First National Bank of Bar Harbor v. Anthony
1989 Me. LEXIS 102, 557 A.2d 957 (1989)
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Rule of Law:
A remainder interest in a revocable inter vivos trust vests in the beneficiary at the time of the trust's creation, not at the death of the settlor, unless the trust instrument explicitly requires the beneficiary to survive the settlor. The settlor's unexercised power to revoke or amend the trust makes the vested interest subject to divestment but does not prevent it from vesting.
Facts:
- On May 14, 1975, J. Franklin Anthony created a revocable inter vivos trust.
- The trust provided that upon the death of both himself and his wife, Ethel, the trust corpus would be divided in equal shares among his three children: John M. Anthony, Peter B. Anthony, and Dencie S. Tripp.
- Ethel Anthony predeceased her husband, J. Franklin Anthony, on November 22, 1982.
- On September 9, 1983, John M. Anthony died, predeceasing his father, the settlor. John was survived by three children.
- J. Franklin Anthony died on April 2, 1984, without having revoked or amended the trust's disposition to his children.
- J. Franklin Anthony's will, probated after his death, expressly omitted the heirs of his son, John M. Anthony.
Procedural Posture:
- The First National Bank of Bar Harbor, as trustee, filed a complaint in the Superior Court (a trial court) requesting construction of the Anthony Trust.
- The children of John M. Anthony, the appellants, filed a motion for summary judgment, asserting their father's interest had vested.
- The Superior Court granted summary judgment against John M. Anthony's children.
- The court held that the gift to John M. Anthony had lapsed because his interest was contingent on surviving the settlor and directed the trustee to pay the share to the settlor's estate.
- The children of John M. Anthony appealed the Superior Court's decision to this court.
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Issue:
Does a remainder beneficiary's interest in a revocable inter vivos trust lapse if the beneficiary predeceases the settlor, when the trust instrument does not contain an explicit survival requirement for that beneficiary?
Opinions:
Majority - Roberts, Justice
No. A remainder beneficiary's interest in a revocable inter vivos trust does not lapse upon their death before the settlor because the interest is considered vested upon the trust's creation, subject only to divestment by the settlor's actions. Unlike a will, which is not operative until the testator's death, an inter vivos trust becomes operative upon its creation. The court determined the settlor's intent from the trust instrument, noting that the settlor explicitly required his wife to survive him to benefit but included no such language for his children. The settlor's unexercised power to revoke or amend the trust does not prevent the interest from vesting; it merely makes the already-vested interest defeasible. Therefore, John M. Anthony's interest vested when the trust was created, and upon his death, it passed to his estate rather than reverting to the settlor's estate.
Analysis:
This decision establishes a significant default rule for interpreting inter vivos trusts in Maine, distinguishing them from testamentary dispositions. It clarifies that a beneficiary's remainder interest vests upon the trust's creation unless explicitly made contingent on survival, thereby promoting certainty and protecting the interests of a deceased beneficiary's heirs. The ruling emphasizes the primacy of the trust document's express language over extrinsic evidence of the settlor's later, unexecuted intentions. This creates a strong presumption against implied conditions of survivorship in revocable trusts, forcing settlors who wish to impose such a condition to do so explicitly.
