Opinion ID: 1824389
Heading Depth: 1
Heading Rank: 4

Heading: Continued Viability of Trust Option

Text: In the fifth paragraph of item XIX of her will, Carpenter granted an option for the purchase of forty percent of the balance of her bank shares to the Monticello State Bank Profit Sharing Trust. The trust provided a means for bank employees to benefit from the bank's profits and apparently provided retirement benefits to beneficiaries. Pursuant to the merger, the trust terminated in late 1990 and its assets were distributed to the beneficiaries. The Densmores argue that Carpenter granted the option in favor of the trust and not the trust's beneficiaries, and therefore, the option no longer may be effectuated due to the termination of the trust. The Densmores further contend that antilapse principles do not apply to devises to artificial entities which have terminated and therefore, the beneficiaries of the trust may not acquire the option as the heirs of the trust. The optionees assert that the real issue is Carpenter's intent, and since the will and circumstances surrounding its execution demonstrate it was Carpenter's intent to benefit the employees of the bank, the trial court properly applied the doctrine of gift by implication in finding that the beneficiaries are entitled to exercise the option. To answer this issue, we do not need to look to the principles associated with revival of trusts or the implications associated with the termination of a trust. Although it would have been a better procedure for the responsible parties to provide for the continuation of the trust for the purpose of taking under Carpenter's will, the testator's intent controls the outcome of this matter. Iowa recognizes the doctrine of gift by implication. On many occasions, we have cited with approval the following explanation of the doctrine: When a testator's will clearly reveals a general plan or intention as to the disposition of his property, and a situation arises that is not within the express language of the will, such general plan may be regarded as existing but incompletely expressed, and the failure to provide for the situation inadvertent rather than intentional, and a gift may be implied for the purpose of completing the general plan. Conn v. Williams, 353 N.W.2d 411, 415 (Iowa 1984); Russell v. Johnston, 327 N.W.2d 226, 230 (Iowa 1982); Porter v. Porter, 286 N.W.2d 649, 654 (Iowa 1979) (quoting Davis v. Davis, 24 Ohio Misc. 17, 258 N.E.2d 277, 282 (Com.Pl.1970)); see also In re Estate of Wagner, 507 N.W.2d 711, 714 (Iowa App. 1993). The doctrine is applicable where the probability of the implication is strong. Russell, 327 N.W.2d at 230. Lou Carpenter's will sets forth a complete scheme of distribution which demonstrates that it was her intent to benefit the employees of the bank by granting them options to enjoy the rights and benefits associated with ownership of the bank stock. To provide that the option granted to the trust terminated due to the termination of the trust would be contrary to her clear intention to benefit the bank employees who have faithfully served the bank for many years. The will did not provide for the contingency of the termination of the trust, but the implication is strong that Carpenter sought to benefit the bank's employees rather than specifically the trust. I would affirm the trial court's holding that those individuals who constituted beneficiaries of the trust on the date of its termination hold the right to options to purchase that amount of stock equivalent to their pro rata interest in the trust on the date of its termination. Specifically, the former beneficiaries would be entitled to purchase pro rata the amount of INB shares and cash equivalent to 224.8 shares of Monticello State Bank at the above stated price.