384 Pa. 79 | Pa. | 1956
Opinion by
Sara Jane McKeown, unmarried, created an irrevocable inter vivos trust on March 4, 1942, with herself as the primary beneficiary. She constituted the Commonwealth Trust Company of Pittsburgh her trustee and caused her securities to be turned over to it.
The trust agreement provided for the distribution of income as follows: “Out of the income of the Trust Fund, and, to the extent that it is necessary, out of the principal thereof, the Trustee shall pay the sum of One hundred fifty ($150.00) Dollars monthly to the Donor for and during the term of her natural life, or until the Trust Fund is by such payments entirely depleted. The Trustee in its sole discretion may use such additional amounts of the principal as it deems necessary or advisable to meet unusual expenses incurred by the Donor by reason of illness or other misfortune.”
The trust agreement further provided that “Upon the death of the Donor, the Trustee shall distribute the remaining corpus of the Trust Fund to her child, or among her children, if she is survived by a child or children . . .” with a proviso for a continuation of the trust during the minority of any child of the settlor, if at the time of her death, a surviving child is under the age of twenty-one years. The agreement also provided for remainders over in the corpus to the settlor’s sister, brother and mother (subject to a one-third to a husband) in the event of her dying without leaving a child to survive her.
In 1952, the trustee filed in the court below its first account of its administration of the trust, showing, of course, its distribution of income to the life tenant in excess of $1,800 a year. Subsequent to the creation of the trust,.the settlor had married and, at the time the trustee filed its account, was the mother of a child. For the audit of the account, the court appointed a guardian and trustee ad litem for the minor child of the life beneficiary and for any unborn children, respectively.
The guardian filed a report in which he concluded that it was the settlor’s implied intent to have her trustee accumulate and capitalize, as trust corpus, the income from the trust in excess of $150 per month; that such accumulation would not violate the Act of April 18, 1853, P. L. 503, 20 PS §3251, as amended; and recommended a decree accordingly which the learned auditing judge entered.
In dismissing the life tenant’s subsequent petition for a review of the decree, the court below observed that a distinction is to be noted between a testamentary trust and an inter vivos trust on a question whether a direction for the accumulation of trust income violates the statute. In other words, an accumulation of
If the settlor intended that the trustee should accumulate and capitalize trust income in excess of $1,-800 a year, manifestly she left it entirely to inference. It is certain that she did not expressly so direct. The question, then, is whether the implications of the trust agreement, particularly in the light of the undisputed facts and circumstances attending its execution, warrant any such inference.
There is no basis for inferring that, at the time of the creation of the trust, disposition of an excess of income over the $150 monthly payments was in the settlor’s contemplation. The securities which were to
The learned court below attached importance to the fact that the trust agreement provided that the trustee
The decisions of this court, which the guardian cites, are not in point on the question of an implied direction to accumulate the income of an inter vivos trust. Eberly’s Appeal, 110 Pa. 95, 1 A. 330, Neel’s Estate, 252 Pa. 394, 97 A. 502, and Billings’s Estate (No. 2), 268 Pa. 71, 110 A. 768, are cited merely for the proposition that a direction to accumulate income from a trust may be found from implication as well as from express language. There is no doubt that that is so. Incidentally, in each of those cases, the implied direction to accumulate was held to violate the statute of 1853. The guardian has not found any appellate decision in this State sustaining an implied direction to
Decree reversed; costs to be borne by the trust.
Jane M. Dravo Trust, 99 Pittsburgh Legal Journal 401; Stackpole Trust, 70 District & County Reports 20; and Evans’ Deed of Trust, 87 Pittsburgh Legal Journal 83.