Distribution of Trust Property Intended Only for Lineal Descendants

A trust agreement is a powerful way for people to distribute assets and their income during their lifetime or when they die. This method of distributing property is widely favored for people who wish to provide financially for specific persons such as a surviving spouse but still want to ensure that the remainder of the estate goes to chosen heirs after the spouse dies.

The terms and conditions found in a trust agreement can be as simple or as complex as the settlor would like them to be. Due to the financial and legal implications of drawing a trust, it’s absolutely important to consult an experienced trust attorney who can ensure that your intentions are reflected and carried out when you are no longer around.

In one case, the settlor executed a trust that called for the distribution of the income of specific assets to his wife, while passing on the principal assets to his grandchildren or their lineal descendants, should his children predecease his wife.

Years after the settlor died, his grandchildren predeceased his wife, without leaving behind any children of their own. The settlor’s wife then asked that she be appointed as trustee of the assets that were initially intended for the two grandchildren. The grandchild’s widow filed a lawsuit asking the court for its interpretation of the trust conditions pertaining to the death of the trustees who died without any lineal descendants.

Correct Interpretation of Trust Condition on Per Stirpes Distribution

The Supreme Court of Oklahoma tackled the issue: whether the ‘per stirpes’ gift of any remaining trust principal left to two of the settlor’s grandchildren may be distributed to the widow of one of the grandchildren.

In arriving at the legal interpretation of the trust arrangement, the high court examined the conditions of the agreement and determined the intention of the settlor. The court eventually ruled that it was the settlor’s intention to pass on the remaining trust principal only to lineal descendants or blood relatives in the direct line of descent of his grandchildren. Spouses are not lineal descendants of each other. The remaining trust principal would have to pass to the beneficiary of the trust—the settlor’s wife.

Role of Experienced Trust Attorney

Trust arrangements are not for everyone. You must be able to consider certain things such as your goals to provide for specific persons, the kind of assets you own, and the timing of the distribution of your trust assets/income. It’s important to discuss your goals with your experienced trust attorney who can determine what type of trust is appropriate for your situation and who can carefully craft solid provisions that carry out your intentions.

At Rick Dane Moore & Associates, PLLC, our experienced Oklahoma trust attorneys have a solid grasp of the complex laws and rules of creating trusts and their financial implications. Our Firm will customize the terms and conditions of your trust agreement to suit your situation, needs, and goals.

We invite you to call us today at (405) 703-6552 to speak to one of our attorneys about your situation.