Zilles v. American Legion

200 P.3d 1024, 219 Ariz. 527, 2008 Ariz. App. LEXIS 204
CourtCourt of Appeals of Arizona
DecidedDecember 23, 2008
DocketNo. 1 CA-CV 07-0893
StatusPublished
Cited by17 cases

This text of 200 P.3d 1024 (Zilles v. American Legion) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zilles v. American Legion, 200 P.3d 1024, 219 Ariz. 527, 2008 Ariz. App. LEXIS 204 (Ark. Ct. App. 2008).

Opinion

OPINION

SWANN, Judge.

¶ 1 This appeal presents the question whether a lapsed gift of residuary trust assets passes to the trustors’ heirs according to the law of intestacy or to the other residual beneficiaries identified in the trust. For the reasons discussed below, we hold that such a gift passes to the remaining residual beneficiaries and reverse the order of the trial court.

FACTUAL BACKGROUND

¶2 On December 26, 1997, Frederick A. Zilles and his wife Annabel Zilles (collectively, the “Trustors”) executed the Frederick A. Zilles and Annabel Zilles Revocable Living Trust (the “Trust”). The pertinent provisions contained in Article V of the Trust read as follows:

C. Distribution of Residual Trust Upon Death of Surviving Trustor. Upon the death of the surviving Trustor, the Trustee shall ... distribute the Residual Trust as follows:
1. Distribution of Personal Effects. The Trustee shall distribute the Trustors’ personal effects ... to such persons, who are then living, as are set forth on a list in either of the Trustors’ handwriting or signed by either of the Trustors, which will be found either with the Surviving Trustor’s Will, among the surviving Trustor’s personal papers, or attached as Schedule B to their Trust Agreement. Any personal property not otherwise distributable by such a list shall be distributed in accordance with the following paragraph C.2. of this Article V.
2. Distribution of Trust Balance. After making, in full, any distributions described in the preceding paragraph C.l. of this Article V, the Trustee shall ... distribute the remaining balance of the Residual Trust as follows:
[529]*529a. The Trustee shall donate the Trustors’ art collection of decorative ivory, porcelain lamps and rugs to an organization or entity which is qualified under Section 501(c)(3) of the Internal Revenue Code and which meets the requirements and criteria set forth on Schedule C to this Trust. Ninety percent (90%) of the remaining balance of the Residual Trust shall be donated to such organization or entity, along with the art collection, to be used in connection with the maintenance, storage and display of the art collection, or for other purposes related thereto.
b. The Trustee shall distribute Five Percent (5%) of the Residual Trust to the SHRINERS CRIPPLED CHILDRENS HOSPITAL of Chicago, Illinois.
c. The Trustee shall distribute Five Percent (5%) of the Residual trust [sic] to the AMERICAN LEGION.
D. Distribution of Residual Trust Where Trustors And All Their Beneficiaries Are Deceased. If at the time of death of the surviving Trustor, or at any later time before full distribution of the Residual Trust, all the Trustors’ beneficiaries are deceased, the Residual Trust shall thereupon be distributed one-half (1/2) to those persons who would then be the heirs of the husband Trustor and one-half (1/2) to those persons who would then be the heirs of the wife Trustor, their identities and respective shares to be determined as though the deaths of the Trustors had then occurred and according to the laws of the State of Arizona then in effect relating to the succession of separate property.

¶ 3 Frederick A. Zilles died on October 5, 1998, and Annabel Zilles died on February 23, 2005. Before her death, Annabel Zilles sold her entire art collection, rendering impossible the distribution provided in paragraph C.2.a. The total value of the remaining Trust assets is approximately $410,000. On October 26, 2006, Stephen Zilles (hereinafter the “Petitioner”), as successor trustee, petitioned the court for instructions as to the distribution of the Trust. The Petitioner could not locate Schedule C to the Trust. The court set a hearing for December 14, 2006, which it commenced, but then continued to enable the Petitioner to provide notice to all of the Trustors’ heirs.1

¶4 The American Legion and Shriners Hospitals for Children (collectively, the “Charities”) submitted a memorandum of law in response to the petition for instructions, arguing that the corpus of the residual trust should be divided and distributed to them as the remaining residuary beneficiaries. The court, at the February 1, 2007 hearing, set deadlines for responses to the Charities’ memorandum of law and the Charities’ reply. Two responses were filed on behalf of the Trustors’ heirs arguing that because the gift prescribed by paragraph C.2.a. failed, the Trustors’ intent was that their heirs were entitled to the residual trust.

¶ 5 After oral argument the court took the matter under advisement and subsequently ruled, finding in relevant part as follows:

Annabel Zilles, the surviving trustor, had intended to leave certain art pieces to a museum under paragraph C.2.a., but apparently could not find one that met her approval. Before her death she disposed of the art pieces that were to be distributed under paragraph C.2.a, and never identified a 501(c)(3) devisee.
The distribution of a failed devise should be made in an attempt to further the intent of the trustors, as determined from the four corners of the trust instrument. In Re Estate of Gardiner, 5 Ariz. App. 239, 240, 425 P.2d 427, 429 (1967)[sic] Although inartfully drawn, paragraphs C and D evidence a clear intent to provide 1) a limited devise to the Shriners and American Legion and 2) that a failed devise should revert to the trustors’ heirs. It is therefore probably more in accord with the trustors [sic] intent that this failed devise be distributed to surviving heirs than to increase a minimal charitable devise by nine hundred percent.
[530]*530Furthermore, in the absence of an ascertainable beneficiary, a trust reverts to the trustor’s successors. Restatement Third, Trusts § 44.

¶ 6 A final written order memorializing the decision was signed and entered on October 16, 2007. The Charities timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) section 12-2101(J) (2003).

DISCUSSION

¶ 7 The Charities argue that under controlling Arizona authority, the residual trust should be distributed to them as the remaining residual beneficiaries. When the facts are undisputed we determine de novo whether the trial court correctly applied the law to those facts. In re Estate of Headstream, 214 Ariz. 530, 532, ¶ 9, 155 P.3d 1054, 1056 (App. 2007). Additionally, we review the trial court’s conclusions of law de novo. Id. at 532-33, ¶ 9, 155 P.3d at 1056-57.

¶ 8 We must first attempt to determine who is entitled to the ninety percent of the Trust estate that is the subject of the failed gift. The overriding goal in the interpretation of a trust document is to ascertain the intent of the trustor. In re Estate of Gardiner, 5 Ariz.App. 239, 240, 425 P.2d 427, 429 (1967); see also A.R.S. § 14-1102

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Cite This Page — Counsel Stack

Bluebook (online)
200 P.3d 1024, 219 Ariz. 527, 2008 Ariz. App. LEXIS 204, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zilles-v-american-legion-arizctapp-2008.