The Court of Appeals of Tennessee recently issued a decision in a contentious estate dispute involving the terms of a decedent’s trust. In In re Estate of Bower (Tenn. Ct. App. June 8, 2016), the decedent died having executed a trust, the primary asset of which was a lake house. The trust had been established by the decedent and his previous wife in 1995. After his previous wife’s death, the decedent remarried in 2002. The parties subsequently executed a postnuptial agreement waiving their rights to each other’s estate. After the decedent’s death, his wife and surviving children disputed over whether the trust provided the decedent’s wife with $2,000 a month as well as her use of the lake house.
Although the decedent’s estate was probated in Tennessee, the trust at issue required it to be construed under Florida law. As a result, the court of appeals applied Florida law, which provides that the intention of the decedent should be ascertained through consideration of all the provisions of the trust taken together. Similar to Tennessee law, when the terms of the trust are unambiguous, the court should not refer to outside evidence to interpret its meaning.
The terms of the trust provided that the decedent’s wife shall be paid $2,000 per month from the date of his death, which shall continue until she dies, remarries, or is qualified to receive Medicare benefits. Significantly, at the time of the decedent’s death, the wife had already reached Medicare eligibility age. Interpreting the plain meaning of the trust, the appeals court found that the unambiguous and ordinary meaning of the language was that the monthly payments terminated upon the wife reaching Medicare eligibility. The court further observed that although the result was harsh and potentially contrary to what the decedent intended, the plain language of the trust compelled the court to reach its decision.
The trust also allowed the surviving wife and children the use of the lake house residence. The terms provided that the wife’s use shall continue until she dies, remarries, or abandons the use of the property, and that she shall have primary use of the lake house. The lower court had ruled that the wife was entitled to exclusive use of the lake house. However, the appeals court noted that “primary” and “exclusive” use are not synonymous. While primary means first of importance, exclusive means sole or complete. Accordingly, when again interpreting the plain language of the trust, the court held that when the wife is staying or residing at the lake house, the decedent’s children may not use the lake house. But, when the widow is not making use of the lake house, the decedent’s children are free to use it. The lower court’s judgment was therefore reversed as to this point.
If you would like to learn more about how a trust may be beneficial to you, discuss your situation with a qualified estate planning attorney at Martin Heller Potempa & Sheppard. Our Nashville lawyers can assist individuals with estate planning, probate administration, trust formation, and other legal matters. To schedule an appointment with one of our experienced attorneys, call (615) 800-7096 or contact Martin Heller Potempa & Sheppard online.
More Blog Posts:
Tennessee Court of Appeals Rules Trustee May Sell Property in Testamentary Trust, Tennessee Attorneys Blog, published May 25, 2016
Tennessee Court of Appeals Allows Plaintiff to Bring Claim Against Estate by Intestate Succession, Tennessee Attorneys Blog, published November 16, 2015