Facts
- The testator created a trust for the benefit of his children, with provisions for distributing the trust fund upon the death of the last surviving child.
- One of the children, a beneficiary under the trust, died before the testator.
- The central question arose whether the gift to the predeceased beneficiary lapsed or could pass to that beneficiary’s estate or descendants.
- The court’s decision turned on the testator’s expressed intent, the design of the trust, and sections of the Wills Act 1837 regarding lapse and exceptions.
Issues
- Whether a gift to a beneficiary who predeceases the testator lapses or can be preserved for that beneficiary’s estate.
- Whether the trust structure and the testator’s intent create an exception to the doctrine of lapse under the Wills Act 1837.
- How equitable principles affect the distribution of trust assets when a beneficiary predeceases the testator.
Decision
- The court held that the testator intended the trust to benefit all his children, including those who died before him.
- It found the trust structure postponed the distribution until the death of the last surviving child, which created an exception to the doctrine of lapse.
- The court ordered that the gift to the predeceased beneficiary should be preserved and pass to the beneficiary’s estate or descendants, as if the beneficiary had survived the testator.
- Equitable principles were applied to ensure fair distribution in accordance with the testator’s intent.
Legal Principles
- The doctrine of lapse, as codified in the Wills Act 1837, generally provides that a gift fails if the beneficiary dies before the testator, unless an exception applies.
- The testator’s intent is critical in interpreting wills and determining whether gifts lapse.
- Trust structures can operate so that the doctrine of lapse does not apply, especially where benefits are postponed until a triggering event after the testator’s death.
- Courts may apply equitable principles to preserve gifts and give effect to the testator’s wishes.
Conclusion
Re Gardner (No 2) [1923] 2 Ch 230 confirms that, where a trust and the testator’s intent indicate, a gift to a beneficiary who predeceases the testator may be preserved for the beneficiary’s estate instead of lapsing, particularly when equitable principles and trust construction support such an outcome.