Opinion ID: 891653
Heading Depth: 1
Heading Rank: 2

Heading: Analysis of Trust Expressions of Grantor Intent

Text: {14} Instead of trying to draw conclusions about the intent of Lowell and Martha from parsing language in isolated parts of their trust documents, we must instead examine all relevant components and then consider how they fit together to compose the whole expression of their intent. Viewed in that manner, we conclude that the documentation reflects an overarching intent to create a trust that would (1) provide for both Lowell and Martha, with the power to amend or revoke its provisions during their joint lifetimes; (2) provide for the needs and wishes of the surviving spouse, with the same power to amend or revoke after the death of the first of them; and (3) convey any remaining assets in the trust estate to other beneficiaries after the deaths of both spouses. A number of sections of the trust documentation support this interpretation and reflect a clear intention to vest complete control of the entire estate in the surviving spouse after the death of the first. {15} To begin with, the section specifically governing trust interpretation provides a clear expression of Lowell and Martha's intent that all provisions of the trust are meant to be liberally construed in favor of the surviving spouse's interests and above the interests of other beneficiaries: 1.6 Interpretation. Inasmuch as the continued welfare of Grantors is of primary and paramount concern, Trustee is directed to liberally construe all provisions of this trust in favor of the surviving Grantor, and if there is any doubt or conflict of interest, the rights and interests of the surviving Grantor shall be dealt with by Trustee as primary and paramount to the rights and interests of all other beneficiaries. {16} The first sentence of Section 2.1, entitled Both Grantors Living and Competent, makes it clear that [w]hile both Grantors are living, Trustee shall dispose of the net income and principal of the community property of this trust as both Grantors may direct Trustee from time to time by a written instrument signed by both Grantors and delivered to Trustee. (Emphasis added.) By contrast, Section 2.3, entitled Death of First Grantor to Die, provides that [u]pon the death of the first Grantor to die (hereinafter referred to as `deceased Grantor'), the remaining trust estate shall be administered and distributed in accordance with the subsequent provisions of PART TWO. (Emphasis added.) {17} The subsequent provisions of PART TWO include Section 2.4, entitled During Surviving Grantor's Lifetime, which explicitly directs not only that the Trustee shall pay for the surviving Grantor's benefit such amounts of principal as Trustee may deem necessary or advisable for his or her care, maintenance and support in reasonable comfort, but also that the survivor is given an unrestricted right to take any or all of the trust assets on demand: Trustee shall also pay over to the surviving Grantor such amount or amounts of principal as the surviving Grantor may demand in writing delivered to Trustee. {18} Another of the subsequent provisions of PART TWO recognizes the right of the survivor to redirect the distribution of all of the trust remainder for the use and benefit of such person or persons, including the estate of the surviving Grantor, upon such conditions, with such powers, in such manner, and at such times as the surviving Grantor shall direct by his or her Last Will and Testament. {19} Wells Fargo also argues that, in addition to the surviving grantor's unrestricted power to take all the trust assets during the surviving grantor's lifetime under Section 2.4 and the unrestricted power to redistribute the remainder through a will provision, Section 9.1, Power in Grantors During Lifetimes of Grantors, also recognizes the right of the survivor to continue to exercise the right of amendment or revocation through any signed document: Grantors reserve the right at any time or times to amend or revoke this instrument and the trusts hereunder, in whole or in part, by an instrument or instruments in writing, signed by Grantors and delivered in Grantors' lifetimes to Trustee.... {20} Gary argues, and the Court of Appeals agreed, that the use of the plural term Grantors in Section 9.1 excludes the power of one grantor, even after the death of the first, to continue to exercise the power of revocation or amendment. We disagree for several reasons. {21} To begin with, such a narrow construction would be inconsistent with the thrust of the several provisions of Sections One and Two that emphasize the unrestricted power of the survivor to use and control the trust assets, both before and after his or her death. {22} Second, there are a number of other provisions in the document that assist in the proper interpretation of Section 9.1. One of those is Section 4.2, Gender and Number, which provides that [t]he neuter gender shall include the masculine and feminine, and the masculine gender shall include the neuter and feminine and words used in the singular shall include the plural and vice versa. On that same subject, the trust also contained a final section entitled FURTHER TERMS AND PROVISIONS, which supersede any of the preceding provisions which may be in conflict and which emphasize in Section I(G) that [w]here the context permits, any gender shall be deemed to refer to the other genders, the singular to refer to the plural and the plural to refer to the singular. {23} Following those commands, by properly reading the plural to refer to the singular in Section 9.1, makes it clear that after there are no longer two living grantors, the survivor is permitted to exercise what was previously a joint power of amendment or revocation: Grantor[] reserve[s] the right at any time or times to amend or revoke this instrument and the trusts hereunder, in whole or in part, by an instrument or instruments in writing, signed by Grantor[] and delivered in Grantor['s] lifetime[] to Trustee. {24} The guidelines regarding gender and number interchangeability control a variety of the trust's provisions. If we did not apply the section universally throughout the trust, absurdities would result. See Roberts v. Sarros, 920 So.2d 193, 195-96 (Fla.Dist.Ct.App. 2006) (approving the use of singular and plural interchangeability when doing otherwise would make other portions of the document absurd). For example, without substituting the singular for the plural, Section 5.1, giving the trustee the power to file tax returns on behalf of Grantors during Grantors' lifetimes, would not allow the trustee to file tax returns on behalf of the surviving grantor. Section 6.6.a, which requires the trustee [d]uring Grantors' [l]ifetimes to render accounts to Grantors whenever requested to do so by Grantors, would leave the survivor powerless to demand an accounting or learn the status of the trust's income and principal. Section 7.1 provides that the trustee may resign by giving written notice to Grantors during Grantors' lifetimes, or after the death of both Grantors, to each of the adult beneficiaries. Not reading the provision to refer to the single survivor after the death of the first spouse would result in the absurdity that the trustee could resign only before the death of the first and after the death of the second, but not while only the second was still alive. {25} In contrast, there are a few provisions of the trust agreement where the instrument contains express language clarifying that the context of those particular provisions would prohibit substitution of the singular for the plural. For example, Section 2.1, Both Grantors Living and Competent, uses qualifying language to delineate which construction, singular or plural, is exclusively intended: While both Grantors are living, Trustee shall dispose of the net income and principal of the community property of this trust as both Grantors may direct Trustee from time to time by a written instrument signed by both Grantors and delivered to Trustee. If one Grantor becomes incapacitated, the competent Grantor shall have the right to dispose of the net income and principal of one-half of the community property as the competent Grantor may direct. (Emphasis added.) By the express addition of limiting adjectives before the nouns Grantor and Grantors, Lowell and Martha clarified that any disposal of the trust property during their joint lifetimes could be done only by their joint instruction. There is no such limiting language in Section 9.1. {26} The Court of Appeals was concerned that applying the trust's direction to interchange the plural and the singular where context would permit would have allowed either Lowell or Martha to alter the trust unilaterally during their joint lifetimes, to the detriment of the other's interests. This concern ignores the clear import of other provisions, including particularly Section 2.1's clear instruction that [w]hile both Grantors are living, Trustee shall dispose of the net income and principal of the community property of this trust as both Grantors may direct Trustee from time to time by a written instrument signed by both Grantors.... The trust's provisions, including the singular-for-plural directives and the provisions of both Section 2.1 and Section 9.1, can be, and therefore must be, read in harmony. Where two portions, read in isolation, appear contradictory, we are to presume the various portions complement or modify each other. Restatement (Third) of Prop. § 10.2 cmt. b. {27} We recognize that courts should not add words to those in the [instrument] to contradict its language, and we emphasize that we have no interest in adding words to contradict the language of the trust agreement before us. Sanchez v. Quintana (In re Estate of Padilla), 97 N.M. 508, 513, 641 P.2d 539, 544 (Ct.App.1982). Without adding or contradicting any terms, but simply by combining Sections 2.1 and 9.1 and substituting the singular for the plural as directed in Sections 4.2 and I(G), the trust provides clear and consistent directives: Grantor[] reserve[s] the right at any time or times to amend or revoke this instrument and the trusts hereunder, in whole or in part, by an instrument or instruments in writing, signed by Grantor[] and delivered in Grantor['s] lifetime[, provided that w]hile both Grantors are living, Trustee shall dispose of the net income and principal of the community property of this trust [only] as both Grantors may direct ... by a written instrument signed by both Grantors.... {28} When its provisions are read in harmony, the trust agreement unambiguously provides that during the joint lifetimes of the grantors, amendments could be made only by direction of both; after the death of the first, amendments could be made by direction of the only one remaining to give directions.