Opinion ID: 2282256
Heading Depth: 1
Heading Rank: 2

Heading: all the potential beneficiaries of the trust have been ascertained and have consented to the partial termination.

Text: The circuit court interpreted the phrase share and share alike, among my grandchildren, ... or to the survivors of them if any be deceased to mean that the settlor created a contingent remainder in the grandchildren (remaindermen), whereby their interests were contingent upon their surviving Eugene and Mildred. Under this interpretation, the testator's estate retains a reversionary interest in the trust property; [3] and if none of the three remaindermen survives Eugene and Mildred, the trust property would revert to the testator's estate and be distributed according to the precepts of intestate succession. It is clear that Nancy, Lois, and Patricia have a vested remainder interest in the trust property. [4] Unless the testator's intent is clearly to the contrary, there is a preference for early vesting. Weller v. Sokol, 271 Md. 420, 435, 318 A.2d 193, 202 (1974); Black v. Gary, 199 Md. 354, 361, 86 A.2d 480, 483 (1952). There is also a preference for espousing an interpretation that would avoid the creation of a partial intestacy, as partial intestacy ... is not favored by the law. Gittinger v. F. & M. National Bank, 180 Md. 640, 646, 26 A.2d 414, 418 (1942). In addition, a remainder generally vests on the death of the testator, not the death of the life tenant. Weller, 271 Md. at 435, 318 A.2d at 202; Boulden v. Dean, 167 Md. 101, 107, 173 A. 26, 28 (1934). In Gittinger, the testator created a trust for the benefit of his wife for life. After her death, it was to be distributed to his brother and two sisters, `equally, and if any of them be dead at the time of the termination of said trust, then to the survivor [or] survivors of them equally.' 180 Md. at 642, 26 A.2d at 416. This phrase was interpreted by the Court as creating a vested remainder in the three siblings and a condition subsequent upon which the vested remainders may be divested. [5] Id. at 645, 26 A.2d at 417. The condition was that if one or two of the remaindermen were deceased at the termination of the trust, then the survivor(s) of the deceased remaindermen would divide that portion of the estate equally. Whether a condition is precedent or subsequent depends upon the intention of the testator, but if a gift is first given and then a condition is added by later words, such condition is generally held to be one of termination and not of initiation. Keyser v. Calvary Breth. Church, 192 Md. 520, 523, 64 A.2d 748, 749 (1949). In Gittinger, the testator first gave the property to the three named remaindermen, and then provided what should happen to the share of each of them if certain conditions existed at the death of the life tenant. Those conditions are conditions of termination and not of initiation. 180 Md. at 644, 26 A.2d at 417. In distinguishing between contingent and vested remainders, we held that if the conditional element is incorporated into the description of, or into the gift to the remainder-man, then the remainder is contingent; but if after words giving a vested interest a clause is added divesting it, then the remainder is vested. Id. (citing J. Gray, Rule Against Perpetuities § 108 (4th ed. 1942)). The language in the will in the instant case stating or to the survivors of them if any be deceased, classifies the vested remainder as a defeasible vested remainder. A defeasible vested remainder is a vested remainder which may be defeated by a subsequent occurrence before the termination of the precedent estate. It is a remainder with a condition subsequent which may divest a vested interest. In order to determine whether all of the potential beneficiaries of the trust have consented to its modification, it is necessary to determine how the trust would be distributed under all possible circumstances. If one remainderman dies before Mildred leaving other remaindermen who survive Mildred, the survivors take the deceased remainderman's interest by way of substitution. The clause or to the survivors of them if any be deceased is a substitutional clause. The term `substitutional' is generally applied to limitations intended to provide for the disposition of a gift upon the death of a devisee or legatee before the period of distribution. The simplest form is effected by the use of the word `or', which is usually regarded as implying substitution.... E. Miller, Jr., The Construction of Wills in Maryland, § 218 n. 3 at 602 (1927). This Court also stated in Reiff v. Strite, 54 Md. 298, 304 (1880), The disjunctive word `or' clearly implies substitution; that is, it is taken as meaning that the gift over by way of substitution should take effect in case of the death of the first legatee before the time when the legacy became absolutely and indefeasibly vested in him. Upon Mildred's death, if one of the three named remaindermen is deceased, that remainderman's interest is divested and the two surviving remaindermen each take a one-half share of the property by way of substitution. Likewise, if two of the three remaindermen are deceased at Mildred's death, then the survivor would be entitled to the entire interest. See 2 American Law of Property § 6.1 (A. Casner ed. 1952); 2 H. Tiffany, The Law of Real Property § 419 (3d ed. 1939). All the trust beneficiaries in the instant case, namely, Nancy, Lois, Patricia (the remaindermen) and Mildred (the sole remaining life beneficiary), have consented to the partial termination of the trust. The circuit court was troubled by the possible scenario of all three remaindermen predeceasing the life beneficiary. If that should occur, the court concluded, the remainder would then pass to Michael J. Lane's intestate heirs, because there is no other residuary clause in the subject will other than the one which created the trust. We disagree with this interpretation. Upon the occurrence of the aforementioned event, the trust property would be divided into three equal shares and pass under the wills of the three remaindermen or by intestate succession to the heirs of an intestate remainderman. Gittinger, supra, is similar to the instant case and therefore controls our analysis. The will in Gittinger provided that a life estate be created and after the death of the life beneficiary the trust was to be distributed to three remaindermen `equally, and if any of them be dead at the time of the termination of said trust, then to the survivor [or] survivors of them equally.' 180 Md. at 642, 26 A.2d at 416. The three remaindermen in Gittinger died before the time fixed by the testator for the operation of the condition. Id. at 645, 26 A.2d at 418. The argument that the entire estate should pass to the last of the three remaindermen to die simply because he was the last survivor of the three remaindermen was rejected by the Court. We found that [t]he difficulty with this view is, that at the time fixed by the testator for the operation of the condition, he was not alive and in a position to receive the estate. The testator fixed the time of survivorship and it must be determined as of that time. As the last living remainderman was not alive at that time, he could not receive his sisters' estates, even if they had predeceased him. Id. at 645-46, 26 A.2d at 418. Instead, the trust property was divided into three equal parts and distributed to the estates of the remaindermen. The Court found that the vested remainder interests in the three remaindermen were not divested and, in doing so, focused on the point in time when divesting could occur, that is at the time of the termination of said trust. Id. at 645, 26 A.2d at 417. Divesting would occur if at that time a remainderman was dead and was survived by siblings. Since this situation did not occur, the remainder interests became indefeasible in the remaindermen. Accordingly, each of the three vested remainder interests passed under the deceased siblings' wills or to their intestate takers. Id. at 646, 26 A.2d at 418. The instant case is analogous to Gittinger and, applying the same reasoning, we find that Michael J. Lane created a vested remainder interest subject to a condition subsequent in Nancy, Lois and Patricia. If Nancy, Lois, and Patricia were to predecease Mildred, upon Mildred's death the trust property would pass to the estates of the three remaindermen in equal shares. The testator's estate does not retain a reversionary interest in the trust property, so there are no unknown beneficiaries. Since the three remaindermen have vested remainder interests subject to divestment, at Mildred's death the Trust will pass to one of them or to their respective heirs or legatees. The potential heirs or legatees do not have to consent to the modification of the Trust. They have no right to the remainder interest since the owner of a vested remainder interest can transfer it (like any of the rest of his property) before death. E. Miller, Jr., The Construction of Wills in Maryland § 215. Under no circumstances will the Trust pass to the Testator's intestate heirs. However the Trust is allocated, based on the circumstances at Mildred's death, the potential beneficiaries have consented to its modification. Consequently, the lower court erred in finding that all of the potential beneficiaries of the Trust have not consented to its modification. JUDGMENT OF THE CIRCUIT COURT FOR PRINCE GEORGE'S COUNTY REVERSED.