Saturday, January 10, 2015
In O’Connell v. Houser, the Supreme Judicial Court of Massachusetts allowed a reformation of a trust to conform to the settlor’s intent and tax objectives.
Two trusts were created in the George Houser Trust, one for George’s wife Mary, and another for power of appointment over the marital trust. The trust contained a termination provision that established the measuring lives as “Donor’s issue by blood.”
After executing the GST tax, Mary established the Mary Houser Trust, which had a termination provision that established the measuring lives as “all of the Donor’s issue.’ The couple’s planning objectives were stymied by excluding “by blood” from the termination provision. Omission of these words decoupled Mary’s estate plan from her husband’s and frustrated their planning objectives. Thus, the court allowed the reformation of the trust to include the measuring lives of Mary’s blood issue.
See Aryane Garansi, O’Connell v. Houser Allows Reformation of Trust, Wealth Strategies Journal, Jan. 9, 2015.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.