Opinion
No. 3822.
Decided April 5, 1949.
Although an inter vivos trust instrument be not executed in accordance with the Statute of Wills the creator of the trust may by testamentary disposition add the residue of his estate to the trust as existing in final form at the time of execution of his will. In such case, no testamentary trust need be established under the Statute of Wills to effectively carry out the testator's expressed preference that the residue consisting of personal property be added to the inter vivos trust to be administered by the trustees under powers derived from it rather than the will since payment to said trustees is regarded as the equivalent to an outright payment of a devise or bequest. A fortiori the statute (R. L., c. 363, s. 1, et seq.) relating to appointment of testamentary trustees is inapplicable.
PETITION for distribution brought by the executors of the will of Edwin J. York, late of Dover, deceased, seeking authority to deliver the residue of the estate to trustees under a deed of trust given by the testator during his lifetime, and to be discharged upon filing the trustees' receipt.
In accordance with the provisions of Laws 1947, c. 90, the Probate Court (Hardwick, J.) has certified to this court the following questions:
"(1) Can the executors of the Estate of Edwin J. York pay over the rest, residue and remainder of the Estate of Edwin J. York under the terms of the will to the trustees of the living trust?
"(2) If the answer to question 1 is in the affirmative, will it be necessary for the trustees of the living trust to be appointed as trustees under the will of Edwin J. York by the Probate Court in and for the County of Strafford, give bond and account to said court for the assets of said estate?"
On March 17, 1938, the testator established a living trust, appointing the National Shawmut Bank of Boston, Boston, Massachusetts, and E. Mae Greenaway of Dover, New Hampshire trustees, and conveying to them in trust a substantial portion of his estate for purposes set forth in the trust instrument. He died on September 6, 1946; and on September 12, 1946 his will, and a codicil dated November 23, 1945, were admitted to probate.
The first sentence of the fourth article of the will as amended by the first article of the codicil provides as follows: "I give, devise, and bequeath all the rest, residue and remainder of my estate of whatsoever nature and wherever situated to the National Shawmut Bank of Boston, and E. Mae Greenaway of said Dover, as they are Trustees under a Living Trust Deed dated March 17, 1938, and amended August 27, 1938, November 14, 1940, May 25, 1942, and November 20, 1942, under which I am the Donor, to be added by said Trustees to the trust estate held by them under said Living Trust Deed, as amended as aforesaid, for the benefit of the beneficiaries therein set forth, and thereupon the same shall become subject to the terms of said Living Trust Deed as so amended."
The tenth article of the will as amended by the codicil nominates testamentary trustees to take the residue of the estate upon a trust identical with the living trust in the event that the executors shall determine that it is impossible or inadvisable to consolidate the residue with the trust property held under the living trust deed. The executors have determined that consolidation is neither impossible nor inadvisable but on the contrary is possible and advisable. The residue is understood to consist of personal property having a value of approximately $140,000.
Hughes Burns and Walter A. Calderwood (Mr. Calderwood orally), for the plaintiff executors.
The questions certified are directed primarily to determination of the procedure to be followed in distribution of the estate. If the residue of the estate may be added to the assets of the inter vivos trust, a consolidation for which the testator expressed a preference, no occasion will arise for the appointment of trustees to administer the identical testamentary trust described in alternative provisions of the will, and the requirements of R.L., c. 363, s. 1 and other statutory provisions relating to testamentary trustees are inapplicable.
Although the inter vivos trust is not shown to have been executed in compliance with the Statute of Wills (R. L., c. 350, s. 2), the validity of the desired disposition of the residue of the estate according to the terms of the trust deed is sustained by the weight of authority. Scott, Trusts, s. 54.3, p. 294, and cases cited. Disposition by addition to a previously created trust, even though the trust be subject to modification, is clearly valid in relation to the trust in the form which it took at the time of execution of the will. Old Colony Trust Co. v. Cleveland, 291 Mass. 380. Since the living trust referred to in the will before us assumed its final form before execution of the codicil of November 23, 1945, there is no occasion to extend the principle in order to sustain the disposition which the testator sought to make. See First-Central Trust Co. v. Claflin, (Ohio C.P.) 73 N.E.2d 388.
The answer to the second question certified by the Probate Court depends upon the theory adopted in sustaining the testamentary disposition. See Scott, op. cit., s. 54.3; 1 Bogert, Trusts Trustees, s. 106; Shattuck, Estate Planners' Handbook (1948) s. 14. Under the doctrine of incorporation by reference, it might be thought necessary to establish a testamentary trust. Cf. Shattuck, Inter Vivos Trust in Massachusetts, 26 B.U.L. Rev. 437, 457, 458. However, the proposed disposition is equally sustainable according to the view that the inter vivos trust is a fact "having significance apart from the disposition of the property bequeathed," which may be relied upon to control such disposition without violation of the Statute of Wills. Scott, op. cit. p. 300. Under this view, which we are satisfied to adopt, it is possible to carry out the testator's expressed preference that the residue shall become a part of the res of the inter vivos trust, to be administered by the trustees under powers derived from it, rather than the will. There "then . . . seems to be no reason why the payment or transfer should not be regarded as the exact equivalent of any other outright payment of a devise or bequest." Shattuck, Inter Vivos Trust in Massachusetts, supra, 458. See also, Matter of Rausch, 258 N.Y. 327, 331. Thus the executors may pay the legacy to the trustees of the inter vivos trust, taking their receipt therefor, and no occasion arises for the establishment of a testamentary trust, or for invocation of our statutes relating to the appointment of trustees.
The first question certified is accordingly answered in the affirmative and the second in the negative.
Case discharged.
KENISON, J., was absent: the others concurred.