Opinion ID: 1941403
Heading Depth: 1
Heading Rank: 8

Heading: Distribution of the Art Hadley Testamentary Trust

Text: Much like the Art Hadley Living Trust, the Art Hadley Testamentary Trust provided for the ultimate distribution of the trust corpus to the children and issue of Art Hadley's children, in equal shares per stirpes. This distribution was to take place upon the death of the survivor of Art Hadley's children. Therefore, the trust corpus was to be distributed at the time of Sarah Hadley's death in 2002 to the children and issue then living of Thomas Hadley and Sarah Hadley. However, neither Thomas Hadley nor Sarah Hadley left any natural issue. Furthermore, as indicated by the foregoing analysis, when interpreting the term issue for the purposes of construing a trust instrument, adoptees who were over the age of eighteen at the time of their adoption do not qualify as issue of their adoptive parents. Therefore, Janet Hunt and Lucille Foster cannot be considered issue of Thomas Hadley as defined by the Art Hadley Testamentary Trust. Accordingly, the absence of any issue caused the trust to fail in 2002. Unlike the Art Hadley Living Trust, the Art Hadley Testamentary Trust did not contain a failure clause. Therefore, Rhode Island's intestacy laws must be applied to ascertain the proper beneficiaries of the failed trust. See G.L. 1956 § 33-6-30 (All real and personal property, not devised or bequeathed in the last will and testament of any person shall be distributed in the same manner as if the person had died intestate.). Although appellants agree that the laws of intestacy should apply in the case of a trust's failure, they urge this Court to recognize that Art Hadley's heirs should be determined as of the date of the trust's failure. We disagree. This Court consistently has held that in the case that a testamentary trust fails, the decedent's heirs-at-law should be determined as of the date of the decedent's death. See Redmond v. Manufacturers Hanover Trust Co., 484 A.2d 906, 909 (R.I.1984) (citing Champagne v. Fortin, 69 R.I. 10, 20, 30 A.2d 838, 843 (1943)). This very issue arose in the 1943 case Champagne v. Fortin, 69 R.I. 10, 30 A.2d 838 (1943). In that case, the decedent had established a testamentary trust for the benefit of her children. Id. at 12, 30 A.2d at 839. The trust specified that upon the death of the decedent's children, the trusts were to be divided among the children of the decedent's children (the decedent's grandchildren). Id. However, all the decedent's children died childless and the trust failed to provide instructions for the trustee with respect to the distribution of the trust's corpus in the event that the trust provisions failed. Id. at 11-13, 30 A.2d at 839. Examining the predicament that resulted from the trust's failure, this Court explained that [i]t is manifestly impossible to restore the property to the testatrix. In such a case the parties will be put as near as may be in status quo by imposing a resulting trust for the benefit of the heirs or next of kin of the testator or for his residuary devisee or legatee. Id. at 18, 30 A.2d at 842 (citing 3 Scott on Trusts § 411). Our determination that a resulting trust for the benefit of the decedent's heirs-at-law was appropriate did not end our analysis, however. Champagne, 69 R.I. at 18, 30 A.2d at 842. Instead, we were left to decide who qualified as the decedent's heirs-at-law. Id. We concluded, [i]n our view the resulting trust, arising as it does in favor of the testatrix's heirs by operation of law, and not by reason of any intention of the testatrix to be implied from expressions in her will, can only be construed to be for the benefit of those who answer the description of heirs according to law. Heirs are those upon whom the law casts the descent immediately upon the death of the ancestor. In the eyes of the law only such are or can be heirs. Id. at 20, 30 A.2d at 842-43. According to this Court, this general rule applies, requiring that heirs be determined at the date of the testator's death, unless the testator made it clear in the instrument that he or she intended that the heirs be determined at some other time. Id. at 20, 30 A.2d at 843. More than forty years later, this Court reaffirmed its central holding in Champagne in Redmond, a case involving substantially similar facts. In Redmond, 484 A.2d at 908, the decedent created a trust for the benefit of her grandchildren. Upon the death of the decedent's grandchildren, the trust corpus was to be distributed to the issue of her grandchildren. Id. However, much like in Champagne and the matter now before this Court, when the last living grandchild died, there were no living issue of any of the decedent's grandchildren, nor was there a provision specifying an alternative distribution. Id. In Redmond, this Court expressly followed the rule expounded in Champagne and directed that the heirs-at-law be determined based on the date of the decedent's death. Id. at 909. We see no reason to deviate from these holdings. When the Art Hadley Testamentary Trust failed upon Sarah Hadley's death in 2002, a resulting trust arose in favor of Art Hadley's heirs-at-law. Applying the rule espoused in Champagne and reaffirmed in Redmond, Art Hadley's heirs-at-law at the time of his death were his survivors, Frances Hadley, Thomas Hadley, and Sarah Hadley. Under the laws of intestacy, one half of Art Hadley's estate should be distributed to the estate of his spouse, Frances Hadley, and the remaining is to be divided equally among the estates of his children, Thomas Hadley and Sarah Hadley.