Vito v. Grueff ( 2017 )

Michael Vito et al. v. Candace Grueff, No. 75, September Term, 2016
TRUSTS – TRUST INTERPRETATION – INTENTION OF SETTLOR – Court of
Appeals held that modification authority contained in irrevocable trust did not permit 75%
of beneficiaries to divest remaining beneficiary. Court of Appeals reaffirmed that, when
interpreting trust, intent of settlor is paramount and deduced from entire trust document.
Court of Appeals held that, where settlor plainly intended trust to benefit his four children
equally, modification authority could not be used by three of beneficiaries to remove fourth
beneficiary.
Circuit Court for Montgomery County
Case No. 380035-V
Argued: March 31, 2017
IN THE COURT OF APPEALS
OF MARYLAND
No. 75
September Term, 2016
______________________________________
MICHAEL VITO ET AL.
v.
CANDACE GRUEFF
______________________________________
Barbera, C.J.
Greene
Adkins
McDonald
Watts
Getty,
JJ.
______________________________________
Opinion by Watts, J.
______________________________________
Filed: May 22, 2017
This case involves four siblings who were beneficiaries under an irrevocable trust
that was established by their father, the trust’s settlor.1 Three of the four siblings attempted
to remove the fourth sibling as a beneficiary of the irrevocable trust by relying on a
provision of the irrevocable trust that permitted 75% of the beneficiaries to amend the terms
of the trust.
In this context, we are asked to decide whether the modification authority that is
granted to the beneficiaries of a trust may be used to divest one of the beneficiaries from
benefits of the trust where the trust was explicitly established to benefit all beneficiaries
equally. Here, the settlor established an irrevocable trust for the benefit of his four adult
children. Included in the trust instrument is a modification provision that provides
authority for the beneficiaries to alter, amend, or revoke the terms of the trust if 75% of the
beneficiaries vote in favor of such action. The modification provision did not specifically
grant authority to remove a beneficiary, but rather allowed 75% of the beneficiaries to alter,
amend, or revoke the terms of the trust pursuant to the terms of the modification provision.
Thirty years after the trust was created, three of the four beneficiaries executed an
amendment under the modification provision purporting to remove the fourth beneficiary
as a beneficiary of the trust.
Considering the language of the entire trust instrument, we hold that the plain
language of the modification provision does not grant authority for three beneficiaries of
1
A settlor is “[s]omeone who makes a settlement of property; esp[ecially], one who
sets up a trust. — Also termed creator, donor, trustor, grantor, founder.” Settlor, Black’s
Law Dictionary (10th ed. 2014) (italics in original).
the trust to remove the fourth beneficiary, and that the irrevocable trust clearly evinces the
settlor’s intent for the trust to benefit his four children—the four beneficiaries—equally.
An interpretation of the trust instrument that would permit three of the settlor’s children to
divest the fourth would contravene the settlor’s intent and be inconsistent with the plain
language of the irrevocable trust. We conclude that the amendment at issue—in which
three of the four beneficiaries purported to divest the fourth beneficiary—was
impermissible under the terms of the irrevocable trust.
BACKGROUND
On September 16, 1983, James Vito (“Vito”) established an irrevocable trust,
entitled the “James B. Vito Family Trust” (“the irrevocable trust”), naming his four
children, Michael Vito (“Michael”), Judith Vito Seal (“Judith”), John Timothy Vito
(“Timothy”), and Candace Vito Grueff (“Candace”) (together, “the beneficiaries”), as
beneficiaries.2 At the time, Vito owned a contract to purchase property improved by a
building in Rochester, New York. The preamble of the irrevocable trust states that Vito
intended to give the contract to purchase property to the trust as a gift “for the immediate
benefit of [Vito’s] children, namely, CANDACE VITO GRUEFF, JUDITH A. VITO,
MICHAEL A. VITO, and JOHN T. VITO (hereinafter referred to as the ‘Beneficial
Owners’ or ‘Beneficiaries’) of the fee interest in said property in which [Vito was] the
owner of all buildings and improvements thereon[.]” The preamble further provides that
Vito granted “all [Vito’s] right, title and interest in and to the fee interest in said property .
2
Due to the common surname, we refer to James Vito as “Vito” and to his wife and
children by their first names.
-2-
. . in equal shares, for [Vito’s] children, CANDACE VITO GRUEFF, JUDITH A. VITO,
MICHAEL A. VITO, and JOHN T. VITO,” thereby establishing “a Trust Fund subject to
the terms and conditions [therein] under which the Trustee agree[d] to hold said fund . . .
for the benefit of and in behalf of [Vito]’s said children[.]”
Following the preamble, the irrevocable trust sets forth fifteen individually
numbered items, including, in relevant part:
SECOND: The Settlor shall pay all transfer or recordation taxes and costs of
settlement and title insurance on the purchase of the subject property and
thereafter the Trustee shall hold the legal title to Trust Property subject to the
Bill of Sale, Lease and Memorandum of Gift between the parties and shall
collect and receive all payments coming due on account thereof, whether
rents, dividends, interest and/or principal in behalf of and for the benefit of
the beneficiaries and the Trustee shall pay out of sums collected on such
assets, first out of income, and to the extent necessary from principal, all
taxes and other proper charges of the administration thereof. In addition, the
Trustee shall at least once each year distribute all the net income and any
capital gains of the trust to the beneficial owners in the shares set forth in
Item SIXTH below in such partial or periodic distributions as he deems
appropriate within his discretion.
***
FOURTH: This Trust shall terminate sixteen (16) years from the date hereof
unless sooner terminated as hereinafter provided (unless the Settlor-Tenant
exercises his option to renew the Lease for ten (10) years, in which case the
term of the Trust shall also be extended). Upon the termination of this Trust,
whether at the end of said sixteen (16) years or prior thereto (or after
expiration of the option period) the Trust Estate then held by the Trustee shall
be paid over, transferred and delivered to the beneficiaries in the shares set
forth in Item SIXTH below, free of all Trusts.
***
SIXTH: If at any time the assets comprising the Trust estate shall have been
liquidated and all of the aforesaid assumed obligations or liens or
encumbrances on the Trust property have been satisfied, the Trustee shall,
after setting aside an amount which in his judgment will be sufficient to
-3-
provide for the payment of any taxes and/or costs of administration, pay over
and distribute the remaining assets, exclusive of the reserve for taxes and/or
costs, to the beneficiaries free of all Trust, in the shares listed below:
CANDACE VITO GRUEFF 25%
JUDITH A. VITO 25%
MICHAEL A. VITO 25%
JOHN T. VITO 25%
100%
***
EIGHTH: In the event of the death of any of the issue of Settlor, prior to the
termination of this Trust, the beneficial interest herein of such deceased
person shall pass to his or her estate.
***
TENTH: This Agreement may be revoked, altered or amended from time to
time by an instrument in writing, signed by the holders of not less than
seventy-five (75%) interest herein and delivered to the Trustee.
Prior to the amendment at issue in the instant case, the irrevocable trust had been
amended four times, pursuant to the protocol set forth in Item Tenth requiring consent of
75% of the beneficiaries to alter, amend, or revoke the terms of the irrevocable trust.
Specifically, in 1995, Judith, Michael, and Timothy first amended the irrevocable trust to
appoint John F. Brennan, Esquire (“Brennan”) as the successor to the original trustee, Paul
Vito (“Amendment I”). In 1999, all of the beneficiaries—Judith, Michael, Timothy, and
Candace—amended the irrevocable trust to extend its duration until Vito’s death or
December 31, 2019, whichever occurred first (“Amendment II”); pursuant to Item Fourth,
the irrevocable trust was originally intended to expire after sixteen years. In 2003, all of
-4-
the beneficiaries extended the trust termination date to December 31, 2024 (“Amendment
III”). In Amendment III, the beneficiaries empowered the trustee to enter into certain
indemnification agreements on behalf of the trust. In 2012, Judith, Michael, and Timothy
amended the irrevocable trust to appoint Judith and Michael as successor trustees to
Brennan (“Amendment IV”).3
In the midst of the amendments, the beneficiaries became embroiled in litigation.
In 1999, Vito created a separate, revocable trust (“the revocable trust”), identifying himself,
his wife, Mary Vito (“Mary”), and Brennan as the trustees. The revocable trust was funded
by Vito’s commercial real estate holdings and other property. On December 15, 2004, Vito
executed an amendment to the revocable trust restating its terms. The amended revocable
trust established a residuary trust, separate from a marital trust, under which Vito’s four
children had an interest. In April 2011, Vito amended the revocable trust as the settlor, and
Vito, Mary, and Brennan amended the revocable trust as trustees, specifying that Candace’s
25% interest in an entity known as James Properties II, LLC would be reduced by a 10%
interest that had been previously granted to Candace’s son. Each of Judith, Timothy, and
Michael retained a 25% interest in James Properties II, LLC. Candace subsequently filed
a guardianship proceeding, alleging that Vito had dementia, that Michael and Judith had
taken advantage of Vito, and that Michael and Judith had convinced Brennan to draft the
amendment without informing Vito and Mary of its implications.4 The parties settled the
3
Amendment IV was the fourth amendment to the irrevocable trust, but was
erroneously entitled “Amendment III.”
4
Michael and Judith do not concede that Vito was incompetent as a result of
dementia. Vito was never declared incompetent by a court.
-5-
guardianship matter with the appointment of Paul H. Ethridge, Esquire (“Ethridge”) and
Mary as co-guardians of Vito’s property.
On August 9, 2013, with respect to both the irrevocable trust and the revocable trust,
Candace, Respondent, filed in the Circuit Court for Montgomery County (“the circuit
court”) a “Complaint to Remove Trustees, For Breach of Fiduciary Duty, to Appoint
Successor Trustees, For Negligence, For Monies Had and Received, To Set Aside Improper
Conveyances and For an Accounting and Other Relief, Including Money Damages” against
Mary in her capacity as a co-guardian of Vito’s property, Ethridge in his capacity as a co-
guardian of Vito’s property, Michael, Judith, Timothy, Brennan, and MFV Annuity Fund,
LLC. In the complaint, Candace alleged that Michael and Judith, Petitioners, were
misallocating funds from both trusts. Candace requested that the circuit court remove
Michael and Judith as trustees of the irrevocable trust and appoint a successor trustee.
Candace also sought, among other things, to require Michael and Judith to provide a full
accounting of any funds taken from the trusts.
On October 21, 2013, subsequent to the filing of Candace’s complaint, pursuant to
the modification provision of the irrevocable trust—Item Tenth—Judith, Michael, and
Timothy executed the amendment to the irrevocable trust purporting to remove Candace
as a beneficiary under the irrevocable trust. This was the fifth amendment (“Amendment
V”) to the irrevocable trust, which provides:
Pursuant to Article [(Item)] Tenth[5] of the JAMES B. VITO FAMILY
TRUST, dated September 16, 1983, as amended by Amendment I to the
5
The parties refer to Item Tenth, as well as other provisions of the irrevocable trust,
as both “Item” and “Article.” For consistency, we refer to a trust provision as an “Item.”
-6-
James B. Vito Family Trust dated March 8, 1995, and as further amended by
Amendment II to the James B. Vito Family Trust dated September 1, 1999,
Amendment III to the James B. Vito Family Trust dated June 16, 2003, and
a fourth amendment incorrectly identified as Amendment III to the James B.
Vito Family Trust dated May 21, 2012 (collectively, the “Trust”), the
undersigned, being seventy-five percent (75%) of the beneficial owners of
the Trust, hereby amend the Trust as follows:
1. [Item] Sixth is hereby deleted in its entirety and replaced as follows:
SIXTH: If at any time the assets comprising the Trust estate shall have
been liquidated and all of the aforesaid assumed obligations or liens
or encumbrances on the Trust property have been satisfied, the
Trustee shall, after setting aside an amount which in his judgment will
be sufficient to provide for the payment of any taxes and/or costs of
administration, pay over and distribute the remaining assets, exclusive
of the reserve for taxes and/or costs, to the beneficiaries free of all
Trust, in the shares listed below:
JUDITH VITO SEAL 33 1/3%
MICHAEL A. VITO 33 1/3%
JOHN T. VITO 33 1/3%
All other terms and conditions of the Trust shall remain unchanged
and continue in full force and effect.
This Amendment may be executed in counterparts, each of which,
when so executed, will be deemed an original, and all of which, taken
together, shall constitute one instrument.
Less than two weeks later, on November 1, 2013, Judith and Michael filed in the
circuit court a “Motion to Dismiss and/or For Summary Judgment” as to Counts I and V,
which pertained to removal of Michael and Judith as trustees of the irrevocable trust and
the request for an accounting of their dealings with regard to the irrevocable trust. In the
motion, Michael and Judith claimed that Candace lacked standing to challenge their
appointment as trustees because she was no longer a beneficiary of the irrevocable trust,
-7-
contending:
Finally, pursuant to Amendment V to the James B. Vito Family Trust
(“Amendment”), attached hereto as Exhibit 1, [Candace] is no longer a
beneficiary, income or otherwise, of the [irrevocable] Trust. The
Amendment amended [Item] Sixth of the Family Trust, which controls the
disbursement of current income and proceeds upon the termination of the
[irrevocable] Trust. Although when suit was filed, [Candace] was an income
beneficiary and a one-fourth (1/4) remainder beneficiary, on October 21,
2013, pursuant to [Item] Tenth of the [irrevocable] Trust, three-fourths (3/4)
of the beneficial owners agreed to modify [Item] Sixth, replacing it with a
new [Item] Sixth. [Candace] is not an income beneficiary under the new
[Item] Sixth as of October 21, 2013. Thus, since she is no longer a current
income beneficiary of the [irrevocable] Trust nor a residual beneficiary, she
lacks standing to bring her request for removal of Michael and Judith as
Trustees.
(Bolding in original). Similarly, Michael and Judith argued that Candace lacked standing
to request an accounting of any transaction involving the irrevocable trust that occurred
after October 21, 2013, the date on which Amendment V was executed. In addition to the
motion to dismiss and/or for summary judgment that Michael and Judith filed, there were
two other motions to dismiss Candace’s complaint filed: one by Timothy and MFV
Annuity Fund, LLC, and a second by Mary and Brennan.
On December 19, 2013, the circuit court conducted a hearing on the motions. On
January 27, 2014, the circuit court issued an opinion and order granting all of the motions
to dismiss, including Michael’s and Judith’s motion to dismiss and/or for summary
judgment. In ruling on Michael’s and Judith’s motion, the circuit court found that Candace
lacked standing to bring her claims. Specifically, the circuit court concluded that Item
Tenth could be used to remove a beneficiary from the irrevocable trust; thus, by virtue of
Amendment V, Candace was no longer a beneficiary with standing to seek removal of
-8-
Michael and Judith as trustees of the irrevocable trust, and to seek an accounting for
transactions that occurred after October 21, 2013. The circuit court also found Item Tenth
“to be a valid and enforceable contractual provision.”
On February 5, 2014, Candace filed a motion to alter or amend the circuit court’s
judgment. On May 8, 2014, the circuit court held a hearing on the motion to alter or amend.
During the hearing, the circuit court clarified that its order granting Michael’s and Judith’s
motion to dismiss and/or for summary judgment was partial. On the same day as the
hearing, the circuit court issued an Order Amending Opinion and Order docketed on
January 29, 2014, in which the circuit court explained “that only partial summary judgment
has been entered in favor of the defendants, Michael [] and Judith [], on Count V of
[Candace]’s complaint, and [Candace]’s claim for an accounting for the period of time up
to October 21, 2013, shall remain pending.” On November 3, 2014, the parties filed a line
of dismissal, asking that the remaining pending counts of the complaint be dismissed with
prejudice. Two days later, on November 5, 2014, Vito died.
On November 7, 2014, Candace noted an appeal to the Court of Special Appeals.
On August 31, 2016, in a reported opinion, the Court of Special Appeals reversed, in part,
the circuit court’s judgment, by reversing the dismissal of Counts I and V, which pertained
to removal of Michael and Judith as trustees of the irrevocable trust and the request for an
accounting of their dealings with regard to the irrevocable trust, and otherwise affirmed the
circuit court’s judgment. See Grueff v. Vito, 229 Md. App. 353, 385, 145 A.3d 86, 104
(2016). The Court of Special Appeals held “that a broadly worded power to amend in an
irrevocable trust instrument cannot be used by a majority of beneficiaries to divest a
-9-
minority beneficiary of her interest in the trust when doing so would be contrary to the
settlor’s intent in creating the trust.” Id. at 356, 145 A.3d at 87. Specifically, the Court of
Special Appeals observed that interpreting the irrevocable trust to allow three of four
siblings to divest the fourth would contravene Vito’s clearly stated intent, which was to
benefit his four children equally. See id. at 373, 145 A.3d at 98. The Court of Special
Appeals stated: “When the [irrevocable] trust instrument is considered as a whole, a
reading of [the 75% rule] to allow the holders of a 75% interest, i.e., three children, to
divest the holder of the remaining 25% interest, i.e., one child, of that interest is inconsistent
with [Vito]’s clear intention to benefit all four of his children, and to do so equally.” Id. at
373, 145 A.3d at 98. Thus, the Court of Special Appeals reversed the circuit court’s
judgment as to Counts I and V with respect to Michael and Judith. See id. at 385, 145 A.3d
at 104.
On October 14, 2016, Michael and Judith filed in this Court a petition for a writ of
certiorari, posing the following question:
Whether the [Court of Special Appeals] erred in reversing the Circuit
Court and ignored the intent of the settlor, as expressed in the plain and
unambiguous language of the Trust instrument, by holding an amendment
clause cannot be used to modify the beneficiary section of the Trust, even
though the amendment complied with the plain language of the amendment
clause?
On December 2, 2016, we granted the petition. See Vito v. Grueff, 450 Md. 664, 150 A.3d
819 (2016).
- 10 -
DISCUSSION
The Parties’ Contentions
Michael and Judith contend that the Court of Special Appeals’s decision, reversing
the judgment of the circuit court as to Counts I and V, was not based on established
Maryland law, but rather was fashioned to avoid an “undesirable result”—the divestment
of Candace. Michael and Judith argue that the Court of Special Appeals failed to give the
language of Item Tenth its plain meaning, which, in their view, grants the beneficiaries
broad discretion to modify the irrevocable trust, including the authority to divest a
beneficiary. Relying on principles of contract interpretation, Michael and Judith assert that
the Court of Special Appeals was prohibited from considering provisions outside of Item
Tenth unless the Court determined that the language of Item Tenth was ambiguous.
Michael and Judith maintain that, in rejecting the use of the 75% rule to amend Item Sixth,
the Court of Special Appeals substituted its judgment for Vito’s clearly stated intent.
Candace responds that the Court of Special Appeals correctly determined that
Michael’s and Judith’s interpretation of Item Tenth contravened Vito’s intent, which was
to have the irrevocable trust benefit his four children equally. Candace contends that the
Court of Special Appeals properly considered the language of the irrevocable trust in its
entirety in determining the scope of Item Tenth. According to Candace, language
throughout the irrevocable trust demonstrates that Vito intended the irrevocable trust to
benefit all four children and, thus, any amendment divesting one child would contravene
that intent. Candace argues that Amendment V violates well-established Maryland law
regarding testamentary power of appointment, which prohibits beneficiaries from
- 11 -
unilaterally taking a greater share of trust property for themselves.
In reply, Michael and Judith contend that Vito’s intent, as expressed in the
irrevocable trust, comports with their interpretation of Item Tenth. Michael and Judith
argue that, considering the irrevocable trust as a whole, nothing contained therein
contradicts the validity of the divestment of Candace under Item Tenth. Michael and Judith
assert that Item Tenth provides for broad amendment authority that is to be exercised by
75% of the beneficiaries. Michael and Judith maintain that any amendment to the
irrevocable trust, including the first four amendments, would alter its original intent.
Michael and Judith contend that Candace’s objection to their use of Item Tenth stems from
the circumstance that the modification achieves an obviously undesirable result for her,
rather than from any legal shortcoming of the amendment.
Standard of Review
We treat the circuit court’s grant of the motion to dismiss and/or for summary
judgment as a motion for summary judgment, as the circuit court considered materials
outside of the pleadings—namely, the irrevocable trust and Amendment V. See Anne
Arundel Cty. v. Bell, 442 Md. 539, 552, 113 A.3d 639, 647 (2015) (“We will treat the
Circuit Court’s grant of the County’s motions to dismiss as a grant of summary judgment
because the trial court considered materials (specifically, affidavits) outside the complaints
(i.e., the complaints and documents attached thereto).” (Citations omitted)). We review
all questions of law, including whether summary judgment was properly granted, without
deference. See id. at 552, 113 A.3d at 647; see also Toms v. Calvary Assembly of God,
- 12 -
Inc., 446 Md. 543, 551, 132 A.3d 866, 870-71 (2016) (“As with all questions of law, we
review this matter de novo.” (Citations and internal quotation marks omitted)).
Relevant Law
“The creation of a trust is a means of providing benefits for another, sometimes for
a consideration but more generally as a donative transfer. . . . The intent to create a trust
must be definite and particular.” Amy Morris Hess et al., Bogert’s Trusts and Trustees
(“Bogert’s”) § 46 (2016) (footnote omitted). At common law, there is a presumption that
beneficiaries do not possess the power to modify a trust. See Bogert’s § 992 (“Although a
beneficiary may be expressly granted the power to amend the trust, at common law, neither
some nor all of the beneficiaries have an implied power to modify the trust.” (Footnotes
omitted)). A settlor may, however, affirmatively grant a beneficiary the power to amend
the trust. See id. Similarly, a trustee may not unilaterally amend a trust without the consent
of the beneficiaries, except as expressly provided in the trust instrument. See From the
Heart Church Ministries, Inc. v. African Methodist Episcopal Zion Church, 370 Md. 152,
184, 803 A.2d 548, 568 (2002) (“Once established, a trust may be modified without the
beneficiaries’ consent, but only if the power to do so is reserved. If no such right has been
reserved, then the beneficiaries’ consent is required before the trust may be modified.”
(Citation omitted)); Shriners Hosps. for Crippled Children v. Md. Nat’l Bank, 270 Md.
564, 581, 312 A.2d 546, 555 (1973) (“[T]rustees cannot alter the interests of the
beneficiaries without their consent[.]” (Citation omitted)).
Conversely, courts may amend a trust if doing so would best effectuate the settlor’s
intent:
- 13 -
Courts . . . have the inherent power to modify a trust so long as that authority
is exercised with caution and not employed merely as a tool or device to
enable beneficiaries to receive a greater income or use of trust property than
was intended by the settlor. Before a court utilizes the inherent power of
modification, it must first be satisfied that facts and circumstances exist that
could not have been foreseen by the testator and that as a result of that lack
of foresight, the beneficiary will suffer loss.
Probasco v. Clark, 58 Md. App. 683, 687-88, 474 A.2d 221, 223 (1984) (citations omitted);
see also Shriners Hosps., 270 Md. at 581, 312 A.2d at 555 (“[A] trust instrument may be
reformed by the court to correct a mistake in the exercise of an equity court’s inherent
power.” (Citations omitted)); Md. Code Ann., Est. & Trusts (1974, 2011 Repl. Vol., 2014
Supp.) (“ET”) § 14.5-413 (“The court may reform the terms of a trust, even if
unambiguous, to conform the terms to the intention of the settlor if it is proved by clear
and convincing evidence that both the intent of the settlor and the terms of the trust were
affected by a mistake of fact or law, whether in expression or inducement.”).6 “This power
of the court to modify does not extend to altering the dispositive provisions by introducing
new beneficiaries, or removing old ones, or changing the shares of the beneficiaries.”
Bogert’s § 994 (footnote omitted).
When interpreting a trust, “[o]ne of the fundamental rules of construction is that the
intention of the [settlor] must govern if consistent with the rules of law, and this intention
6
In 2014, the General Assembly enacted the Maryland Trust Act (“the Trust Act”),
which took effect on January 1, 2015. 2014 Md. Laws 3876, 3969 (Vol. V, Ch. 585, H.B.
83). The provisions of the Trust Act “appl[y] to all trusts created before, on, or after
January 1, 2015[.]” ET § 14.5-1006(a)(1). The Trust Act “do[es] not apply to judicial
proceedings concerning trusts commenced before January 1, 2015[.]” ET § 14.5-
1006(a)(3). However, “a rule of construction or presumption provided in [the Trust Act]
applies to trust instruments executed before January 1, 2015, unless there is a clear
indication of a contrary intent in the terms of the trust[.]” ET § 14.5-1006(a)(4).
- 14 -
must be gathered from the entire instrument.” Sands v. Church of Ascension and Prince
of Peace, 181 Md. 536, 541, 30 A.2d 771, 774 (1943). Courts generally employ the
following methodology to ascertain the intent of the settlor:
The process of construction of trust provisions is the same as that used in the
construction of wills, and essentially involves three steps. The premise is
that the intent of the settlor or testator controls. That intent is first sought by
careful examination of the language of the trust clause in question, giving the
words in that clause their ordinary meanings. If the question cannot be
resolved by reference to the clause alone, the court will examine the entire
trust instrument to determine the settlor’s intent and purposes; where
necessary they apply statutory or court rules of construction or presumptions.
The third step becomes necessary when the intent or meaning of the settlor
or testator cannot be determined by reference to the provisions of the trust
instrument itself, for example, if the language is ambiguous. Then, the court
admits extrinsic evidence to assist it in determining the meaning and effect
of the particular clause.
Bogert’s § 182 (footnotes omitted). Because the rules of construction for trusts are the
same as those for wills, we find this Court’s case law interpreting wills to be instructive.
As with the interpretation of trusts, “[w]hen construing a will, the paramount
concern of the court is to ascertain and effectuate the testator’s expressed intent.” Friedman
v. Hannan, 412 Md. 328, 339, 987 A.2d 60, 67 (2010) (citation and internal quotation
marks omitted). Indeed, we have explained that effect must be given to the express
meaning of the testator’s words, rather than what the court might presume the intent of the
testator to be. See Banghart v. Vieweg, 261 Md. 214, 220-21, 274 A.2d 333, 336 (1971)
(“(A)rguments based upon the supposed or known wishes of a testator in respect to the
disposition of his [or her] property are not to be considered, unless such wishes are
expressed in his [or her] will.” (First alternation in original) (citation and internal quotation
marks omitted)). Furthermore, extrinsic evidence is inadmissible unless it clarifies an
- 15 -
ambiguous testamentary intent:
As far back as Walston v. White, 5 Md. 297 (1853), Chief Judge Le Grand
said for our predecessors:
‘The rule is this: where the language of the testator is plain and unambiguous
such language must govern, and therefore extrinsic evidence is inadmissible
to show that he [or she] meant something different from what his [or her]
language imports; but any evidence is admissible, which, in its nature and
effect, simply explains what the testator has written; ‘in other words, the
question in expounding a will is not (-W)hat the testator meant? as
distinguished from (-W)hat his [or her] words express(?) but simply (-W)hat
is the meaning of his [or her] words?
...
In Hebden v. Keim, 196 Md. 45, 75 A.2d 126 (1950), Judge Delaplaine said
for the Court:
‘We recognize, of course, that the Court, in construing a will, is governed,
not by what the Court may think the testator wanted to say, but by what his
[or her] words actually meant, because his [or her] words were designed to
express his [or her] intention. The expressions in a will must be interpreted
in their ordinary and grammatical sense; and if the language is plain and
unambiguous, the Court cannot give it a different meaning in order to give
effect to a mere conjecture as to the testator’s intention.’
Banghart, 261 Md. at 218-19, 274 A.2d at 335 (some alterations in original) (some citations
omitted). Where provisions of the same will appear to contradict one another, the Court of
Special Appeals has concluded that “the provision which most nearly appears to be in
accord with the testator’s wishes should prevail.” Bell v. Forti, 85 Md. App. 345, 352, 584
A.2d 77, 80 (1991) (citation omitted). Accordingly, “a specific will provision should
prevail over or modify a general provision” and “[t]he testator’s general intention prevails
over minor discrepancies, omissions, or contradictions in the will.” Id. at 352, 584 A.2d at
81 (citations omitted).
- 16 -
We have consistently adhered to the principle that, when determining the fate of a
testamentary estate, the testator’s intent is of primary importance and must be divined from
the four corners of the will. See Pfeufer v. Cyphers, 397 Md. 643, 651, 919 A.2d 641, 646
(2007) (“[U]nless prohibited by statute or public policy, the intent of the testator as
ascertained from the four corners of the will controls the disposition of a decedent’s estate.”
(Citation and internal quotation marks omitted)); Bandy v. Clancy, 449 Md. 577, 597, 144
A.3d 802, 814 (2016) (“When construing a will, our emphasis . . . is ascertaining and
effectuating the intent of the testator[.]” (Citation omitted)). In Pfeufer, 397 Md. at 660,
919 A.2d at 652, we held that a testator’s clearly stated intent that an inheritance tax on the
estate be paid from the residuary estate “without apportionment” was controlling, even
though a number of the residuary legatees would ordinarily be exempt from paying
inheritance taxes on their share. In Pfeufer, id. at 646, 919 A.2d at 643-44, the testator’s
will provided that the residuary estate be divided in equal shares among four individuals:
his daughter, his son, his sister, and a fourth individual who was of no relation. Pursuant
to Md. Code Ann., Tax-Gen. (1988, 2004 Repl. Vol.) (“TG”) § 7-203(b)(2), the three
relatives of the testator were exempt from paying inheritance taxes, but the fourth legatee
did not qualify for such an exemption.7 See Pfeufer, 397 Md. at 646-47, 919 A.2d at 644.
The will, however, included the following language:
7
TG 7-203(b)(2) provided:
The inheritance tax does not apply to the receipt of property that passes from
a decedent to or for the use of:
- 17 -
I direct that all estate, inheritance, transfer, legacy or succession taxes, or
death duties (including interest and penalties thereon) which may be assessed
or imposed with respect to my estate, or any part thereof, of whatever nature
and description and wheresoever situated, . . . shall be paid out of the
principal of my residuary estate; and such payment shall be made as an
expense of the administration of my estate without apportionment.
Id. at 647, 919 A.2d at 644 (emphasis and ellipsis in original) (internal quotation marks
omitted).
The testator’s daughter originally abided by the terms of the will and deducted the
inheritance tax from the entire amount of the residuary estate; however, before distribution
of the residuary estate, she amended the administration account such that the entirety of the
inheritance tax burden for the residuary estate came out of the fourth legatee’s portion of
the residuary estate. See id. at 647, 919 A.2d at 644. The fourth legatee challenged the
amendment, but the Orphans’ Court for Montgomery County upheld the amendment,
finding that the legislative intent of TG § 7-203(b) controlled over the “boilerplate
language” of the will. Id. at 647-48, 919 A.2d at 644. Upon determining that the clearly
expressed intent of the testator was that the inheritance tax be paid from the residuary estate
without apportionment, we reversed the judgment of the Orphans’ Court for Montgomery
(i) a grandparent of the decedent;
(ii) a parent of the decedent;
(iii) a spouse of the decedent;
(iv) a child of the decedent or a lineal descendant of a child of the
decedent;
(v) a spouse of a child of the decedent or a spouse of a lineal
descendant of a child of the decedent;
(vi) a brother or sister of the decedent; or
(viii) a corporation if all of its stockholders consist of individuals
specified in items (i) through (vi) of this paragraph.
- 18 -
County. See id. at 660, 919 A.2d at 652. In so holding, we emphasized the primacy of the
testator’s intent in determining the allocation of an estate, and noted that it must control
unless in conflict with law or public policy, stating:
[T]he testator must have intended that the amount of the residuary shares to
be distributed would be determined based on the value of the residuary estate
after the taxes had been paid, off the top, out of the estate; it was the clear
intention of the testator that each individual share of the residuary estate be
determined after the taxes were paid on the entire estate, albeit from the
residuary estate. Thus, it is immaterial that under the Tax Code, some of the
legatees would not have been obligated, in any event, to pay taxes on their
share; they are, in reality, not being taxed on their residuary share, nor is any
residuary legacy being reduced. As we have said, the intent of the testator,
as ascertained from the language of the will, controls the source of the funds
to be used to pay inheritance taxes so long as there is no conflict with the
applicable statute, other law or public policy.
Id. at 655, 919 A.2d at 649 (citation omitted).
To ascertain the intent of the testator, the Court considers a will in its entirety. See
Wesley Home, Inc. v. Mercantile-Safe Deposit & Trust Co., 265 Md. 185, 198, 289 A.2d
337, 344 (1972) (“It is, of course, the cardinal principle of construction of wills that the
intention of the testator be carried out, as deduced from the ‘four corners’ of the will.”
(Citations omitted)); Marty v. First Nat’l Bank of Balt., 209 Md. 210, 217, 120 A.2d 841,
844 (1956) (“Th[e] expressed intention of a testator must be gathered from the language of
the entire will, particularly from the clause in dispute, read in the light of the surrounding
circumstances at the time the will was made.” (Citations omitted)). In determining the
testator’s intent, we give the words in the will their plain meaning and seek “to harmonize
its provisions and avoid conflicts, such that the interpretation gives effect to each provision
wherever possible.” Bandy, 449 Md. at 613, 144 A.3d at 824 (citation omitted). “Where
- 19 -
. . . the intention is evident from the context of the will, but is made obscure by an inaccurate
or inapt expression, the Court may insert, delete, correct, or transpose words and phrases
in order to remove the ambiguity[,] and thereby effectuate the testator’s intention.”
Hebden, 196 Md. at 51, 75 A.2d at 129 (citations omitted).
In LeRoy v. Kirk, 262 Md. 276, 279-80, 277 A.2d 611, 613 (1971), we held that,
when considered in the context of an entire will, the phrase “personal property” pertained
only to tangible personal property. In LeRoy, id. at 278, 277 A.2d at 612, the testators, a
husband and wife, executed nearly identical wills, which included instructions on devising
their property once both spouses died. The will provided, among other things, that a friend
receive “the sum of Ten Thousand Dollars ($10,000) and all of [the testators’] personal
property, including [their] automobile, boat and the contents of [their] house and
outbuilding[.]” Id. at 278, 277 A.2d at 612 (internal quotation mark omitted). The will
further provided that the
Executor [was] to liquidate that portion of [the] estate remaining after
payment of the bequests set forth in ITEMS IV, V, and VI above, and to
distribute the resulting sum in equal shares to the ANNE ARUNDEL
GENERAL HOSPITAL, Annapolis, Maryland, and the ANNE ARUNDEL
COUNTY CHAPTER OF THE SOCIETY FOR THE PREVENTION OF
CRUELTY TO ANIMALS[.]
Id. at 278-79, 277 A.2d at 612.
After both spouses died, a dispute arose between the friend and the Anne Arundel
General Hospital and the Society for the Prevention of Cruelty to Animals as to the
meaning of the phrase “personal property” as used in the will. See id. at 279, 277 A.2d at
612. The friend contended that “personal property” included both tangible and intangible
- 20 -
personal property, whereas the Anne Arundel General Hospital and the Society for the
Prevention of Cruelty to Animals argued that the phrase referred only to tangible personal
property. See id. at 279, 277 A.2d at 612. The friend maintained that the language of the
will unambiguously demonstrated the testators’ intent to provide the friend with all of their
personal property, including intangible personal property, such as stocks and cash. See id.
at 280-81, 277 A.2d at 613. We disagreed, explaining:
We find the [friend’s] approach to be too simplistic. It is true that a
bequest of ‘personal property’ without more includes every form of personal
property, tangible and intangible, from whatever source derived, that is
everything except real estate. It is equally true, however, that the broad scope
of the words ‘personal property’ standing alone is limited by the rule that ‘if
there be anything in any part of the will which restricts or qualifies the
general term, the latter must be so restricted and qualified, if it can be done
without violating some other principle of law or the manifest intention of the
testator.’
Id. at 281, 277 A.2d at 613 (citation omitted).
In determining the intended meaning of the phrase “personal property[,]” we
emphasized the importance of considering the words of a clause in the context of the
testators’ intent as demonstrated throughout the entirety of the will:
The search is not for [the testator’s] presumed but for his [or her] expressed
intention. What must be sought is the true meaning of his [or her] words, not
what he [or she] meant as distinguished from what [the] words express, ‘but
simply what is the true meaning of [the] words; not merely what he [or she]
meant, but what [the] words mean.’ What the words express is to be
interpreted according to their plain meaning and import. This expressed
intention must be gathered from the language of the entire will, particularly
from the clause in dispute, read in the light of the surrounding circumstances
when the will was made.
Id. at 279-80, 277 A.2d at 613 (citation omitted). In LeRoy, id. at 283, 277 A.2d at 614,
we observed that the testators had identified their personal property to be tangible personal
- 21 -
property—i.e., a boat, car, and contents of their house—whereas, in other sections of the
will, the testators placed no such limitations on bequests. We also noted that the structure
of the bequests became unworkable if we were to interpret the will as granting the friend
all of the testators’ tangible and intangible personal property:
Debts, expenses and death taxes are directed to be paid from the residue. If
it was intended that [the friend] was to get all the intangible personal property
as well as all the tangibles, the residue could have consisted only of the real
estate, that is, the home property. To pay the death taxes there would have
had to have been one sale of the realty early in the administration of the estate
and there could have been no other later sale of ‘that portion of [the] estate
remaining after payment of the bequests * * *.’ One can only conclude that
the testator foresaw that there would be a liquidation of estate assets after
[the friend]’s bequests had been distributed to her.
Id. at 283-84, 277 A.2d at 615 (ellipsis in original). Thus, we concluded that the phrase
“personal property,” when considered in the context of the entire will, pertained solely to
tangible personal property. See id. at 279, 277 A.2d at 613.
Similarly, in Childs v. Hutson, 313 Md. 243, 247, 545 A.2d 43, 45 (1988), we held
that a broadly-phrased devise of a life tenancy in a will did not grant the life tenant the right
to subsequently gift the property to another party. In that case, the testatrix executed a will
in which she granted a life tenancy in the family home to her daughter, who was one of the
testator’s three adult children. See id. at 244, 545 A.2d at 44. Specifically, the will granted
the daughter the “‘full power to sell, mortgage, lease, rent or in any other manner
whatsoever to dispose of the entire estate, or any portion thereof (except by Will).’” Id. at
244, 545 A.2d at 44. The will provided that, in the event that the daughter sold the property,
the net proceeds of the sale would be divided among the three adult children, with $1,000
provided to the testatrix’s son, two-thirds to the daughter with the life tenancy, and one-
- 22 -
third to the testatrix’s other daughter. See id. at 244-45, 545 A.2d at 44. The will ordered
that, if the daughter with the life tenancy passed away before selling the property, the
estate’s executor was to sell the property and divide the proceeds according to the same
ratio, but with the testatrix’s granddaughter standing in the place of her mother and
receiving two-thirds. See id. at 245, 545 A.2d at 44.
The daughter retained the property for eighteen years. See id. at 244-45, 545 A.2d
at 44. Shortly before her death, she deeded the property to her daughter, the testatrix’s
granddaughter, without consideration. See id. at 245, 545 A.2d at 44. The testatrix’s other
daughter and the heirs of the testatrix’s son initiated an action seeking to invalidate the
deed. See id. at 245, 545 A.2d at 44. Specifically, they contended that the will, when
considered as a whole, did not grant the daughter the power to gift the property. See id. at
245, 545 A.2d at 44. Conversely, the granddaughter argued that the testatrix’s will granted
the daughter the authority to dispose of the property in any manner that she chose. See id.
at 246, 545 A.2d at 45. We explained the granddaughter’s argument as follows:
[The granddaughter] claim[s] that the plain meaning of the words contained
in [the testatrix]’s will manifested an intention to grant [her daughter]
absolute powers of disposition of the [] property, including disposition by
gift. [The granddaughter] argue[s] that [the testatrix]’s intention must be
gathered from only one source[—]the words employed by her. Accordingly,
the [granddaughter] say[s] that because [the testatrix] vested [her daughter]
with unlimited power to dispose of the [] property “in any other manner
whatsoever,” except by will, that intention can only be gratified if [the
daughter]’s gift of the property is upheld.
Id. at 246, 545 A.2d at 45.
We concluded, however, that the granddaughter’s interpretation of the will was at
odds with the testatrix’s general intent, and that the provision of the will granting the
- 23 -
daughter the right to dispose of the property could not be read in isolation. See id. at 247,
545 A.2d at 45-46. Rather, we determined that the provision at issue needed to be
considered in the context of the entire will, stating:
Of course . . . the intention of the testatrix is to be determined by the words
employed by her. But those words are not to be considered in isolation, but
only in association with the other provisions of the will[—]the overall
testamentary plan of the testatrix. In other words, the will must be read as a
whole. Therefore, [the daughter]’s power to sell, mortgage, lease, rent, or
“in any other manner whatsoever to dispose of the entire estate,” except by
will, must be construed in light of, and circumscribed by, [the testatrix]’s
intent that the property would provide a residence or support for [the
daughter] but would eventually be sold and the proceeds distributed to the
designated beneficiaries. Thus, while the words contained in the broad
power of disposition given [the daughter] in this case, if literally applied,
would accommodate a gift of the property, the will in its entirety reveals
that such a disposition was not within [the testatrix]’s real intention. The
general plan of [the testatrix]’s will required that whatever disposition [the
daughter] made of the property under the power granted to her, a monetary
value would be received for it.
Id. at 247, 545 A.2d at 45-46 (emphasis added). In reviewing the will in its entirety, we
also found it significant that the testatrix had given other property to her daughter outright,
without any restrictions, yet had expressly chosen not to do so with the family home. See
id. at 248, 545 A.2d at 46 (“Indeed, had [the testatrix] intended that [her daughter] have an
unrestricted power of disposition over the property, she would have given it to her outright,
as she did with her other property.”). In sum, we concluded that the authority granted to
the daughter with respect to the family home did not include the power to gift the property.
See id. at 247-48, 545 A.2d at 46.
- 24 -
Analysis
In this case, taking into account the language of the entire irrevocable trust, we hold
that the plain language of Item Tenth does not grant authority for three beneficiaries of the
trust to remove the fourth beneficiary, and that the irrevocable trust clearly demonstrates
Vito’s intent for the trust to benefit his four children—the four beneficiaries—equally. In
other words, Amendment V—in which three of the four beneficiaries purported to divest
the fourth beneficiary, Candace—was impermissible under the terms of the irrevocable
trust. Item Tenth does not provide 75% of the beneficiaries with the power to divest the
remaining beneficiary. Although Item Tenth gives 75% of the beneficiaries authority to
revoke, alter, or amend the terms of the irrevocable trust, an interpretation that grants three
beneficiaries the power to divest the fourth beneficiary would directly contravene Vito’s
express intent, as ascertained from the language of the irrevocable trust, which was that the
irrevocable trust benefit his four children equally.
Guided by the principles of testamentary interpretation set forth in Pfeufer, 397 Md.
at 660, 919 A.2d at 652, LeRoy, 262 Md. at 281, 277 A.2d at 614, and Childs, 313 Md. at
247, 545 A.2d at 45, we conclude that the trust agreement is to be construed based on the
settlor’s intent, as ascertained from the language of the provision at issue, within the
context of the document as a whole. In this case, Vito’s intent to have the irrevocable trust
benefit his four children equally is evident from the totality of the irrevocable trust’s
language. Similar to this Court’s determination in Childs, 313 Md. at 247, 545 A.2d at 45,
if read in isolation, the language of item Tenth could arguably be interpreted to permit
divestment of a beneficiary by 75% action of the beneficiaries. But, when the content of
- 25 -
Item Tenth is considered along with the language of the irrevocable trust in its entirety, it
is clear that Item Tenth does not grant authority for 75% of the beneficiaries to divest a
remaining beneficiary, and Amendment V cannot be reconciled with Vito’s clear intent.
Even a cursory review of Item Tenth reveals that Item Tenth does not provide 75%
of the beneficiaries with the power to change the number of beneficiaries and eliminate a
remaining beneficiary of the irrevocable trust. Indeed, Item Tenth makes no express
mention of increasing or decreasing the number of beneficiaries, and speaks only of
generally amending, altering, or revoking the terms of the irrevocable trust. Plainly, the
language of Item Tenth does not explicitly resolve the present issue.
When read in its entirety, the plain language of the irrevocable trust provides ample
substantiation that Vito intended the irrevocable trust to benefit all four children.
Significantly, the preamble includes the following language:
WHEREAS, [Vito] desires to dispose of said contract by gift on this
date to this Trust for the immediate benefit of his children, namely,
CANDACE VITO GRUEFF, JUDITH A. VITO, MICHAEL A. VITO,
and JOHN T. VITO (hereinafter referred to as the “Beneficial Owners” or
“Beneficiaries”) of the fee interest in said property in which he will be the
owner of all buildings and improvements thereon[.]
***
NOW, THEREFORE, to accomplish such purposes [Vito] does hereby give
all his right, title and interest in and to the fee interest in said property to
PAUL M. VITO, as Trustee, in equal shares, for his children, CANDACE
VITO GRUEFF, JUDITH A. VITO, MICHAEL A. VITO, and JOHN
T. VITO, and [Vito] does hereby establish a Trust Fund subject to the terms
and conditions hereof under which the Trustee agrees to hold said fund, all
as herein provided for the benefit of and in behalf of [Vito]’s said
children[.]
- 26 -
(Emphasis added). Within the irrevocable trust, Vito included provisions to ensure that his
four children would receive the benefits of the trust:
[T]he Trustee shall at least once each year distribute all the net income and
any capital gains of the trust to the beneficial owners in the shares set forth
in item SIXTH below in such partial or periodic distributions as he deems
appropriate within his discretion.
***
Upon the termination of this Trust . . . the Trust Estate then held by the
Trustee shall be paid over, transferred and delivered to the beneficiaries in
the shares set forth in Item SIXTH below, free of all Trusts.
***
SIXTH: If at any time the assets comprising the Trust estate shall have been
liquidated and all of the aforesaid assumed obligations or liens or
encumbrances on the Trust property have been satisfied, the Trustee shall,
after setting aside an amount which in his judgment will be sufficient to
provide for the payment of any taxes and/or costs of administration, pay over
and distribute the remaining assets, exclusive of the reserve for taxes and/or
costs, to the beneficiaries free of all Trust, in the shares listed below:
CANDACE VITO GRUEFF 25%
JUDITH A. VITO 25%
MICHAEL A. VITO 25%
JOHN T. VITO 25%
100%
***
EIGHTH: In the event of the death of any of the issue of [Vito], prior to the
termination of this Trust, the beneficial interest herein of such deceased
person shall pass to his or her estate.
Tellingly, in addition to Item Sixth, which identifies Vito’s four children by name
and directs that each receive an equal 25% share of the trust, Item Eighth specifies that, in
- 27 -
the event that one of the beneficiaries dies while the trust is in existence, the deceased
beneficiary’s estate, not the other beneficiaries, would be entitled to the deceased
beneficiary’s share. In other words, under Item Eighth, Candace’s heirs would inherit her
interest in the trust. Thus, Michael’s and Judith’s interpretation of Item Tenth is at odds
with the intent evident in Item Eighth, as well as the preamble.
As we explained in Childs, 313 Md. at 247, 545 A.2d at 45, when interpreting a will,
the intention of the testator is ascertained by the language employed by the testator in the
context of the will as a whole. As we noted in Childs, id. at 247, 545 A.2d at 45, had we
analyzed the clause at issue in isolation, we would have concluded that the testatrix’s
daughter was empowered to dispose of the property in any way that she saw fit, except by
will. In Childs, id. at 247, 545 A.2d at 45, however, we explained that the testatrix’s “words
are not to be considered in isolation, but only in association with the other provisions of
the will[—]the overall testamentary plan of the testatrix.” Our considerations in this case
are the same. Without further context, Item Tenth could debatably be read to permit
divestment of a beneficiary through amendment of the irrevocable trust. When Item Tenth
is considered in the context of the entirety of the irrevocable trust, however, it is clear that
it was not Vito’s intent that three beneficiaries could divest the remaining beneficiary.
In more than one instance, Vito provided that the irrevocable trust was intended to
benefit his four children equally, including Candace. As such, adopting Michael’s and
Judith’s interpretation would lead to an unreasonable result. As Candace points out,
Michael’s and Judith’s interpretation of the irrevocable trust would, in theory, have
permitted Michael, Judith, and Timothy to remove Candace instantly as a beneficiary of
- 28 -
the irrevocable trust as soon as the trust was created. This outcome cannot be reconciled
with Vito’s intent, and would have brought about the result of immediately undermining
the purpose of the irrevocable trust.
Beyond the language of Item Tenth authorizing the alteration, revocation, or
amendment of the irrevocable trust, we discern no language in the irrevocable trust that
would even remotely suggest that Vito intended to permit 75% of the beneficiaries to divest
the remaining beneficiary. Notably, Amendment V, by having amended only Item Sixth
of the irrevocable trust, and not having amended the preamble and other provisions of the
irrevocable trust, creates an instrument that is internally inconsistent. The preamble
explicitly provides that the named beneficiaries, including Candace, are to share equally in
the benefits of the irrevocable trust. At oral argument, Michael’s and Judith’s counsel
acknowledged that Amendment V changed only the terms of Item Sixth and had no effect
on the preamble. Thus, were we to assume that Vito intended to permit 75% of the
beneficiaries to amend the irrevocable trust divest another beneficiary—which we do not—
without altering the preamble, the amendment to Item Sixth would directly contradict the
preamble and other portions of the irrevocable trust, such as Item Eighth. In short,
Amendment V, in amending only Item Sixth, did not effectively alter the irrevocable trust
to divest Candace, as the preamble still provides that Candace, like the other three
beneficiaries, is to share equally in the benefits of the trust, and Item Eighth continues to
provide that, in the event of the death of any of Vito’s children before the trust terminates,
the beneficial interest will pass to that child’s estate.
Similarly, we observe that Amendment V also produces the unacceptable result of
- 29 -
rendering the 75% amendment provision of Item Tenth illogical. Item Tenth does not
require unanimity for alterations, amendments, or revocations of the terms of the
irrevocable trust, but rather provides that such changes would require approval of at least
75% of the beneficiaries. By reducing the number of beneficiaries to three, Amendment V
made it impossible to amend the irrevocable trust without unanimity because, without
Candace as a beneficiary, only three beneficiaries remain, and it is mathematically
impossible to have an exact 75% majority of three people. Indeed, Michael’s and Judith’s
counsel conceded as much at oral argument. At oral argument, upon a question from the
Court, Michael’s and Judith’s counsel acknowledged that Item Tenth now requires
unanimity of the beneficiaries to amend the irrevocable trust. As with the failure to amend
the preamble, Amendment V pertained only to Item Sixth, not Item Tenth, and, as a result,
now renders Item Tenth’s 75% amendment provision unworkable.
Indisputably, this case’s circumstances are similar to those of Childs, 313 Md. 243,
545 A.2d 43. As in Childs, id. at 245-46, 545 A.2d at 44-45, at issue is the extent of the
authority that a maker of an instrument intended to give a beneficiary. In Childs, id. at
244-47, 247, 545 A.2d at 44-45, the parties, who were siblings and beneficiaries to a will,
disagreed as to whether a beneficiary had the authority to gift the family home where sale
of the home was intended to benefit all of the sibling beneficiaries. In this case, the parties
disagree as to the scope of the beneficiaries’ authority to modify the irrevocable trust.
Namely, Item Tenth does not expressly set forth whether it provides three of the
beneficiaries with the authority to divest a fourth beneficiary. As explained above, we must
consider the language of the irrevocable trust in its entirety to ascertain Vito’s intent. We
- 30 -
conclude that Vito’s clear intent to benefit his four children equally cannot be reconciled
with an interpretation of the irrevocable trust that would permit three of the beneficiaries
to divest the fourth beneficiary.
At oral argument, Michael’s and Judith’s counsel discussed the “objective rule of
contract[.]” Maryland case law prescribes an objective interpretation of contracts, while
case law pertaining to the interpretation of wills—and, by extension, trust agreements—
directs that the goal is to effectuate the settlor’s intent, as gleaned from the entire trust
agreement. As evident from the relevant case law, the interpretation of a will is guided
first and foremost by the testator’s intent. This approach, which applies equally to
interpretation of trust agreements, differs notably from case law governing the
interpretation of contracts. Indeed, when interpreting a contract, we have adopted an
objective approach in which the court must “determine from the language of the agreement
itself what a reasonable person in the position of the parties would have meant at the time
it was effectuated.” Spacesaver Sys., Inc. v. Adam, 440 Md. 1, 8, 98 A.3d 264, 268 (2014)
(citation omitted). Thus, we have explained that, when interpreting the terms of a contract,
the subjective intent of the parties is not controlling:
In these circumstances, the true test of what is meant is not what the parties
to the contract intended it to mean, but what a reasonable person in the
position of the parties would have thought it meant. Consequently, the clear
and unambiguous language of an agreement will not give away to what
the parties thought that the agreement meant or intended it to mean.
Id. at 8, 98 A.3d at 268-69 (emphasis added) (citation omitted). Maryland case law
regarding the interpretation of contracts differs from case law pertaining to the
- 31 -
interpretation of wills and trusts, where ascertaining the testator’s or settlor’s “[i]ntention
is primary and paramount.” Marty, 209 Md. at 216, 120 A.2d at 844.
We are not persuaded by Michael’s and Judith’s contention that the irrevocable
trust’s reference to both the lowercase term “beneficiaries” and the capitalized term
“Beneficiaries” allegedly differentiates between the defined group of four “Beneficiaries”
and an undefined group of potential other “beneficiaries,” and evinces an unspoken
presumption by Vito that the designated beneficiaries might change over time. Although
the preamble defines “Beneficiaries” as Vito’s four children, throughout the trust
instrument the four children are also referred to as “beneficiaries[.]” As Candace correctly
points out, the capitalized term “Beneficiaries” is not used in the irrevocable trust with the
exception of one reference in the preamble. The subsequent use of “beneficiaries” appears
to be nothing more than a typographical oversight or the use of the lowercase version of
the word to which Vito attached no significance, rather than an intentional distinction
between people who could benefit from the trust. Indeed, it would be nonsensical for Vito
to define “Beneficiaries” once in the document and then never use the word again.
On brief, Michael and Judith mischaracterize the Court of Special Appeals’s
analysis by arguing, in a single sentence without elaboration or discussion, that it
incorrectly applied the principle of expressio unius est exclusio alterius, which is “[a]
canon of construction holding that to express or include one thing implies the exclusion of
the other, or of the alternative.” Expressio unius est exclusio alterius, Black’s Law
Dictionary (10th ed. 2014); see also Breslin v. Powell, 421 Md. 266, 287-88, 26 A.3d 878,
891 (2011) (“[C]ourts may consider with caution the can[]on of [statutory] construction,
- 32 -
expressio unius est exclusio alterius, meaning to express or include one thing implies the
exclusion of the other, or of the alternative[.]” (Citation and internal quotation marks
omitted)). We do not discern that the Court of Special Appeals based its decision—“that
a broadly worded power to amend in an irrevocable trust instrument cannot be used by a
majority of beneficiaries to divest a minority beneficiary of her interest in the trust when
doing so would be contrary to the settlor’s intent in creating the trust”—solely on Item
Tenth’s lack of a reference to removing a beneficiary. Grueff, 229 Md. App. at 356, 145
A.3d at 87. Rather, the Court of Special Appeals specifically noted that the language of
Item Tenth had to be considered in the context of the entire trust instrument:
Item TENTH of the Irrevocable Trust is a generally worded power. It allows
the “Agreement” to “be revoked, altered or amended from time to time by an
instrument in writing, signed by the holders of not less than seventy-five
(75%) interest” in the trust, and delivered to the Trustee. Read broadly, the
“alter and amend” language in Item TENTH would seem to give the holders
of a 75% beneficial interest in the trust the power to make any change to the
trust instrument, including, as Michael and Judith argue, to eliminate the
beneficial interest of the 25% beneficiary and allocate it among the remaining
beneficiaries. Item TENTH does not specify that that can be done, however,
and therefore we must look to the entire trust instrument to determine
whether such a reading of Item TENTH is consistent with [Vito]’s intention
as the Settlor of the trust.
Id. at 371, 145 A.3d at 96-97 (emphasis in original). The Court of Special Appeals properly
considered the entire trust instrument to ascertain Vito’s intent. We detect no
misapplication of the principle of expressio unius est exclusio alterius in the Court of
Special Appeals’s analysis.
Michael and Judith also contend that the Court of Special Appeals “implicitly
appl[ied]” the Maryland Trust Act in reaching its decision. We observe, however, that the
- 33 -
Court of Special Appeals mentioned the Maryland Trust Act once in the body of its opinion
in reference to a potential future claim brought by Candace regarding the revocable trust:
In this opinion, we have reviewed the rulings that were made in the
circumstances that they were made; specifically, with respect to the
Revocable Trust, that [Vito] was alive. [Vito]’s death rendered the
Revocable Trust irrevocable. Whether, post [Vito]’s death, Candace is in a
position to bring claims against Mary and Brennan for alleged breaches of
the duties they owed [Vito] as the Settlor is a question not before us. We
note that any such claim would be governed by the Maryland Trust Act.
Grueff, 229 Md. App. at 383, 145 A.3d at 103-04 (citations and footnote omitted). Earlier
in the opinion, in a footnote, the Court of Special Appeals explicitly stated that the
Maryland Trust Act did not apply to this case:
We read [the language regarding the effective date of the Maryland Trust
Act] to mean that the Act was not controlling when the circuit court made its
ruling concerning the trusts in this case. Clearly, if the Act had controlled
when the Irrevocable Trust was amended to eliminate Candace’s beneficial
interest, the amendment would not have survived.
Id. at 368 n.7, 145 A.3d at 94 n.7. Plainly, the Court of Special Appeals did not base its
decision on the Maryland Trust Act.
In addition to contending that Amendment V contravened Vito’s clearly stated
intention, in her brief and at oral argument, Candace contended that Amendment V violated
well-established Maryland law regarding the testamentary power of appointment. We
agree. As to distribution and disposal of testamentary property, Maryland’s case law
concerning power of appointment constrains a beneficiary’s power to appoint to himself or
herself the property of a testamentary estate:
The Maryland law on powers of testamentary appointment is unusual
if not unique. A power to appoint or dispose of property by will, unrestricted
as to beneficiaries, as for example, ‘in such manner as she may see fit’ (Balls
- 34 -
v. Dampman, 69 Md. 390, 391, 16 A. 16, 17) or ‘to such person or persons
as she may limit, nominate, and appoint’ (Lamkin v. Safe Deposit & Trust
Co., 192 Md. 472, 475, 64 A.2d 704, 705), is called in Maryland a general
power, as it is in most jurisdictions, but unlike most jurisdictions, Maryland
holds that such a power does not authorize the holder of the power to appoint
to him[- or her]self, to his [or her] own estate or to his [or her] creditors unless
the power in terms so authorizes (with the exception that where the donee
and donor of the power are the same person, an appointment may be made to
a creditor, Wyeth v. Safe Deposit and Trust Co., 176 Md. 369, 4 A.2d 753).
Frank v. Frank, 253 Md. 413, 415, 253 A.2d 377, 379 (1969). Thus, in Maryland,
beneficiaries may appoint testamentary property to themselves or for their benefit only
where the instrument specifically grants the beneficiaries this authority. See Bryan v.
United States, 286 Md. 176, 179, 406 A.2d 423, 425 (1979) (“Since 1888, we have
consistently adhered to the view that the donee of a testamentary power otherwise general
may not direct property subject to the power to his [or her] own use, absent a specific
enabling grant of this authority.” (Citation omitted)). Under Maryland’s common law,
any amendment granting a majority of beneficiaries the power to apportion to themselves
a larger share of a trust than that to which they were originally entitled would have to be
explicitly stated in the original trust instrument. In this case, the irrevocable trust did not
contain such a provision; yet, with Amendment V Michael, Judith, and Timothy increased
each of their own shares of the benefits of the trust from 25% to 33 1/3%. Thus, by
executing Amendment V, Michael, Judith, and Timothy impermissibly granted to
themselves a greater apportionment of the trust property than Vito intended. As they lacked
- 35 -
the explicit appointment power to do so, this action was prohibited under Maryland case
law.8
In sum, we hold that Item Tenth of the irrevocable trust does not authorize 75% of
the beneficiaries to remove the remaining beneficiary. Our holding is grounded in the well-
established principle that the settlor’s intent controls the disposition of the trust property.
In this case, Vito’s intent that the irrevocable trust benefit his four children equally is
8
Although not raised by the parties, we note that the execution of Amendment V
during the pendency of the instant litigation also raises the specter of the doctrine of
unclean hands. The doctrine of unclean hands is an equitable doctrine, which we have
explained as follows:
The unclean hands doctrine states that courts of equity will not lend
their aid to anyone seeking their active interposition, who has been guilty of
fraudulent, illegal, or inequitable conduct in the matter with relation to which
he [or she] seeks assistance. The doctrine does not mandate that those
seeking equitable relief must have exhibited unblemished conduct in every
transaction to which they have ever been a party, but rather that the particular
matter for which a litigant seeks equitable relief must not be marred by any
fraudulent, illegal, or inequitable conduct.
Dickerson v. Longoria, 414 Md. 419, 455, 995 A.2d 721, 743 (2010) (citation, brackets,
and internal quotation marks omitted). We have noted that the doctrine of unclean hands
applies only when the inequitable conduct and the transaction at issue intersect. See Adams
v. Manown, 328 Md. 463, 475, 615 A.2d 611, 617 (1992) (“Thus, an important element of
the [un]clean hands doctrine is that the alleged misconduct must be connected with the
transaction upon which the claimant seeks relief.”).
Here, Michael, Judith, and Timothy executed Amendment V after Candace had filed
a complaint seeking, among other things, Michael’s and Judith’s removal as trustees of the
irrevocable trust and a full accounting of their dealings with the irrevocable trust. Plainly,
Michael and Judith sought to divest Candace as a means of eliminating her standing in the
underlying matter so that Candace would not be able to pursue the claims made in her
complaint. Indeed, the circuit court granted their motion to dismiss and/or for summary
judgment against Candace on this basis. These circumstances call into question Michael’s
and Judith’s motivation with respect to the amendment of the irrevocable trust.
- 36 -
clearly demonstrated in the trust instrument and, as such, the divestment of Candace by
Michael, Judith, and Timothy was plainly inconsistent with Vito’s intent.9
JUDGMENT OF THE COURT OF SPECIAL
APPEALS AFFIRMED. PETITIONERS TO PAY
COSTS.
9
In her brief, Candace also contends that Michael and Judith violated their fiduciary
duty as trustees of the irrevocable trust by divesting her. Under Maryland Rule 8-
131(b)(1), this Court “ordinarily will consider only an issue that has been raised in the
petition for certiorari or any cross-petition and that has been preserved for review by the
Court of Appeals.” This issue was not squarely addressed by the circuit court, nor raised
by Candace in a cross-petition for a writ of certiorari. Thus, the issue is not properly
preserved for our review. Furthermore, as we hold in favor of Candace, we perceive no
need to address the matter.
- 37 -