February 25, 2013
Authored by: Luke Lantta
There are reasons why trust beneficiaries may want to waive or disclaim their interests in a trust. But, if multiple class members intend or agree to collectively waive their interests, they may want to make sure that each class member actually waives his or her interest. Otherwise, as we recently saw in the Georgia Supreme Court’s decision in White v. Call, the holdouts may wind up with everything.
Robert L. White executed and delivered a deed of gift to his wife, Florence, “as trustee of Robert Emory White [“Robert”], Maria Sheron White and Myron James White [“Myron”], the children of said donor and of the said trustee.” After the donor delivered the deed of trust, another child was born to the donor and Florence, Marvin Terry White (“Terry”).
The trust specifically directed the trustee on how the real property held in the trust should be distributed:
divide the proceeds of such sale or sales equally among herself and the surviving children of the donee or trustee, PROVIDED that the Trustee shall not have remarried. In the event that the Trustee shall have remarried, then she shall sell said property . . . and divide all of the proceeds received therefrom equally between the surviving child or children of donor and Trustee.
Florence remarried prior to the donor’s death. Ten years after the donor died, Robert, Maria, and Myron executed a joint affidavit in which each swore that “Florence L. White as trustee [of the subject Trust] has settled the Trust to the satisfaction of the affiant(s)” and that they “had no further claims against Florence L. White as Trustee by virtue of provisions of the above referenced trust indenture.” Terry did not sign the affidavit.
When Florence died intestate, Cynthia E. Call was appointed as successor administrator of Florence’s estate. Call filed suit requesting that she also be appointed as successor trustee of the Trust and be given the authority to sell the real property remaining in the Trust free of all claims. The trial court appointed Call and approved the sale.
Call then filed a motion asking for a determination that the Trust had been fulfilled and to whom she should distribute the Trust property. The trial court determined that, following the sale of the real property, the Trust had been fulfilled and that Terry was entitled to all of the proceeds because the three other children had previously waived any further interest in the Trust by signing that joint affidavit.
Robert and Myron claimed that Call breached her fiduciary duties by asking the court to ratify a distribution of the Trust to Terry, and they also claimed that the trial court misinterpreted the Trust.
The Georgia Supreme Court, however, agreed with the trial court. Florence remarried; Robert, Myron, and Maria waived any interest in the Trust when they executed that joint affidavit; and the Trust required distribution of its proceeds to “the surviving child or children” of the donor and Florence. The end result is that Terry gets all the proceeds.
The Georgia Supreme Court rebuffed Robert and Myron’s claims that the Trust only applied to Robert, Myron and Maria because they were the only three named children in the Trust. In doing so, the court reaffirmed some important law about class gifts.
While the donor may not have contemplated having additional children, the language of the Trust created a class gift to his surviving children. In the case of a devise to a class, the rule is that the members of the class are ascertained upon the death of the settlor. To deviate from this rule, the settlor must express such an intention to deviate through clear and unambiguous language.
Here, the operative trust language referred to the “surviving child or children,” which kept it within the general rule.