Fitchie v. Brown
Headline: Court upholds a long-term trust for annuities, confirms it ends 21 years after the last named annuitant’s death, and requires surplus income to be saved and later distributed to heirs.
Holding: The Court upheld the will’s trust as valid, ruled it ends twenty-one years after the last named annuitant dies, and held surplus income must be accumulated and later distributed to those entitled.
- Requires trustees to accumulate surplus income until final distribution.
- Sets trust end at 21 years after the last named annuitant dies.
- Affirms trust validity even with many annuitants, excluding corporations as measuring lives.
Summary
Background
A testator left a fund in trust to pay a list of named annuitants and then to distribute the remaining estate later. The testator said the trust should last “as long a period as is legally possible” and refered to ending “under the statute.” The heirs challenged the will, arguing the trust’s end date and the lives meant to measure it were too uncertain, that more than forty annuitants made it void, and that part of the will might create an intestacy. The executors tried to argue parts of the case in this Court, but the Court said they had no right to oppose the lower court’s decree because they did not appeal.
Reasoning
Applying the common-law rule that a trust may last only for lives in being plus twenty-one years, the Court read the will as implying that the lives meant to measure the trust were the named annuitants. The Court found that the testator intended the trust to continue as long as legally possible but also intended an eventual full distribution of the estate. That construction avoided an invalid perpetual annuity, excluded the corporate orphanage from being treated as a life in being, and rejected the heirs’ claim that the number of annuitants made the trust void. The Court therefore held the trust valid and fixed its duration at the death of the last named annuitant plus twenty-one years. The Court also ruled that surplus income must accumulate as part of the trust until distribution.
Real world impact
Trustees may continue paying annuities as written and must save any surplus income into the trust until the final distribution date. The ultimate beneficiaries will receive both the original fund and accumulated surplus when distribution occurs. The trustee named may take and execute the trust, and if needed a court would appoint a replacement trustee. The judgment of the Supreme Court of Hawaii is affirmed.
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