## Facts

- J. Franklin Anthony created a revocable inter vivos trust in 1975, naming First National Bank of Bar Harbor as trustee.
- The trust paid income to the settlor for life, then to his wife, Ethel, for life if she survived him.
- The trust directed that, after both life interests ended, the corpus be distributed “in equal shares” to the settlor’s three named children: John M. Anthony, Peter B. Anthony, and Dencie S. Tripp (Fenno), “free and clear of any trust.”
- Ethel died in 1982, before the settlor.
- John died in 1983, before the settlor, leaving three children (the settlor’s grandchildren).
- The settlor died in 1984 without revoking or amending the trust.
- The settlor’s will left his probate estate to Peter and Dencie and expressly omitted John’s children.
- A dispute arose whether John’s trust remainder lapsed because he predeceased the settlor, or instead passed to his children.

## Issues

1. Whether a named child’s remainder interest under a revocable inter vivos trust vests at the trust’s creation, absent an express survivorship condition.
2. Whether the settlor’s retained power to revoke makes the remainder contingent (and thus lapsing if the beneficiary dies before distribution) or merely defeasible.
3. Whether the settlor’s will disinheriting the deceased child’s heirs affects distribution of the inter vivos trust remainder.

## Decision

- The court vacated the Superior Court’s summary judgment against the grandchildren and remanded for entry of judgment in their favor.
- It held John’s remainder was a present, vested interest when the trust was created.
- John’s death before the settlor did not cause the trust gift to lapse.
- John’s vested one-third remainder passed to his children, who were entitled to receive that share upon termination of the life interests.

## Legal Principles

- Remainder interests created by a revocable inter vivos trust generally vest upon creation, unless the instrument imposes an express survivorship condition or otherwise shows the interest is contingent.
- A settlor’s reserved power to revoke renders remainders defeasible (subject to divestment by revocation), not contingent on the beneficiary’s survival.
- Courts will not imply a survivorship requirement where the trust’s distribution clause names beneficiaries and postpones possession only until termination of prior life interests.
- A will’s provisions governing the probate estate do not control distribution of assets held in an inter vivos trust and do not, by themselves, alter vested trust remainders.

## Conclusion

The court concluded that a revocable inter vivos trust’s named remaindermen take vested future interests at the time the trust is established unless the trust expressly conditions the gift on survival; therefore, when a remainderman dies before the settlor and the trust is not revoked, the remainderman’s share passes to his heirs rather than lapsing.


First Nat’l Bank of Bar Harbor v. Anthony, 557 A.2d 957 (Me. 1989)