Robbins v. Johnson

DUGGAN, J.,

concurring specially: I agree with the majority’s analysis and that the pretermitted heir statute does not apply here but believe we must address the plaintiffs’ arguments that the trust is not a valid trust. In both the probate court and this court the plaintiffs contend that the trust cannot be enforced against the decedent’s estate. Thus, the property of the invalid trust would pass through the estate where the pretermitted heir statute would apply. See In re Estate of Robbins, 145 N.H. 145, 148 (2000). The probate court rejected their arguments and I would affirm.

The plaintiffs first argue that the trust was not a valid trust because it was a nominee trust. A passive or nominee trust exists when the trustees have no discretionary duties to perform. See Wilkins v. Miltimore, 95 N.H. 17, 19 (1948). “The key to the nominee nature of a trust is that the beneficiaries are in practical control of the trust property.” Dwire v. Sullivan, 138 N.H. 428, 430 (1994). For instance, in Dwire, we noted that the trust at issue stated explicitly that the trustee “shall act only as an agent of the beneficiaries.” Id. at 431 (quotation, parenthesis and ellipsis omitted). Similarly, in Roberts v. Roberts, 646 N.E.2d 1061, 1062 (Mass. 1995), the Massachusetts Supreme Judicial Court ruled that a trust that gave the trustees “no power to deal in or with the Trust Estate except as directed by the beneficiaries” was a nominee trust.

The trust in this case is not a nominee trust. During Robbins’ lifetime, the trust granted the trustee “sole discretion” either to hold net income and principal for future use or to add net income to principal, in the event that Robbins became incapacitated. After her death, the trustee had “sole and absolute discretion” to distribute the trust’s net income and principal for the support, health and maintenance, and education of the trust beneficiaries. The trustee also had the authority, but had no obligation, to charge against the trust corpus any payments of Robbins’ debts and other expenses associated with her estate. The trust also imposed numerous active management duties upon the trustee.

The plaintiffs next argue that the trust was not a valid trust because it vested the sole legal and equitable title to the trust assets in Robbins. See generally RESTATEMENT (SECOND) OF TRUSTS § 340, at 176-81 (1957). During her lifetime, Robbins did not have full equitable title to the trust property, but rather shared it with the defendants. During Robbins’ lifetime, the defendants had a vested remainder interest in the trust. See Flaherty v. Flaherty, 138 N.H. 337, 340 (1994); see also RESTATEMENT (SECOND) OF Trusts § 56 comment/at 149 (“If by the terms of the trust an interest passes to the beneficiary during the life of the settlor, although the interest does not take effect in enjoyment or possession before the death of the settlor, the trust is not a testamentary trust ... and the intended trust is valid ....”); Zuckerman v. Alter, 615 So. 2d 661, 663-64 (Fla. 1993). The fact that Robbins retained control over the property did not make the trust invalid and therefore testamentary. See, e.g., G. BOGF.ET, TRUSTS § 22, at 58-59 (6th ed. 1987) (“great majority” of decisions uphold trusts in which settlor has reserved right to trust income for life and such portions of trust principal as he may elect to take in addition to right to revoke and alter trust); Sullivan v. Burkin, 460 N.E.2d 572, 575 (Mass. 1984) (trust is not testamentary and invalid because settlor-trustee reserves beneficial life interest, power to revoke and modify trust and controls administration of trust); Coleman v. First National Bank of Nevada, 506 P.2d 86, 88 (Nev. 1973) (same); Zuckerman, 615 So. 2d at 663-64 (same); see also RESTATE ME NT (SECOND) OF TRUSTS § 57, at 151; Restatement (Third) of Trusts § 25(1), at 508 (Tent. Draft No. 1, 1996); cf. RSA 563-A:l (1997) (will provision pouring assets into inter vivos trust is valid even though trust is amendable or revocable, or both).

Finally, the plaintiffs argue that the trust was an incomplete donative transfer and therefore part of the assets of the estate. See Burns v. Nolette, 83 N.H. 489, 492 (1929). The plaintiffs do not, however, point to any authority that a revocable inter vivos trust is invalid as an incomplete donative transfer.

Brock, C.J., joins in the special concurrence.