Court Opinion

ID: 8597495
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:04:52.864214+00
Date Added: 2024-06-11T16:55:01.933476
License: Public Domain

NICHOLS, Judge,
concurring and dissenting:
I agree with and join in the first two sections of the court’s opinion, but regret to say I cannot go along with the third, fourth, and fifth. I originally wished to deny both motions and remand, but the opinion suffers the fate of so many of mine, of convincing in a negative sense. I now think the remand would be futile and self-defeating and that the court’s analysis of Henry D. Lloyd’s intent is unsound. This analysis postulates that he in his will preferred the financial well being and security of Norah K. Lloyd above all other considerations. On this hypothesis the court reasons that the Rhode Island courts would enforce a floor below which they would not allow the assets in the Family Trust to be reduced, that the quantum of this figure can be determined, and that Norah K. Lloyd’s life estate can be appraised from it.
It is evident the will of Henry D. Lloyd gave her both more and less than a pure life estate in the Family Trust *25assets. More, because the trustees could invade the corpus on her behalf if necessary in their opinion. Less, because they could also do the same for the "issue” of the Lloyd marriage, and their "issue” and members of their immediate family. Thus the class of contingent beneficiaries started out large, with the two daughters and their children, and would continually grow as members of the original class acquired spouses and issue. It appears to include persons who would on no contingency receive income, but the idea probably was that possible emergencies for the issue would include catastrophes to their spouses. The power to invade the corpus I regard as primarily catastrophe insurance since at the time of the testator’s death he had no reason to expect any of the objects of his bounty would need to have the corpus invaded on their behalf. We know that catastrophes occur at random and by definition are unforeseeable. If foreseen, they are averted. Thus, antecedently considered, the likelihood of the corpus being invaded for Norah K. Lloyd and against her would vary in the proportion the number of one person, Norah K. Lloyd, would bear to a large and growing number of remainder beneficiaries. Moreover, the trustees were not to invade the corpus of the Family Trust fo Norah K. Lloyd until the martial trust was exhausted. This is clearly intended to protect the remainder beneficiaries and itself belies the idea that the financial welfare of Norah K. Lloyd was the only overriding consideration. Moreover, the catastrophes provided against include inflation and changes in the cost of living.
Suppose the husband of granddaughter X is kidnapped and held for ransom. Suppose at that time the income of Norah K. Lloyd is more than adequate for her needs but it is impossible to be sure that, with inflation, it will remain so. Are the trustees supposed to refuse to contribute to the ransom fund and let the husband be killed? Suppose a beneficiary is a doctor or lawyer and suffers a crushing malpractice verdict. Will the trustees let him or her be bankrupted?
It appears to me that what conscientious trustees would do would be to balance the intensity of the crisis against the likelihood of future financial embarrassment to Mrs. Lloyd, *26in a decision they would make as informed and reasoned as possible. They would probably ask themselves what Henry D. Lloyd would have done if alive. I fail to see how, in deciding, they could bind themselves by any arbitrary line as to the quantum of corpus necessary to protect Mrs. Lloyd in the future.
Thus I do not find the trustee’s power limitless, but I do contemplate situations where even a cautious and responsible trustee might feel compelled to take action that would result in a remaining corpus insufficient to protect Mrs. Lloyd in all possible contingencies. Thus the will did not create any part or portion of the Family Trust corpus that was wholly immune from invasion.
I note further that the court really will not value the entire life estate by recognized valuation principles, as the regulation prescribes. It will arbitrarily by guesswork set aside a portion of it and value that, the supposed uninvadeable portion. It does not appear that any such half a loaf effectuation of a tax credit is in accordance with the policies and practices of the IRS and of the courts, such as the Congress must have been aware of when it enacted § 2013.
I would hold that the statute, with its unchallenged regulatory gloss, simply fails to provide for the case before us, much as we might wish it did. I would therefore allow defendant’s motion and dismiss the petition.