20 A.3d 989
N.H.2011Background
- Timothy M. Donovan died in June 2009 with the will distinguishing intangible property to Cathy Carter and Optimum Manufacturing stock to a trust.
- Article 4 of the will bequeathed all intangible personal property, excluding Optimum stock, to the respondent.
- Article 6 of the will devised the rest of the estate, including Optimum stock, to the Timothy M. Donovan Revocable Trust.
- The Third Amended Appendix to the Trust authorized the trustee to sell Optimum stock after death and to distribute proceeds per Article 4(E).
- In August 2008, before death, the decedent sold all Optimum stock to Optical Filter Corporation for $15 million.
- Petitioners sought a declaration that sales proceeds passed to the trust under Article 4(E); respondent argued the proceeds remained with the respondent under Article 4.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did ademption occur regarding Optimum stock? | Donovan Family contends stock proceeds pass to trust under Article 6. | Proceeds did not pass; stock was specifically devised to trust but adeemed when sold before death. | Yes; the stock was adeemed; proceeds did not pass to the trust. |
| If ademption did not occur, does Article 4(E) govern distribution of post-death sale proceeds? | Proceeds should be distributed to family per Third Amended Appendix Article 4(E). | Article 4(E) applies only to post-death sales of stock still owned at death. | Article 4(E) applies only to post-death sales; it does not govern pre-death sale proceeds. |
| What is the effect of incorporating trust terms by reference into the will? | Trust terms should be reviewed for distribution of proceeds. | Even if incorporated, trust provisions do not override ademption and will terms. | Trust terms are incorporated by reference if ambiguous; interpretation shows Article 4(E) applies only to post-death sale. |
Key Cases Cited
- In re Richardson Trust, 138 N.H. 1 (1993) (testator's intent governs will interpretation; plain terms presumed)
- Estate of Reposa, 121 N.H. 114 (1981) (adeemtion when stock is sold before death and no substitution occurs)
- Owen v. Busiel, 83 N.H. 345 (1928) (codicil/stock bequest adempted by pre-death transfer)
- In re Guardianship of Domey, 157 N.H. 775 (2008) (probate review standards; findings final unless clearly erroneous)