Opinion ID: 1736657
Heading Depth: 1
Heading Rank: 2

Heading: The Will and Trust Instrument

Text: We begin our analysis with the materials primarily relied upon by the trial court the will and the trust instrument. We note that the defendants vigorously argue that the trust instrument should not have been considered by the trial court, on the ground that it was not part of the evidence stipulated to by the parties. Because we hold that the trial court incorrectly determined that either of these documents established a trust, we need not consider the defendants' particular argument for excluding the trust instrument, and, for the purposes of this appeal, we will assume that the trust instrument was properly before the trial court. As has been noted many times by this Court, [t]he intention of the testator is always the polestar in the construction of wills, and the cardinal rule is to ascertain the intention of the testator and give it effect if not prohibited by law. Mastin v. First Nat. Bank of Mobile, 278 Ala. 251, 257, 177 So.2d 808, 813 (1965); see Ala. Code (1975), § 43-8-222. In ascertaining the testator's intentions, we consider the will as whole, and we may consider the language of the will in light of the facts and circumstances attending its drafting. See, e.g., Mastin v. First Nat. Bank of Mobile, 278 Ala. at 257, 177 So.2d at 813. Applying these principles to the case at bar, we think it beyond doubt that the testatrix tentatively intended by this will to devise [3] the disputed mortgage proceeds to an inter vivos trust established by the testatrix. The will is unambiguously a pourover will, and we may assume that the unexecuted trust instrument represents the contemplated inter vivos trust into which the proceeds noted in Item Two of the will were to be devised. The trust instrument, however, was never executed, nor was the trust referenced therein ever otherwise established by the testatrix. Consequently, we think it clear that this attempted devise fails and that the devise in Item Two of the will therefore lapses. The attempted devise fails in the first instance because it does not conform with Ala.Code (1975) § 43-8-140, which sets forth the procedures for establishing pourover gifts to an inter vivos trust. One requirement of that section is that the trust's terms [be] set forth in a written instrument (other than a will) executed before or concurrently with the execution of the testator's will. (Emphasis added.) The trust instrument clearly does not meet this requirement, as it was never executed. The attempted devise fails in the second instance because it does not meet the requirements of certain other grounds that might be invoked to sustain it. We consider these grounds with some hesitation, because the legislature, in adopting § 43-8-140, may have intended that the procedure set forth therein be the exclusive means of establishing testamentary additions to inter vivos trusts. Because we find, however, that the other grounds for upholding the devise in question cannot be properly invoked in this case, we need not decide the question of § 43-8-140's exclusivity, and we expressly reserve that question for later decision. The will states that the proceeds from three of the mortgages were to be devised to the First National Bank of Tuskaloosa, N.A., as Trustee acting under a certain Trust Agreement entered into and with [the Trustee] for the purposes stated in said Trust Agreement, and notes that the Trust Agreement to be made and entered into ... will be in memory of my beloved husband. It is well settled that documents not executed with the formalities required of wills can supplement the terms of a will in certain limited circumstances, including documents referencing or creating charitable trusts. See Baxley v. Birmingham Trust Nat. Bank, 334 So.2d 848 (Ala.1976); Restatement (Second) of Trusts § 358 (1959). These circumstances exist where the terms of the trust can be gathered from a document or documents incorporated by reference into the will, and where the terms of the trust can be adduced from a fact of independent significance. Baxley, supra ; Restatement (Second) of Trusts, supra. Although Alabama adheres to the doctrine of incorporation by reference, see § 43-8-139, the requirements of that doctrine are not met in the present case. `The document which is to be incorporated must have been in existence at the time the will was executed, it must be referred to in the will, and it must be identified by clear and satisfactory proof as the paper referred to.' Baxley v. Birmingham Trust Nat. Bank, 334 So.2d at 852 (quoting Holt, Testate Succession in Alabama: Part I, 24 Ala.L.Rev. 221, 243-44 (1971)) (emphasis added); see First Nat. Bank of Birmingham v. Klein, 285 Ala. 505, 234 So.2d 42 (1970); Mastin v. First Nat. of Mobile, 278 Ala. 251, 177 So.2d 808 (1965). There is insufficient proof in this case that the trust document in question was in existence at the time of the execution of the will. As noted previously, the drafting of the trust document can be narrowed only to sometime within the year 1981, judging from the language of the document itself. Moreover, the testatrix died in 1983. Therefore, she could have asked her lawyer to draft this document at any time during the year 1981, and we note that her lawyer was apparently also dead at the time of this trial. Thus, no evidence was introduced that further narrows the date of the drafting of the trust document. Therefore, it would appear to be beyond dispute that this document could have come into existence at any time during the year 1981. The will, however, was clearly executed on March 24, 1981, and the codicil appended thereto was executed on October 20, 1981. Assuming that this codicil republished the will on October 20, [4] there nevertheless would remain a period of nearly two and one-half months in 1981 during which the trust document could have been drafted subsequent to the republication of the will. Moreover, the will itself is ambiguous as to the existence of the trust document, as Item Two, quoted at length above, refers to the trust both as being in existence and as yet to be made and entered into. Thus, the proof that the trust document was in existence at the time of the will's execution is highly ambiguous at best, and it falls far short of the standard required to incorporate the document by reference into the will. An incorporated document must be in existence when the will is executed, Baxley v. Birmingham Trust Nat. Bank, supra ; it is not enough to show that the document might have been in existence. Likewise, the doctrine of facts of independent significance, also adhered to in Alabama, see § 43-8-141, is inapplicable to this case. `The chief requirement [of the doctrine] is that the document referred to in the will have a separate legal identity and existence, and not be solely for the purpose of supplementing the will,' Baxley v. Birmingham Trust Nat. Bank, 334 So.2d, at 853 (quoting Holt, Testate Succession in Alabama: Part I, 24 Ala.L.Rev. 221, 244 (1971)); see First Nat. Bank of Birmingham v. Klein, 285 Ala. 505, 234 So.2d 42 (1970). In the instant case, it is undisputed that the trust referred to in the trust document was never established. Hence, this trust never rose to the level of a separate legal identity, and the doctrine of facts of independent significance is inapplicable. It is not the trust instrument but the trust itself that has independent significance. 1A A. Scott & W. Fratcher, The Law of Trusts § 54.3, at 12-13 (4th ed. 1987); see Restatement (Second) of Trusts, § 54 comment f (1959). Thus, the doctrine of facts of independent significance, while it can sometimes serve as an escape mechanism from the strict requirements of incorporation by reference, First Nat. Bank of Birmingham v. Klein, 285 Ala. at 509, 234 So.2d at 46, cannot properly be invoked in the instant case. Accordingly, no charitable trust was established by the will in this case. The attempted pour-over devise into the trust fails, because of a lack of compliance with the requirements of § 43-8-140. Similarly, the trust instrument cannot be regarded as having been incorporated by reference, and the trust itself never achieved a separate legal identity; this fact foreclosed application of the doctrine of facts of independent significance. Therefore, even if we wished to assume that the testatrix's actual intention was to establish a trust by will, a trust similar to that evidenced by the trust instrument, we could not do so, because such a trust would be prohibited by law. Mastin v. First Alabama Bank, 278 Ala. at 251, 177 So.2d at 813. We should note, however, that the evidence of the testatrix's intent in this case does not require such an assumption, and that, in fact, her actions could well indicate the opposite intent. As noted previously, the will is clearly a pour-over will, and we must assume that the testatrix realized that such a testamentary scheme required a trust receptacle to render it operative. The testatrix lived more than two years after the will was executed and after she would have been made aware of the necessity of establishing a trust, yet she made no effort to consummate the pour-over scheme. We think that such inaction comports at least as well with an intention to allow the devise in the will to lapse as it does with an intention to make the devise. We note in this regard that § 43-8-140 provides that the revocation of the inter vivos trust underlying a testator's pourover scheme results in the lapse of any devise in the will to that trust. This is perhaps a legislative determination that a testator, by such a revocation, evidences an intent that the devise is to be distributed according to a residuary clause or by intestacy, rather than by the terms of the trust. A failure to create the underlying trust in the first place ought to be given a similar effect, at least in the circumstances in which this case arises. Consequently, even if some legal means to establish this trust existed, we are not at all sure that our polestar, the intention of the testatrix, would lead us inescapably to the conclusion that such a trust was to be established.