O'DONOGHUE v. DOOLEY
2016 OK 110
| Okla. | 2016Background
- Settlor David L. Dooley executed a trust (Sept. 12, 2003) and a pour-over will; he died Oct. 20, 2003, survived by his spouse Carolyn Dooley. Two grandchildren, Erin and David O'Donoghue, were named as remainder beneficiaries per stirpes.
- The trust was divided into Part A (amount passing free of federal estate tax) and Part B (the remainder/QTIP trust for Carolyn). Part A distributions to grandchildren were completed; Part B provides income to Carolyn for life and principal, on her death, to Erin and David "per stirpes."
- Both Erin and David later died leaving no lineal descendants. Erin died in 2010 (left estate to David); David died in 2013 (his widow Sandra O'Donoghue is executor and sole beneficiary of his estate).
- Sandra (as personal representative of David's estate) sued for a declaration that Erin and David's remainder interests vested at settlor's death and therefore passed to David's estate (and ultimately to her). Carolyn, as trustee, contended the per stirpes gifts lapsed (no lineal descendants) and that remaining principal would flow to the income beneficiary (Carolyn) under the trust.
- Trial court granted summary judgment to Carolyn; Court of Civil Appeals reversed, holding the remainders vested and passed to Erin and David's heirs (entitling Sandra). The Oklahoma Supreme Court granted certiorari.
- The Supreme Court held that "per stirpes" means by lineal descendants; because Erin and David died without lineal descendants, their per stirpes gifts lapsed and the trust remainder will pass to the income beneficiary per the trust terms; the Court of Civil Appeals' decision was vacated and the trial court affirmed.
Issues
| Issue | Plaintiff's Argument (Sandra) | Defendant's Argument (Carolyn) | Held |
|---|---|---|---|
| Whether Erin and David's remainder interests vested at settlor's death and passed to David's estate (so Sandra can recover) | Remainders vested at settlor's death; vested interests passed to the estates/heirs on death; Sandra (David's widow/estate rep) takes his share | Remainders were contingent on distribution at Carolyn's death and per stirpes requires lineal descendants; lacking lineal descendants the gifts lapsed and remainder goes to income beneficiary | Held for Carolyn: per stirpes requires lineal descendants; both grandchildren died without lineal descendants so gifts lapsed and remainder flows to income beneficiary under trust |
Key Cases Cited
- In re Dimick's Will, 531 P.2d 1027 (Okla. 1975) (testator's intent controls vesting interpretation)
- Matter of Tayrien's Estate, 609 P.2d 752 (Okla. 1980) (construe testamentary documents to avoid intestacy when possible)
- Hulett v. First Nat. Bank & Trust Co. in Clinton, 956 P.2d 879 (Okla. 1998) (same principle: ascertain settlor/testator intent)
- Trust Co. of Okla. v. State ex rel. Dep't of Human Servs., 825 P.2d 1295 (Okla. 1991) (interpret trust in favor of intended beneficiaries)
- Conville v. Bakke, 400 P.2d 179 (Okla. 1964) (definition of vesting for remainders: ascertained person and no condition precedent)
- Moore v. McAlester, 428 P.2d 266 (Okla. 1967) (remainder interests vest at grantor's death and are not divested by subsequent death absent clear language)
- Dannenburg v. Dannenburg, 271 P.2d 345 (Okla. 1953) (remainder vested at death of grantor, not lapsed by pre-distribution deaths)
- Riddle v. Jay, 356 P.2d 1074 (Okla. 1960) (vested remainders may pass to estate/heirs despite pre-possession death)
- Porter v. Porter, 222 P. 971 (Okla. 1923) (early Oklahoma authority on vesting of remainder interests)