Will omits heirs and gives all to charities

Where the decedent’s will created a trust, and the designated trustee predeceased the decedent, the income from the residuary estate goes to the trust beneficiaries, a group of charities, and not to the decedent’s blood relatives, who were “explicitly and implicitly” disinherited in the will.

Overview

Rutyna executed a will about five years before his death. The will stated that he was not married, had no children, and that although he had blood relatives, he was choosing “not to make provision in this Will for them.”

The will gave Dolores Monaco, who was not related to Rutyna, a house and all of his personal property. The will bequeathed 60 percent of the residuary estate to Monaco. The will bequeathed the other 40 percent to Monaco “in trust,” specified the creation a trust known as the “Rutyna Family Foundation” and directed that the annual income was to be equally distributed to several charities.

Rutyna and Monaco died on the same day. Under Virginia law, Monaco is deemed to have predeceased Rutyna for purposes of interpreting the will. Mirman, the petitioner in this case, qualified as administrator of Rutyna’s estate. Mirman has asked the court to determine the proper residuary beneficiaries.

The charities argue that the will created a valid trust, that Monaco was named as trustee and not a trust beneficiary, that the trust cannot fail for lack of a trustee, that the residuary estate should be distributed to the trust and that the heirs-at-law should inherit nothing.

The heirs argue that the trust fails and that the entire estate passes “via intestacy” to them because Monaco predeceased Rutyna. In the alternative, the heirs argue that if the will did create a trust, they are beneficiaries of a resulting trust because Monaco predeceased Rutyna and he failed to name an alternate or residuary beneficiary.

The charities and the heirs both argue they are entitled to the whole of Rutyna’s estate.

Discussion

To create a trust, the settlor must have the capacity and the intention to create a trust. The trust must have a definite beneficiary or be a charitable trust, a trust for the care of an animal or a trust for certain other noncharitable purposes. The trustee must have duties to perform, and the same person is not the sole beneficiary and the sole trustee.

The parties agree that Rutyna had the capacity to create the trust and that the will manifests his intent to create a trust funded by 40 percent of the residuary estate. There is no dispute that the trustee has duties to perform and that the same person is not both the sole trustee and sole beneficiary.

“[T]he heirs have not cited any authority to support their position that an income beneficiary [the charities in this case] alone is insufficient to satisfy the definite-beneficiary requirement. … A beneficiary is sufficiently definite where it is ‘specifically named or capable of ascertainment from facts existing at the time the trust or interest is to be created[.]’ … [T]he charities are expressly identified in the will,” and therefore are definite beneficiaries under Virginia law.

The heirs argue that the trust creation language in the will did not name a trustee. “The relevant language regarding trustee designation in the Will is the clause, ‘To Dolores M. Monaco, forty per cent (40%) in trust.’ It is well settled that use of the clause ‘in trust’ in a will is instructive language that identifies a trustee responsible for holding and distributing the trust corpus to the applicable beneficiaries. …

“[A] trust shall not fail for want of a trustee. Consistent with this equitable maxim, the Code of Virginia expressly provides that the Court may appoint a trustee when a vacancy arises.”

The charities are the sole beneficiaries of the trust. Further, Rutyna “clearly conveyed his intent to disinherit his intestate heirs” in the will.

Conclusion

The devises and bequests in the will to Monaco have failed because she predeceased Rutyna. As a result, “the entirety of Rutyna’s estate is contained in his residuary estate.” Because Monaco died before Rutyna, she does not share in the residuary estate.

The trust is valid. Monaco was the designated trustee. Her death resulted in a vacant trustee position. There is no designated principal beneficiary of the trust corpus. The trust is a charitable trust and no principal beneficiary is required. The charities have an equitable interest in the trust corpus. A new trustee will be appointed to oversee the trust, including income distribution from the trust corpus to the charities. The charities will provide input in this regard.

Mirman, Administrator of Estate of Rutyna v. Clements, et al. Case No. 19-2652, Feb 4., 2020; Norfolk Cir. Ct. (Lannetti). Stephan J. Lipkis, Todd D. Rothlisberger, C. Wiley Grandy, Neal P. Brodsky, Andrew Fox, Margaret A. Kelly, M. Bradley Brickhouse, Ashley B. Horbal for the parties. VLW 020-8-007, 12 pp.