In re Albert G. Aaron Living Trust (2018) & Construction of Trust Terms

When it comes to developing trusts, immense attention must be paid to the language used throughout the trust documents. This is true with respect to every aspect of the trust – the identification of family members, the identification of trustees, and, perhaps most importantly, the distribution of assets to beneficiaries. The established rule in Maryland law is that trust language is carried out in accordance with the intent of the trust creator (referred to as the trustor or “settlor” in Maryland). But, when ambiguous language is encountered, there may be conflicting interpretations regarding the true intent of the settlor. This makes it imperative to include clear and unambiguous language, otherwise the possibility of litigation increases.

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In the case of In re Albert G. Aaron Living Trust (2018), a complex trust agreement was challenged by a beneficiary who believed that a particular phrase reflected a certain intent of the settlor. The trustees disputed this interpretation, and copious litigation ensued. Let’s go over one of the core issues resolved throughout the course of this litigation.

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Facts of the Case

The trust settlor in this case was married twice prior to passing away. His first wife predeceased him, but prior to her death he included a provision within a trust which was contingent on her surviving him. The provision stated that a separate trust would be created which would distribute certain assets to charitable foundation, unless the settlor’s first wife survived him; if the settlor’s first wife survived him, this separate trust would not be created and the assets which would have been channeled into it would be redistributed according to specific guidance found elsewhere in the trust agreement.

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The settlor’s first wife ended up predeceasing him, and shortly after her death the settlor married his second wife. The settlor altered the trust agreement after the death of his first wife; he made numerous changes, including the addition of his second wife as a beneficiary of certain assets. However, the provision pertaining to the creation of a separate trust for charitable purposes was not altered, even though the contingency was already resolved because of the death of the settlor’s first wife. Incidentally, the settlor amended the trust many times prior to his death – in total, there were 11 amendments, and these amendments had multiple changes within them. But, the amendments didn’t update all portions of the trust agreement to reflect certain events, including the provision on the charitable foundation.

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The second wife ultimately challenged the interpretation of the provision pertaining to the creation of a new trust to fund the charitable foundation, as she argued that the language identified her as opposed to the first wife. The exact phrase used in the provision was “my wife,” rather than “first wife” or any person’s particular name. Hence, the second argued that, because she survived the settlor, the trust funding the charitable foundation should be avoided and the assets redistributed accordingly. The trustees of the trust disputed this interpretation. The trial court sided with the trustees, holding that the intent of the settlor clearly showed that “my wife” referred to his first wife. The matter came before the appellate court and was affirmed. The second wife then appealed to the Supreme Court of Maryland.

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Ruling & Discussion

There are multiple ways to ascertain the true intent of a settlor. In this situation, the Supreme Court had a relatively easy time determining that the settlor had in fact intended for the phrase “my wife” to refer to his first wife, as both the trial and appellate courts had concluded. After the settlor married his second wife, he proceeded to make numerous direct references to his second wife by name throughout the trust documents (the various amendments to the original trust agreement). He was very clear when he intended to reference his second wife, as opposed to his first wife, and so this was certainly a strike against the second wife’s argument. Furthermore, The family member identification section of the trust agreement had remained untouched, despite all the amendments, and so this section still referred to the “wife” of the settlor as his first wife. Again, this shed doubt on the interpretation of the phrase “my wife” as referring to the second wife rather than the first wife.

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Contact the Murphy Law Firm for More Information

To learn more about the interpretation of trust terminology, the creation of trusts, the drafting of wills, or any other related estate planning topic, contact one of the estate planning attorneys at the Murphy Law Firm today by calling 240-222-1187.

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