WILLIAM B. CHANDLER III, Chancellor.
Dear Counsel:
I have thoroughly reviewed the briefs on the parties' motions for summary judgment. For the following reasons, I grant summary judgment to beneficiaries Elizabeth Haskell Fleitas and Kaylee H. Fleitas and deny summary judgment to respondent beneficiaries Stephanie McGinley and Andrea Wiseman.
Before the Court are cross-motions for summary judgment. The moving parties include Elizabeth Haskell Fleitas ("Elizabeth"), and her daughter Kaylee Fleitas ("Kaylee"). The other moving parties are Stephanie P. McGinley ("McGinley") and her sister Andrea S. Wiseman ("Wiseman"), Elizabeth's sister. McGinley and Wiseman are both daughters of Valerie Fleitas Johnson ("Valerie"). Valerie and Elizabeth are sisters; their mother was Elizabeth Haskell Fleitas ("Fleitas"), whose will and trust are at the heart of this dispute. Kaylee, McGinley and Wiseman are all granddaughters of Fleitas.
Fleitas acquired testamentary powers of appointment under a trust that her father, Harry G. Haskell, granted on December 7, 1931. On August 14, 1997, Fleitas executed her Will in which she exercised her testamentary power of appointment and created the Trust with Wilmington Trust Company ("Trustee"). The testamentary Trust language is at issue here. Fleitas died on July 12, 1999, bequeathing her estate by the distribution scheme prescribed in her Will. At the time of Fleitas's death, she had two living daughters, Elizabeth and Valerie, and four living adult grandchildren, all of whom were Valerie's children. Two of these four of Fleitas's grandchildren are respondents McGinley and Wiseman. Fleitas's other daughter, Elizabeth, had no children at the time of Fleitas's death. On May 5, 2009, almost ten years after Fleitas's death, Elizabeth adopted a seven-year-old daughter, Kaylee.
On August 14, 2009, the petitioner Wilmington Trust Company ("WTC") filed a verified petition for instructions asking this Court to interpret the Trust distribution language. WTC believes that the Will's language is ambiguous as to the generational level at which the per stirpital division of the beneficial Trust interest should first occur.
On June 9, 2010, Elizabeth and Kaylee filed a motion for summary judgment, seeking a judicial declaration that, as a matter of law, the initial per stirpes distribution of the Trust assets at issue begins with Elizabeth and Valerie, the testatrix's daughters. On the same day, respondents McGinley and Wiseman also filed a motion for summary judgment, seeking judicial determination that, as a matter of law, the initial per stirpes distribution of the Trust assets at issue begins with the testatrix's grandchildren, including Kaylee, McGinley, and Wiseman.
A few articles of the Will are relevant to my discussion, some being the actual testamentary Trust text for which the parties have diverging interpretations, and some being other parts of the Will that may indicate Fleitas's intent. I will examine each separately.
I begin with Article 5, "Powers of Appointment," paragraphs C and D (collectively, the "Trust provisions" of Fleitas's Will). These two paragraphs are the source of the present dispute. Article 5, Paragraph C
Paragraph D
The dispute regarding Paragraph D is like that regarding Paragraph C. One interpretation, which favors Kaylee, is that the initial division of the Trust property in the per stirpes scheme occurs at the generational level directly below the testatrix, namely with her daughters Elizabeth and Valerie. This would entitle Kaylee right now to one-half of the 20% balance of the Trust income reserved for Fleitas's "issue more remote than children" and Valerie's four children to the other one-half of the 20% balance. It would also entitle Kaylee's line of heirs to half of the vested interest in the Trust corpus after the Trust terminates.
In Article 1 of the Will ("Personal Property Provision"), concerning tangible personal property, the testatrix directs her personal property to be divided between Valerie and Elizabeth "in such manner as they agree in as nearly equal shares as practicable." Article 1 also provides that if either daughter predeceases Fleitas "but is represented by children who survive me [Fleitas], such children shall take, equally, the share which such deceased daughter would otherwise have taken had she survived me." Fleitas directs her personal property to be divided per capita among her grandchildren if both her daughters predecease her.
Article 5, Paragraph B ("Pecuniary Gifts Provision"), which is part of the Trust provisions, provides $1 million to Valerie and $1 million to Elizabeth, assuming they survive Testatrix Fleitas. Paragraph B also provides $100,000 to each living grandchild or to the living issue of a grandchild that predeceases Fleitas, per stirpes. Article 5, Paragraph D, provides that, if all of Fleitas's "issue more remote than children" predecease her, the Trust property "shall be distributed, in equal shares, free from trust, to my then living children; or, if no child of mine is then living, to the then living issue, per stirpes, of my deceased father, HARRY G. HASKELL."
Article 6 ("Residue Provision"), which concerns the residue of Fleitas's estate, divides the residue in equal shares between Elizabeth and Valerie "and to the issue, per stirpes, of either of them who predeceases me but is represented by issue who survive me." This Article divides the residue of Fleitas's estate equally between Elizabeth's line of heirs and Valerie's line of heirs.
Importantly, Article 17, the definitions section of the Will, defines "per stirpes" thusly: "In applying any provision of this my Will which refers to a person's issue, `per stirpes,' the children of that person are the heads of their respective stocks of issue, whether or not any child is then living." The Will's definition of "issue, per stirpes" is consistent with Delaware's statute, 12 Del. C. § 3301(g)(3) (2008), which states that "`issue' shall denote a distribution per stirpes, such that the children of the person whose issue is referred to shall be taken to be the heads of the respective stock of issue" and that adopted persons such as Kaylee are considered issue of the adopting person. This means that in Delaware, children of a testator or testatrix are the heads of the stirpes, absent a different intent explicitly conveyed by the testator or testatrix. Therefore, under the Will's definitions section, a distribution to Fleitas's "issue, per stirpes" makes Fleitas's children the heads of the respective stock of issue.
The issue here is straightforward: in the Will, do the phrases "my issue more remote than children as are living from time to time, per stirpes,"
This dispute is governed by the plain and clear terms of the Will. I hold that, based on the testatrix's intent clearly reflected in the Will's explicit definition of "per stirpes" and based on 12 Del. C. § 3301(g)(3), the stirpital distribution begins with an initial, equal division between Elizabeth's and Valerie's lines. The Trust should be divided so that Kaylee receives half of the 20% Trust interest, and the remaining 10% Trust interest is divided between Valerie's four children, including the respondents. For the purposes of Trust distribution, Elizabeth and Valerie will be treated as if they predeceased the testatrix, and Kaylee will acquire 10% of the total Trust interest and the respondents will each acquire 2.5% of the Trust interest. Upon the death of either Valerie or Elizabeth, if the Trust has not terminated, 50% of the Trust interest will go to the survivor, and 50% of the Trust interest will go to the issue of the deceased sister. After the Trust terminates, Elizabeth and Valerie are the heads of stock for the purposes of distributing the Trust corpus.
This Court grants summary judgment to a moving party under Court of Chancery Rule 56(c) if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
In this Court's interpretation of the language of a will or trust, the testator's or settlor's intent controls, considering "his or her dominant purpose."
When language in a written instrument is potentially ambiguous regarding a per stirpes distribution, this Court applies the following test:
In deciding whether parol evidence should be considered, I must first determine if the language in the Will is ambiguous. "Ambiguity exists when the terms in question `are reasonable or fairly susceptible of different interpretations or may have two or more different meanings.'"
Both parties argue that the Will is clear and unambiguous, but both argue for different interpretations of the phrases containing the "per stirpes" language. The dispute between the parties is one over the interpretation of the words regarding which generation represents the heads of stock in the stirpital distribution of the Trust assets, not over any double meaning. In light of the Will's definitions section, which explicitly designates the heads of stock to be the testatrix's daughters, the only reasonable interpretation of the Will read in its entirety is that Elizabeth and Valerie are the stirpital roots. Furthermore, the meaning of the phrases at issue, considering Fleitas's equal distribution between Elizabeth's and Valerie's lines of heirs in various articles of the Will and canons of construction under 12 Del. C. § 3301, is clear and unambiguous. Since no ambiguity exists in the language, I need not resort to extrinsic evidence.
Having determined that no ambiguity exists in the Will, I now must interpret the Will's terms as written.
The distinction between an equal distribution among heirs under a Will and a per stirpes distribution is clear. "`[E]qual shares' denotes per capita distribution."
Respondents' argument does not comport with the Will's definition of what "issue, per stirpes" means. As a preliminary matter, an equal division among the grandchildren is essentially a "per capita" distribution for the purposes of that generation. The Will mandates a per stirpes distribution in the definitions section, which states that in a per stirpes distribution, "the children [Elizabeth and Valerie] of that person [Fleitas] are the heads of their respective stocks of issue." The existence of this definitions section makes it unequivocally clear that Fleitas understood what "per stirpes" meant and that she did not intend for an equal distribution among the first generation qualifying as her "issue more remote than [her] children."
Four separate provisions in the Will indicate Fleitas's intent to treat her daughters and her daughters' lines of descendants equally: Article 1 (the Personal Property Provision), Article 6 (the Residue Provision), Article 5, Paragraph B (the Pecuniary Gifts Provision), and Article 5, Paragraph D (containing Fleitas's devise when one or both of her daughters die).
In Article 1, the Will provides that the testatrix's personal property should be divided between Valerie and Elizabeth in "as nearly equal shares as practicable." That paragraph provides that if one daughter predeceases Fleitas but the deceased daughter has living children, those children (i.e., Fleitas's grandchildren) "shall take, equally, the share which such deceased daughter would otherwise have taken had she survived me [Fleitas]." This indicates that Fleitas understood the difference between equitable divisions of her personal property, for which she willed equally between her two daughters, versus taking by representation, for which she willed among her grandchildren.
It is also evident that Fleitas knew the difference between a per capita and per stirpes distribution based on her use of the term "issue" versus "children" or "grandchildren" in the different clauses of her Will. Article 1 states that if both Elizabeth and Valerie predecease her, Fleitas's personal property should be divided among "such of my grandchildren who survive me, per capita." This statement indicates that Fleitas understood that "per capita" means equally, and she specifically wanted her personal belongings to be divided equally among her grandchildren who could bequeath those items as they pleased in their respective wills. Had Fleitas wanted the 20% Trust balance to be likewise distributed to her grandchildren equally, she would have provided that her grandchildren take equal shares and that the issue of any deceased grandchild take per stirpes the share that that deceased grandchild would have taken if he or she were alive. The Will does not state this, and I cannot now redraft the Will to implement something that was not Fleitas's intent. Therefore, the Personal Property Provision serves as additional evidence that the Will, taken as an entirety, was intended to divide Fleitas's assets equally between her two daughters' lines of heirs, unless otherwise stated. This provision also demonstrates Fleitas's understanding of the distinction between "per capita" and "per stirpes" and demonstrates that she did not intend to treat her grandchildren as a class concerning the Trust distribution.
Article 6 of the will provides for "equal shares to such of my children [Fleitas's daughters] ... who survive me, and to the issue, per stirpes, of either of them who predeceases me but is represented by issue who survive me." I agree that Article 6 provides an equal distribution of Fleitas's residue assets to her two daughters. Under this language, Valerie and Elizabeth are clearly the heads of their respective stocks of issue and will each receive 50% of the residue. Upon the deaths of Elizabeth and Valerie, their children will then receive a fractional portion of their mothers' interest in the residue.
Assuming, for the sake of argument, that Valerie had predeceased the testatrix but Elizabeth had survived her, under the Residuary Provision, Elizabeth would receive 50% of the residue, and Valerie, having died, would pass her 50% interest in the residue to her issue, per stirpes, that is, to her four children. Kaylee would get none of the residue until Elizabeth died. Under the Respondents' argument that the heads of the stirpes should be the grandchildren, however, Elizabeth would get 50% of the interest in the residue and the five grandchildren, including Kaylee, would evenly divide up the other half of the residue. This scheme does not make sense, considering Kaylee is a "substituted heir" and should not take until Elizabeth can no longer take. Contrary to respondents' argument, the Residue Provision further supports the reading that "issue, per stirpes" throughout the Will means that the stirpital roots lie with Elizabeth and Valerie, not with Fleitas's grandchildren.
Article 5, Paragraph B, provides $1 million to each of Fleitas's children and $100,000 to each of her grandchildren, "and if any one or more of my [Fleitas's] grandchildren is then deceased with issue then living, to the then living issue, per stirpes, of each such deceased grandchild of mine." This bequest again indicates Fleitas's understanding of the distinction between an equal distribution and a per stirpes distribution. For this particular provision only, Fleitas bequeaths $100,000 per capita to each of her grandchildren.
This provision also indicates Fleitas's intent to treat her two daughters equally, giving them both $1 million. The equal bequests to her grandchildren, which are substantially smaller than those to her daughters, only suggest that Fleitas intended to treat all of Valerie's children, the only grandchildren who existed at the time of Fleitas's death, equally; it has no bearing on what the testatrix might have bequeathed had she known Elizabeth would have a child.
Finally, Article 5, Paragraph D itself provides an indication of how Fleitas intended to divide her Trust assets. Paragraph D provides that when one of Fleitas's daughters dies or at the termination of the Trust period, if only one of Fleitas's daughters is alive, the surviving daughter will get 50% of the Trust income, and the other 50% goes to Fleitas's "issue more remote than children as are living from time to time, per stirpes." Paragraph D also says that, if no issue more remote than her children are alive at the termination of the Trust period, the Trust property goes equally to Elizabeth and Valerie if they are alive. Under Paragraph D, if Valerie had predeceased Fleitas, Elizabeth would take 50% of the Trust income, and Valerie's children would evenly divide the other 50%. This provision indicates that Fleitas intended to divide the Trust interest between her two daughters' lines of heirs equally, whether they were both alive or one died; the daughter that died first would pass her 50% share by dividing that share evenly among her children. Therefore, Article 5, the actual Trust provision, also indicates Fleitas's intent to treat both her daughters' lines of heirs equally.
Under the Will's clear terms, the initial division of the 20% net balance of the Trust income occurs with Elizabeth and Valerie, daughters of the testatrix.
Based on the definitions section in Fleitas's Will and Delaware statutory law, I conclude that Elizabeth and Valerie, as daughters of the testatrix, are the heads of the stirpital distribution of Fleitas's Trust. In applying a per stirpes distribution with Elizabeth and Valerie as the heads of the stirpes, I treat Elizabeth and Valerie as having predeceased the testatrix for purposes of the 20% balance of the Trust interest because they are not entitled to that 20%. Therefore, Kaylee Fleitas will receive one-half of the 20% Trust income balance, or 10% of the total Trust income presently and her line of heirs will receive 50% of the Trust corpus once the Trust period terminates and Elizabeth and Valerie die. Valerie's four children, including the respondents, will share the other one-half of the 20% Trust income balance, each receiving 2.5% of the total Trust income presently and each receiving 12.5% of the Trust corpus following the termination of the Trust period and both Elizabeth's and Valerie's deaths.
IT IS SO ORDERED.
