Bercik Law Blog

HOW A COURT MAY INTERPRET A TRUST

A Court May Interpret a Trust Beyond the Document’s Plain Language 


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interpret a trust

 In the Matter of the Trust of Violet Nelson, the New Jersey Appellate Division re-affirmed its position that a court may use outside evidence to interpret a trust by looking at the intent of the trust creator.

In the recent New Jersey case of  In the Matter of the Trust of Violet Nelson, the creator of the trust named her grandchildren as beneficiaries.  However, during her life, she had essentially disowned her daughter and her daughter’s children because the daughter married outside the Orthodox Jewish faith.  When one of the daughter’s children attempted to claim from the trust as a beneficiary, the trustee objected, stating that the creator’s use of the term “grandchildren” meant only those grandchildren who were raised within the Orthodox Jewish faith.  As a result, the court was faced with deciding between the plain language of the trust or interpret a trust using the meaning of the term “grandchildren” to be consistent with the creator’s intent (Orthodox Jewish grandchildren only).  The lower court ruled that the plain language of the trust prevailed and that all the grandchildren were beneficiaries.  The trustee appealed.

The Appellate Division looked to the extensive body of case law that states that the primary goal to interpret the trust  is to fulfill the creator’s intent.  In particular, the Appellate Division pointed to the power of the court to fulfill the intent of the creator through either interpretation of language consistent with the creator’s intent or through the actual reformation of the language so as to correct mistakes, fulfill an unexpressed intention, or address unforeseen circumstances.

In some circumstances, a court may interpret a trust by looking outside the trust to the intent of the trust creator of the trust.

In the end, the Appellate Division found that sufficient evidence had been presented to show that the intent of the creator may very well have been to limit the beneficiaries to only those grandchildren that remained within the Orthodox Jewish faith.  And, with further findings, if a trial court concluded that the actual intent of the creator was to limit the beneficiaries to Orthodox Jewish grandchildren only, the court was obligated to make such a ruling despite the plain language of the trust to the contrary.  Therefore, the matter was returned to the trial court for further proceedings and findings of fact.

Accordingly, the Appellate Division made clear that a court is both obligated and empowered to determine and enforce the actual intent of the trust creator, even though it may be contrary to the plain language found in the document when reviewing a case to interpret a trust.

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