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Chancery Court Interprets Trust Document's Intent

By Francis G. X. Pileggi, Esq.

In the Matter of Lammot DuPont Copeland Trust No. 5400, dated March 12, 1956, and the Lammot DuPont Copeland Trust Under Agreement dated April 25, 1955, Del. Ch., No. 192-CC (April 20, 2009), read opinion here;

In this opinion, the Chancery Court resolved a dispute on summary judgment with respect to the language of two trusts valued at a total of $22 million. Chancellor Chandler concluded that the assets of the two trusts, upon their future termination, were intended by the trustor to be distributed to the trustor's grandchildren on a class-wide, per capita basis.

The petitioner, Gerret van S. Copeland, Jr. ('Petitioner') is one of two children of Gerret van S. Copeland, son of the trustor, Lammot du Pont Copeland. Respondents are the five children of trustor's son, Lammot du Pont Copeland, Jr. The Petitioner filed this action seeking instruction from the Court as to how to interpret the language of two trusts formed by trustor in 1955 and 1956. In particular, the Petitioner wanted the Court to instruct the trustee of the two trusts as to how it should distribute the assets of the trusts upon their termination. The Petitioner argued that the relevant language of the trust with respect to how the distribution was to be made, either per stirpes or per capita, was ambiguous and therefore, according to applicable Delaware law, the Court should favor a per stirpes distribution. Respondents argued that the relevant language of the two trusts is clear and unambiguous and properly sets forth the intent of the trustor, which was to distribute the assets to the trustor's grandchildren as a class, and per capita. Chancellor Chandler agreed with Respondents' interpretation.

The seminal rule of construction in trust cases is that the trustor's intent is 'determined ‘by considering the language of the trust instrument, read in its entirety, in light of the circumstances surrounding its creation.'' The Chancellor noted that the Court should 'rely on two guiding principles in responding to a petition for instructions: 1) where the language of a will [or trust] is unambiguous, the court must enforce its terms as written; and 2) where the language used in a [trust] is ambiguous, the court must give the language that meaning which will effectuate the intent of the [settlor].' Since the Petitioner argued that the language in the trusts was ambiguous because it provides no guidance as to whether the distributions should be made on a per stirpes or per capita basis, the Court looked to the language in the trusts, which contained the phrase 'unto Trustor's then living grandchildren.' The Court went on to note that since the trustor was a 'sophisticated businessman and experienced creator of trusts,' and he specifically used the phrase per stirpes to identify how a great-grandchild would take if one of the grandchildren died before the trusts' assets were distributed, the Court concluded that 'if the Trustor intended the grandchildren to take per stirpes than he would have specifically used that phrase.' As a result, the Court concluded that the trustor intended to distribute the assets of the trusts to his grandchildren as a class, per capita.

 

Full post as published by Delaware Corporate and Commercial Litigation Blog on April 20, 2009 (boomark / email).