In a recent Rhode Island estate law case, six trust beneficiaries (collectively, ‘respondents’) moved to dismiss the petitioner’s petition for declaratory relief or, in the alternative, to either amend the trust or allow the other beneficiaries to disclaim their interest in the petitioner’s share of the trust. Petitioner sought to permit his adopted son—whom he adopted as an adult—to succeed to his interest in his grandfather’s trust. The court had jurisdiction pursuant to G.L. 1956 § 9-30-1.
The trust was established in 1928 by the settlor. Rhode Island Hospital Trust served as the initial trustee, and thereafter replaced by its successor entity, Bank of America. Following the settlor’s death, the trust directed the trustee to equally divide the remaining net income from the trust to the benefit of his wife, three daughters, and their issue. The trust further provided for its termination 21 years following the death of the settlor’s wife and daughters and two other named individuals (collectively, ‘the R. family’). At the time the case came before the Rhode Island Superior Court, members of the R. family were the only surviving named individuals, both in their nineties.
Petitioner’s mother, one of settlor’s daughters, became a beneficiary of the trust following the settlor’s death. Petitioner and his three sisters succeeded to their mother’s interest in the trust upon her death. In 2001, at the direction of the superior court, the daughter’s interest in the trust was divided into four separate shares—one for each of her children. The 2001 judgment further provided that “[i]f, at any point, a child of [the daughter] is deceased and no issue of that child survives,” then the deceased child‘s share of the trust will be divided evenly among the surviving siblings.
At the time the case came before the court, the petitioner was the only sibling without biological children. Thus, if the petitioner died prior to termination of the trust, per the 2001 judgment, his interest would be divided equally among his surviving siblings. While the petitioner did not have any biological children, he did have an adopted son. Notably, the child was adopted while an adult by the petitioner. He sought to have the child succeed to his interest in the trust if the petitioner died prior to its termination.
Respondents submitted a motion to dismiss the petition. Both parties submitted supplemental memoranda in support of their positions.
Petitioner sought a court declaration that under the trust and the facts and circumstances as they existed at the time of the trust’s creation, the petitioner’s adopted son may succeed to his interest in the trust to the same extent as would a biological child. In the alternative, the petitioner sought leave from the court to amend the trust to permit the child to succeed to the petitioner’s interest in the trust or to allow the other beneficiaries of the trust to disclaim their interests in the petitioner’s share of the trust.
Petitioner contended that the current statutory language—excluding children who were adopted when they were over the age of eighteen in the definition of “issue”—was not in effect when the trust was created. Rather, the petitioner asserted that the statute in effect at the time of the trust’s creation did not differentiate between adopted and biological children. Similarly, the petitioner argued there should be no distinction between children adopted before or after the age of eighteen. Petitioner further contended that because of the statutory language in effect at the time of creation, and because the trust did not contain a distinction between adopted and biological children, there was no intent—on behalf of the statute or the settlor—to exclude adopted children.
Turning to the petitioner’s request to allow the other beneficiaries to disclaim their interest in the petitioner’s share of the trust, he asserted that this option would not require a modification: merely the consent of the other beneficiaries. Petitioner claimed that it was anticipated that some or all of the beneficiaries would consent to the proposed modification or disclaim their interest in the petitioner’s share.
Respondents argued that the petitioner’s claim of a vested remainder interest subject to divestment should not impact the court’s ultimate determination regarding whether the requested relief was proper. They maintained that the petitioner’s request remained hypothetical and, therefore, a justiciable controversy did not exist. Respondents further contended that the petitioner acknowledged that he did not have unanimous consent to amend the trust and should not have been allowed to continue litigation in hopes of convincing the other beneficiaries to consent.
Petitioner asked the court to declare that the petitioner’s adopted son, who was adopted after the age of eighteen, could inherit his share of the trust. Through this request, he sought to avoid the possible distribution of his share of the trust to his siblings, as directed by the 2001 judgment. For that to occur, however, a number of precipitating events had to transpire. Specifically, the trust provided for its own termination 21 years following the deaths of several named individuals. The R. family were the only surviving individuals named in the trust. For the scenario contemplated by the petitioner to occur, both of the R. family had to die, and the petitioner had to perish before 21 years passed following their deaths. Clearly, as the petitioner duly recognized, these events had not yet occurred and were not guaranteed to occur.
Alternatively, the respondents moved to dismiss the petitioner’s request for declaratory relief because they contended his request was not properly before the court as it did not present a justiciable controversy. Petitioner asserted that his request was proper pursuant to § 9-30-4. Moreover, the petitioner argued that the mere fact that the respondents filed a motion to dismiss evidenced a justiciable controversy.
The court found that the petitioner’s request was premature and therefore not ripe for declaratory relief. Accordingly, petitioner’s request for declaratory judgment was denied. Because the petitioner’s request was improperly before the court, the court granted the respondents’ motion to dismiss without prejudice.
Petitioner alternatively sought leave to amend the trust or permit the other beneficiaries to disclaim their interest in his share of the trust. Petitioner relied on Section 65 of the Restatement (Third) of Trusts for authority. Section 65 provides for termination or modification of a trust “if all of the beneficiaries of an irrevocable trust consent.” Termination or modification of the trust could not be compelled by consent of the beneficiaries, however, if it “would be inconsistent with a material purpose of the trust.” In that event, the beneficiaries could seek either “the consent of the settlor or, after the settlor’s death, . . . authorization of the court if it determines that the reason(s) for termination or modification outweigh the material purpose.”
In furtherance of his effort, the petitioner obtained the assent of two trust beneficiaries. Moreover, the petitioner argued that this modification did not conflict with the material purpose of the trust. Respondents, however, did not provide assent to the modification of the trust. Absent unanimous consent, Section 65 does not contemplate modification of a trust. Accordingly, the petitioner’s motion to amend the trust was denied.
Petitioner presented an additional “alternative theory” under the 2001 judgement by which he could modify his share of the trust without the consent of the other beneficiaries. He posited that the court could determine that modification of his sub-trust merely requiring the consent of that particular sub-trust, i.e., the petitioner. The court declined to rule on this argument at that time.
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