Opinion ID: 220042
Heading Depth: 2
Heading Rank: 4

Heading: Amounts and Timing of Hoff’s Withdrawal Rights

Text: As quoted at the outset of Section I above, the trust agreement specifies that, after the death of the Settlor, Hoff would have the right to withdraw assets from the Trust in amounts equal to one-third of the value of trust principal calculated “at age 30,” one-half of the value of trust principal that remains “at age 35,” and all trust property that remains “at age 40 (or from time to time or at any time thereafter).” We acknowledge the possibility of two potential ambiguities here: (1) Whether this provision specifies only the dates on which the value of the amounts that Hoff could withdraw are to be calculated or specifies both those dates and the times at which Hoff may make withdrawals of such amounts; and (2) whether the parenthetical phrase, “(or from time to 10 No. 10-50462 time or at any time thereafter),” which follows “at age 40,” applies to withdrawals authorized at each specified age or only to withdrawals authorized “at age 40.” None disputes that the initial function of the withdrawal provision’s reference to Hoff’s ages — 30, 35, and 40 — is to fix the exact days as of which the dollar amounts that Hoff may withdraw are to be calculated. The prepositional phrase “of the Trust Property at age 30” (and the same phrase dealing with ages 35 and 40) modifies “value,” not “right to withdraw.” The subject provision thus dictates first the precise dates on which the value of the amount of trust assets that Hoff could withdraw are to be determined — respectively, his 30th, 35th, and 40th birthdays. Whether a secondary function of these age references is to establish the times (or periods of time) at (or during which) Hoff may make withdrawals is disputed. Peggy and Hoff contend that, even if Mary is held to be the sole settlor so that her death triggered Hoff’s withdrawal rights, his bankruptcy trustee could not reach any principal of the Trust because Hoff filed for bankruptcy while he was 37, not while he was 30 or while he was 35. They reach this conclusion by interpreting the trust agreement to dictate that, following the settlor’s death, Hoff may withdraw trust assets only at — not from and after — ages 30 and 35. Although it is not clear whether Peggy and Hoff insist that he could make withdrawals (1) only on the single day that he reached age 30 and again on the single day that he reached 35 or (2) at any time during the year when he was 30 and again during the year when he was 35, it is clear that they interpret this provision to mean that Hoff could not make any withdrawals during the year following his 37th birthday (or while he is or was 31, 32, 33, 34, 36, 37, 38, or 39). This reading is unreasonably strained if not patently absurd. Just because this “snap shot” reference to Hoff’s ages determines the precise days as of which the value of the amounts he may withdraw are to be 11 No. 10-50462 calculated, it does not follow that it is also a “snap shot” restriction on when he may make withdrawals, i.e., only on his 30th and 35th birthdays or only during the 365-day periods while he is 30 and 35. The age references do not modify the rights to withdraw, which have no temporal limitation. The only reasonable reading of this provision is that, (1) after the death of the settlor and (2) after the value of withdrawable trust assets is calculated — first as of his 30th birthday and again as of his 35th birthday — Hoff could withdraw funds totaling those amounts and he could do so, either in a single lump sum or in lesser amounts seriatim, at any time and from time to time after the specified birthdays, so long as the total of all withdrawals during those five-year spans never exceeds those values in the aggregate. It follows that, given only this one reasonable interpretation, the provision is not ambiguous. Not to be dissuaded, however, the Appellants advance an alternative argument in support of the contention that Hoff cannot make withdrawals except precisely “at age 30” and “at age 35.” They do so on the shoulders of the parenthetical phrase, “(or from time to time or at any time thereafter),” and its location immediately following “at age 40” in the Trust’s withdrawal provision. Relying on the last-antecedent rule,18 they insist that this timing phrase only modifies Hoff’s withdrawal right at age 40 but does not permit him (and thus Appellee) to make withdrawals “at any time and from time to time” after attaining the ages of 30 or 35. We do not rely on that parenthetical provision to conclude that, following the death of the Settlor, Hoff could make withdrawals at any time or from time to time after attaining ages 30 and 35, not just “at” 30 or 35. Rather, because we see the age reference primarily as a valuation-date reference and secondarily as the commencement date of the periods during which withdrawals can be made, 18 See, e.g., United States v. Campbell, 49 F.3d 1079, 1086 (5th Cir. 1995). 12 No. 10-50462 we conclude that, once accrued, Hoff’s rights to withdraw have no temporal limitations. Rights of withdrawal, once accrued, continue ad infinitum as to each fraction, viz., one-third and one-half, as well as thereafter for all trust assets remaining from and after 40. Moreover, even though it is not obvious from the trust agreement why, irrespective of the Trust beneficiary’s age, the withdrawal rights afforded to him remain inchoate until the death of the Settlor, it is obvious from the trust agreement that the term of the trust is for the lifetime of the beneficiary, Hoff. Therefore, unless either no property were to remain in trust when Hoff reaches age 40 or he were to withdraw all of the Trust’s property at that time, the Trust will continue in force and effect thereafter. Because, under either or both circumstances, (1) additional assets could be contributed to the Trust from time to time during the continuation of the Trust after Hoff’s 40th birthday, and (2) any assets remaining unwithdrawn would likely produce interest, dividends, or other proceeds after his 40th birthday, some provision for Hoff’s making withdrawals of such post-40 assets is needed. Otherwise, he would only be able to withdraw assets equal in value to the principal of the trust when he reached the age of 40. This parenthetical phrase is thus necessary to ensure that Hoff could withdraw post-40 accumulations. Our belabored point is that, even if, arguendo, we were to rule that the parenthetical phrase, “from time to time or at any time thereafter,” is directly applicable only to withdrawals after age 40, so as to ensure that Hoff could withdraw assets contributed or accruing to the Trust following his 40th birthday, it would not follow that such exclusive attribution to post-40 withdrawals would preclude Hoff’s exercise of his age 30 and 35 withdrawal rights from time to time or at anytime after he attained those ages. To summarize, regardless whether, for purposes of withdrawal, the parenthetical phrase that follows “at age 40” (1) applies only to property held in 13 No. 10-50462 trust at and after that age or (2) applies as well to the specified fractions of such property remaining at ages 30 and 35, nothing in the trust agreement can be tortured to prohibit Hoff’s exercise of his age-35 withdrawal rights from time to time thereafter, including at and after age 37, as to trust assets aggregating onehalf of the value of the Trust’s property that remained as of Hoff’s 35th birthday. And, because Hoff could make such withdrawals at age 37, so can his bankruptcy trustee.