Shafer v. Bank of America National Trust & Savings Ass'n

FORD, J. The question presented on this appeal is whether the executor of the estate of the deceased life beneficiary of a testamentary trust is entitled to the income which came into the hands of the trustee in the period between the last quarterly payment of income to the life beneficiary and the date of the latter’s death. The executor has appealed from an order determining that he was not entitled to receive such income from the trustee.

By a decree of distribution in the estate of Faith Cole Richardson, deceased, certain property was ordered to be to the designated trustee as the corpus of the first trust under the decedent’s will. In the decree it was further in part as follows: “1. The trustee shall pay to or apply for the use and benefit of William TI. Richardson, during his lifetime, and for and on account of his support and all of the income from the corpus of this first trust estate from September 13, 1958, payable in quarterly or other convenient installments, but not less than annually. . . . 3. Upon the death of William H. Richardson, this first trust shall cease, and the remaining corpus and any undistributed income shall go to augment the trust estate of the second trust provided for under decedent’s will. ... 5. The costs of administration of this first trust, including trustee’s fees, fees, and other related charges, shall be paid and by the income from or corpus of the second trust under decedent’s will.” (Emphasis added.)

William H. Richardson, the life beneficiary, died on March 2, 1961. The last quarterly distribution to him of income was for the quarterly period ending December 30, 1960, the previous distributions in 1960 having been for the quarters ending respectively March 30, June 30, and September 30.1 After December 31, 1960, and prior to the death of Mr. Richardson on March 2, 1961, the trustee received income,2 but none of it was distributed to the life beneficiary [231]or to the executor of his estate. For the reasons hereinafter stated, we have reached the conclusion that the order from which the appeal was taken embodied a correct determination of the trustee’s duty with respect to the disposition of such income.

Guidance is found in section 235A of the Restatement Second of Trusts, which is as follows: “Where property is given in trust to pay the income to a beneficiary for life and on his death to pay the principal to others, such income as has been received by the trustee or has accrued prior to the death of the life beneficiary and has not been paid to him is payable to his personal representatives, unless it is otherwise provided by the terms of the trust.” (Emphasis added.) (See also 3 Scott, Law of Trusts (2d ed. 1956) §§ 235A, 238; Bogert, Law of Trusts and Trustees (2d ed. 1962) § 818, pp. 346-348; 1 Nossaman, Trust Administration and Taxation (2d ed. 1957) § 16.03.) Accordingly, recourse must be had to the terms of the trust as set forth in the decree of distribution for the purpose of ascertaining whether there is any provision therein which discloses the intent of the testator with respect to the resolution of the problem presented by the facts now before the court.3