, albeit for different reasons, that there currently is a vacancy in the trustee position. As previously noted, a trust shall not fail for want of a trustee. Consistent with this equitable maxim, the Code of Virginia expressly provides that the Court may appoint a trustee where a vacancy arises.
If a trustee named in a will, deed, or other writing . . . dies, . . . the circuit court in which such will was admitted to probate . . . may on motion of any interested party, and upon satisfactory evidence of [appropriate] conditions . . . , appoint a trustee in place of the trustee named in the instrument."Va. Code § 64.2-1405 (2016 Repl. Vol.). Pursuant to this statute, the Chrysler Museum is an interested charitable beneficiary and properly filed a notice and motion to appoint a trustee in light of Monaco predeceasing Rutyna.
The process for appointing a trustee is contingent upon the classification of the trust. Section 64.2-757 of the Code of Virginia outlines what qualifies as a trustee vacancy and the requirements for appointment of a successor trustee. Id. § 64.2-757. Notably, the order of priority for trustee appointment varies depending on whether the trust is a noncharitable or charitable trust. For a noncharitable trust, a vacant trusteeship shall be filled with a person designated pursuant to the terms of the trust; if the trust does not designate a successor trustee, a successor trustee shall be appointed by unanimous agreement of the qualified beneficiaries or, where the beneficiaries cannot agree, by the Court. See id. § 64.2-757(C). For a charitable trust, on the other hand, a vacant trusteeship shall be filled by a designated successor trustee, which is "a person selected by the charitable organizations expressly designated to receive distributions under the terms of the trust," or by a person appointed by the Court. Id. § 64.2-757(D).
The Court finds that the Rutyna Family Foundation is a charitable trust with expressly designated charitable beneficiaries. Monaco predeceasing Rutyna created a vacancy in the trusteeship, and the trust language in the Will does not designate a successor trustee. Accordingly, the vacancy shall be filled by a person selected by the Charities named in Article III.B.2 of the Will or by the Court. Before ruling on the Chrysler Museum's motion to appoint the Hampton Roads Community Foundation as trustee of the Rutyna Family Foundation, the Court requests the other charitable organizations notify the Court in writing regarding whether they support such an appointment. D. The Disinheritance Clause Evidences Testamentary Intent.
In addition to the relevant statutory authorities cited above, which support the Court's ruling that the Charities are the sole beneficiaries of Rutyna's estate, there are also clear indicators that Rutyna intended to bequeath his residuary estate to the Charities—and Monaco—and not to his blood relatives, identified herein as the Heirs.
The cardinal rule in the construction of wills is that the testator's intention will be given effect unless prohibited by some rule of law or public policy. This intention must be gathered from the entire will and all of its provisions considered together . . . . [The Court's] function, of course, is to discern the testator's intent from the language used in the will, giving effect to and reconciling, if possible, all of its provisions.Kling v. Va. Trust Co., 215 Va. 226, 229, 207 S.E.2d 890, 893 (1974). In order to disinherit an heir, there must be a complete disposition of the property; negative words alone are insufficient. See McCabe v. Cary's Ex'r, 135 Va. 428, 442, 116 S.E. 485, 489 (1923) ("[A]n heir at law can only be disinherited by express devise or necessary implication."); see also 1 Harrison on Wills & Administration for Virginia and West Virginia § 16.10(3) (2007) ("To exclude the heir from participation in any portion of his estate must convincingly appear by express terms or by necessary implication.").
Rutyna clearly conveyed his intent to disinherit his intestate heirs—referred to in the Will as "relatives by blood"—through both negative words and the complete disposition of his estate. He included the following verbiage in the concluding sentence of the opening paragraph of his will: "I am not unmindful of other relatives by blood, but choose not to make provision in this Will for them." Rutyna also bequeathed the entirety of his estate, leaving nothing for his intestate heirs. After allocating funds for the administration of his estate and devising and bequeathing all of his real and personal property, Rutyna went on to bequeath "all of the rest, residue, and remainder of my estate, both real and personal, tangible and intangible, wherever situated," to Dolores Monaco and to the Rutyna Family Foundation for the benefit of the Charities.
The Court finds that Rutyna explicitly and implicitly articulates in the Will his intent to disinherit his blood relatives. To the extent that the Court seeks to construe the Will in a manner that gives effect to the testator's intent, as it must, it is clear that Rutyna intentionally omitted the Heirs in favor of Monaco and the Charities.
Conclusion
The Court finds that the devises and bequests in Article II of the Will have failed because Monaco predeceased Rutyna. Hence, the entirety of Rutyna's estate is contained in his residuary estate. Because Monaco predeceased Rutyna, she also does not share in the residuary estate as contemplated by the Will. The Court finds that the Rutyna Family Foundation is a valid trust, with Monaco as the designated trustee. Monaco's death resulted in the vacant trustee position, which needs to be filled, and there is no designated principal beneficiary of the trust corpus. Because the Rutyna Family Foundation is a charitable trust, a principal beneficiary is not required. The Charities maintain an equitable interest in the trust corpus, and a new trustee will be appointed to oversee the trust, including distributing income generated from the trust corpus to the Charities, once additional input is received from the Charities.
The Court directs counsel for the Administrator to prepare and circulate a Final Order consistent with the ruling in this opinion and submit it to the Court for entry within fourteen days.
Sincerely,
/s/
David W. Lannetti
Circuit Court Judge DWL/wmp