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Matter of Estate of Reuben H. Benner

Decided: June 8, 1977.

IN THE MATTER OF THE ESTATE OF REUBEN H. BENNER, DECEASED


Lynch, Milmed and Antell. The opinion of the court was delivered by Antell, J.A.D.

Antell

[152 NJSuper Page 437] Testator died in 1945. By his last will and testament he established successive life estates in residuary trust income for his wife Florence and his only living son H. Tyler Benner, Sr. The will further provides that "upon the decease of the survivor" of the wife and son the corpus is to be divided into two equal parts to be held in trust for the benefit of testator's grandsons Tyler, Jr. and Reuben 2d. Both trusts provide for income to be paid until each grandson reaches age 40, at which time they are to receive distribution of corpus. Specific provision was made that if either grandson "shall die before arriving at the age of forty years," the trust income was to go to "the child or children and issue" of the deceased grandson until

the youngest reached age 21, at which time the trust corpus was to be paid out to all such children.

Testator's widow died in 1956. His son Tyler Sr. survives. However, testator's grandson Tyler Jr., predeceased his father, Tyler Sr., in 1973 at the age of 52, and the question presented in this will construction case is whether the trust remainder to Tyler Jr. had vested or remained contingent at the time of his death in 1973. If the interest is found to have vested, two significant consequences follow: (1) the trust corpus passes through Tyler Jr.'s estate in substantial part to his widow; and (2) although not yet payable to Tyler Jr.'s estate, the value of the future interest, less an allowance for the present life estate, becomes includible in that estate for purposes of estate and inheritance taxes.

The position taken by the executors of Tyler Jr.'s estate and the New Jersey Transfer Inheritance Tax Bureau is that the remainder interest had vested at the time of that grandson's death. On the other hand, the children of Tyler Jr. and the trustees under the testator's will contend that the interest could not vest until the occurrence of both contingencies -- Tyler Jr. attaining age 40 and the termination of Tyler Sr.'s life estate -- and that it would have been testator's "probable intent" that his great grandchildren now have a contingent interest in the trust remainder which will vest upon the death of Tyler Sr.

Reasoning that the dominant estate plan shown by testator's will was to insure that the corpus of his estate remains in the hands of blood descendants and to conserve taxes, the trial judge concluded that both contingencies were required before the gift vested and that the gift therefore remained contingent when Tyler Jr. died. Pursuing what it conceived to be the testator's probable intent in this situation, the judge then ordered that a contingent remainder interest existed in the great grandchildren which would vest upon the death of Tyler Sr.

The classic definitions of vested and contingent remainders were stated and discussed in Cody v. Fitzgerald , 2 N.J. 93 (1949):

A vested remainder is defined as one to which there is a present fixed right to future enjoyment of property though that enjoyment be postponed until the expiration of a prior estate. [Citation omitted] A contingent remainder on the other hand, is one in which the person to take is not in esse or ascertained, or the event upon which enjoyment is to take place is uncertain, or both. It is the uncertainty of the right of enjoyment, and not the uncertainty of actual enjoyment, that renders a remainder contingent. [citations omitted]

The policy of the law requires that legacies and devises in all cases, unless clearly inconsistent with the intention of the testator, should be held to be vested rather than contingent. [Citations omitted]

While it is true that certain terms like "at," "when," "after," "on," etc., often connote the time or event upon which legacies are to vest, nevertheless it was determined in that case (and repeatedly thereafter) that where it appears from the entire will that the only reason for postponing the enjoyment of a gift is to let in some other interest, the gift is deemed presently vested -- the ownership passes at once though the time of enjoyment is postponed. So it has become the settled rule that a devise of a remainder limited upon a particular precedent estate, determinable on an event which must necessarily happen, will be construed as vesting the remainder estate at the time of the death of the testator unless his will clearly indicates a contrary intention. [Citations omitted]

Normally, therefore, a phrase such as "at the death" or "after the death" in the devise of a remainder upon the expiration of a prior life estate, refers to the period of such interest entering into actual enjoyment, and not to the time at which the right to its eventual enjoyment becomes fixed. [citations omitted]

The presumption that favors early vesting is especially strong where the remainder interests are placed in the testator's ...


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