Trusts - Construction and Interpretation Meaning of “Descendants”

Paschall v. Bank of America, 260 S.W.3d 707 (Tex. App.—Dallas 2008, no pet. h.).

Settlor authorized Trustee to distribute trust principal and/or income to her grandchildren “or the descendants of a grandchild.” Trustee distributed trust property to a grandchild’s daughters under the belief that the great-grandchildren are current beneficiaries of the trust. The grandchild objected claiming that Trustee could make distributions to his daughters only after he dies. The trial court granted summary judgment that the great-grandchildren are eligible distributes even though their parent is still alive.

The appellate court affirmed. The court first agreed with both sides that the trust instrument was unambiguous and thus the construction of the trust is a matter of law. The court then examined the trust to determine the way in which Settlor used the word “descendants,” that is, did she use the term (1) in its strict legal sense of issue of a deceased person or (2) in its popular sense as including the issue of a living person. Settlor did not include a definition of “descendants” in the trust instrument so the court examined all of the provisions of the trust. The court found it significant that in some provisions of the trust, Settlor specified whether a grandchild or descendant needed to be “living” or “dead.” In the provision at issue, Settlor did not include clarifying language and thus it makes sense that she used the term “descendants” in its popular sense.

Moral: Trust instruments need to be carefully worded to anticipate as many future scenarios as are reasonably possible to avoid disputes regarding the settlor’s intent.