## Facts

- Arthur Holt died in 1975, leaving a will that created two testamentary trusts: Trust A and Trust B.
- Trust A operated as an intermediary estate, paying income to Holt’s wife, Esther Holt, for her lifetime.
- Esther held a power of appointment over Trust A’s corpus.
- The will provided that if Esther did not exercise the power of appointment, Trust A’s corpus would pass to Trust B at Esther’s death.
- Trust B directed distribution of its corpus in equal shares to 13 specifically named beneficiaries.
- All 13 named beneficiaries survived Arthur, but two beneficiaries died before Esther.
- After Esther’s death, the trustee, First Bank, filed an action seeking a judicial determination of who was entitled to the Trust B property.
- Four surviving beneficiaries argued that the two deceased beneficiaries’ shares should be redistributed among the surviving beneficiaries.
- A probate referee recommended that the deceased beneficiaries’ shares pass to their estates, and the district court approved that recommendation.
- The four surviving beneficiaries appealed, urging a rule that a remainder beneficiary must be alive when the intermediary estate ends to take.

## Issues

1. When a will creates an intermediary estate for a spouse and then provides for distribution to specifically named remainder beneficiaries, must those remaindermen survive the termination of the intermediary estate to take?
2. If two named remainder beneficiaries survive the testator but die before the intermediary estate ends, do their shares pass to their estates or get redistributed among the surviving named beneficiaries?

## Decision

- The Minnesota Court of Appeals affirmed the district court.
- The court rejected a blanket rule requiring remainder beneficiaries to be alive at the end of the intermediary estate.
- The court held that the Trust B interests of the 13 named beneficiaries vested when Arthur died, even though possession was postponed until after Esther’s death.
- Because the two deceased beneficiaries survived Arthur, their vested interests did not fail merely because they died before distribution.
- Accordingly, the two deceased beneficiaries’ shares were properly distributable to their estates rather than reallocated among the surviving beneficiaries.

## Legal Principles

- A court’s main task in will and trust construction is to carry out the testator’s intent as expressed in the instrument read as a whole.
- Minnesota law favors vesting at the testator’s death unless the will shows an intent to make the gift contingent on survival to a later date.
- A remainder to specifically named beneficiaries is ordinarily treated as vested upon the testator’s death, even when enjoyment is delayed by an intervening life interest or intermediary trust.
- The existence of an intermediary estate (and a power of appointment affecting the pathway of the property) does not, by itself, impose a survival-to-distribution condition on named remainder beneficiaries.
- Once a remainder interest is vested, it is descendible; if the beneficiary later dies before possession, the interest generally passes through the beneficiary’s estate unless the will provides otherwise.

## Conclusion

In re Trust Under the Will of Holt holds that, absent will language requiring survival to the end of the intermediary estate, remainder interests given to specifically named beneficiaries vest at the testator’s death; therefore, where two named Trust B beneficiaries survived Arthur Holt but died before Esther, their shares passed to their estates rather than being redistributed among the surviving beneficiaries.


In re Trust Under the Will of Holt, 491 N.W.2d 25 (1992)