Opinion ID: 2160904
Heading Depth: 1
Heading Rank: 8

Heading: Applicability of Restatement (Third) of Trusts

Text: In reaching its decision, the appellate court also relied on section 29 of the Restatement (Third) of Trusts, and the explanatory notes and comments thereto. 383 Ill.App.3d at 997, 322 Ill.Dec. 534, 891 N.E.2d 549. Since the Restatement (Second) of Trusts was adopted in 1959, this court has, on several occasions, cited various sections with approval. See, e.g., Eychaner v. Gross, 202 Ill.2d 228, 255, 269 Ill.Dec. 80, 779 N.E.2d 1115 (2002) (requirements for creation of a trust). We have not yet had reason to consider whether any section of the Restatement (Third) of Trusts, which was adopted in 2003, is an accurate expression of Illinois law and we need not do so in this case. The validity of a trust provision is not at issue, as the distribution provision of Max's trust was revoked when Erla exercised her power of appointment. Her distribution scheme was in the nature of a testamentary provision, which operated at the time of her death to determine who would be entitled to a $250,000 distribution. The appellate court mistakenly compared the present case to an illustration accompanying Comment j to section 29 of the Restatement (Third) of Trusts. 383 Ill.App.3d at 997, 322 Ill.Dec. 534, 891 N.E.2d 549. The illustration concerns a trust created by an aunt to benefit her nephew, who was to receive discretionary payments until age 18, and all income and discretionary payments until age 30, at which time he would receive an outright distribution of all trust property. However, all of his rights under the trust would end if, before the trust terminated on his thirtieth birthday, he married a person who is not of R Religion. If he violated this condition, the remainder of the trust would be given to a college. The drafters of the Restatement called this an invalid restraint on marriage, and stated that the invalid condition and the gift over to the college should not be given effect. Restatement (Third) of Trusts § 29, Explanatory Notes, Comment j, Illustration 3, at 62-64 (2003). This illustration is similar to Max's original trust provision. Under his plan, the grandchildren who were not deemed deceased at the time of Erla's death would receive distributions from the trust for life, subject to termination if they should violate the marriage restriction. Erla's scheme, however, does not operate prospectively to encourage the grandchildren to make certain choices regarding marriage. It operated on the date of her death to determine which, if any, of the grandchildren qualified for distribution on that date. The condition was either met or it was not met. There was nothing any of the grandchildren could have done at that time to make themselves eligible or ineligible for the distribution. As this court noted in Ransdell, a condition precedent, even if a complete restraint on marriage, will, if broken, be operative and prevent the devise from taking effect. However, [w]hen the condition is subsequent and void it is entirely inoperative, and the donee retains the property unaffected by its breach. Ransdell, 172 Ill. at 447, 50 N.E. 111, quoting 2 Pomeroy, Equity Jurisprudence § 933B (1881). Max's will and trust created no vested interests in the children or grandchildren because Erla retained a power of appointment until her death. No vested interests were created in 1997 by Erla's exercise of her power of appointment. Her actions created a mere expectancy, contingent on her dying without further amending the distribution scheme. Because no interest vested in any of the grandchildren until Erla's death, her appointment created a condition precedent. As we noted in Ransdell, under these circumstances, even a complete restraint on marriage ( i.e., distribution only to unmarried grandchildren) would be operative. Thus, this is not a case in which a donee, like the nephew in the illustration, will retain benefits under a trust only so long as he continues to comply with the wishes of a deceased donor. As such, there is no dead hand control or attempt to control the future conduct of the potential beneficiaries. Whatever the effect of Max's original trust provision might have been, Erla did not impose a condition intended to control future decisions of their grandchildren regarding marriage or the practice of Judaism; rather, she made a bequest to reward, at the time of her death, those grandchildren whose lives most closely embraced the values she and Max cherished. The trial court and the appellate court erred by finding a violation of public policy in this case. While the beneficiary restriction clause, when given effect via Erla's distribution provision, has resulted in family strife, it is not so capable of producing harm that its enforcement would be contrary to the public interest. Kleinwort Benson, 181 Ill.2d at 226, 229 Ill.Dec. 496, 692 N.E.2d 269.