178 A.3d 978
R.I.2018Background
- Decedent Constantine W. Pournaras executed three dispositive instruments: a revocable living trust (with real property and $50,000 payable to Elaine Jaffe), an irrevocable living trust (naming son William C. Pournaras as trustee and reserving a limited power of appointment to Constantine), and a 2008 will that disposes of the residuary estate to the living-trust trustee (William).
- The irrevocable trust (2003) gave Constantine a power of appointment exercisable by will, but expressly prohibited appointment in favor of his estate or his creditors; it directed the trustee to divide trust assets equally between the two children on his death.
- The will (2008) defined residuary estate to include “any property over which [Constantine] may have a power of appointment,” and appointed the residuary to the living-trust trustee (William).
- After Constantine’s death (2012), William (as personal representative and as trustee) intended to exercise the limited power of appointment via the will to transfer irrevocable-trust assets into the residuary estate, exposing them to creditor claims.
- Elaine sued for declaratory and injunctive relief (and removal of William as trustee), arguing the testamentary exercise would violate the irrevocable trust’s prohibition; the Superior Court granted summary judgment for Elaine and enjoined William from transferring irrevocable-trust assets into the estate.
- William appealed; the Supreme Court affirmed, holding the testamentary transfer would contradict the clear terms of the irrevocable trust and thus was invalid.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether section 5.01 of the will validly exercised Constantine’s limited power of appointment to place irrevocable-trust assets into his residuary estate (thereby exposing them to creditors). | Jaffe: The irrevocable trust unambiguously forbids appointment in favor of the estate or creditors; the will’s residuary clause cannot operate as a valid exercise of that power. | Pournaras: The will’s language including property over which decedent had a power of appointment evidences a valid testamentary exercise of that power; Hooker supports that appointed property is not part of the donee’s estate. | Court: The irrevocable trust’s plain language prohibits appointment to the estate/creditors; reading the will as effecting such an appointment would contradict the trust and is invalid. |
| Whether extrinsic evidence may be used to alter the plain terms of the irrevocable trust or reconcile the will with the trust. | Jaffe: Not necessary—the trust language is clear; extrinsic evidence is not needed. | Pournaras: Extrinsic evidence (including the living-trust restatement and will) should be considered to effectuate decedent’s overall intent. | Court: The trust language is clear and unambiguous; extrinsic evidence is unnecessary and cannot override the express prohibition in the irrevocable trust. |
Key Cases Cited
- Newstone Development, LLC v. East Pacific, LLC, 140 A.3d 100 (R.I. 2016) (summary-judgment standard cited)
- Daniels v. Fluette, 64 A.3d 302 (R.I. 2013) (summary-judgment standards and nonmoving-party burden)
- Lavoie v. North East Knitting, Inc., 918 A.2d 225 (R.I. 2007) (summary-judgment principles)
- Warwick Sewer Authority v. Carlone, 45 A.3d 493 (R.I. 2012) (de novo review of legal questions)
- N & M Properties, LLC v. Town of West Warwick, 964 A.2d 1141 (R.I. 2009) (de novo standard for legal issues)
- Steinhof v. Murphy, 991 A.2d 1028 (R.I. 2010) (primary objective: ascertain and effectuate testator/settlor intent)
- Fleet National Bank v. Hunt, 944 A.2d 846 (R.I. 2008) (interpretation begins with the plain language of will/trust)
- Hayden v. Hayden, 925 A.2d 947 (R.I. 2007) (no extrinsic evidence when intent is clear within the instrument)
- Garneau v. Garneau, 9 A.2d 15 (R.I. 1939) (settlor cannot revoke or modify a trust absent reserved power)
- Hooker v. Drayton, 33 A.2d 206 (R.I. 1943) (discussed regarding tax allocation and appointment; court found reliance misplaced in this context)