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In re Estate of Fenton

July 13, 2006

IN THE MATTER OF THE ESTATE OF MARIA FENTON.


On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Hunterdon County, Docket No. 40136.

The opinion of the court was delivered by: Parrillo, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued May 22, 2006

Before Judges Lintner, Parrillo and Holston, Jr.

The parties to this appeal are beneficiaries under a trust created by Foster Fenton. Defendant beneficiaries appeal from a May 6, 2005 summary judgment declaring plaintiff beneficiaries to be the validly adopted children of Maria Fenton (Maria) for all purposes, including any rights that her issue enjoy under the trust agreement. For reasons that follow, we affirm.

By way of background, on November 29, 1966, the settlor, Foster Fenton (Foster), created a revocable deed of trust which he subsequently amended five times: July 31, 1968; July 15, 1969; March 4, 1971; August 18, 1971; and March 3, 1972. The trust named Hillary Gans and Mercantile-Safe Deposit & Trust Company (Mercantile) as the trustees. Foster signed the original trust and all of the amendments in Maryland, and was a resident of Maryland at the time of his death in 1974. Gans also resided in Maryland, and Mercantile's principal office was located there. By its own terms, the trust was governed by Maryland law.

The trust provided that Foster would receive the entire net income of the trust estate as long as he lived. Thereafter, the trust income would be paid to his wife, and upon her death, to Foster's four brothers and their widows. After the brothers and widows passed away, one-tenth of the net income would be paid to each of Foster's then-living nieces and nephews.

Upon the death of the nieces or nephews, their respective shares of the trust income would pass to the deceased's "issue".

If there were no living issue, then that beneficiary's portion of the income would be shared by the remaining beneficiaries. The trust further provided that twenty-one years after the death of the last niece or nephew, the trust principal would be distributed to the remaining beneficiaries and their issue per stirpes.

Specifically, Article II, as amended on August 18, 1971, provided in relevant part:

(c) A one-tenth portion of net income . . . shall be paid to each niece or nephew of the Settlor who survives the Settlor for her or his remaining life. Upon the death of any such niece or nephew, and in the case of any niece or nephew who is not living when the said portion of such income would otherwise be payable to her or to him, such portion shall be paid to the issue of such deceased niece or nephew living from time to time as the income is payable, per stirpes and not per capita, such issue taking the portion of income the deceased niece or nephew would have received if living. If there are no such living issue, the portion shall be paid, per stirpes and not per capita, to (i) the nieces and nephews and (ii) the issue of any deceased niece or nephew who are living at the time the income would otherwise be payable to such deceased niece or nephew.

The trust definitions for child, children and issue provided that "child" or "children" meant lawful blood descendants in the first degree of the parent designated, and references to "issue" mean lawful blood descendants in the first, second, or any other degree of the ancestor designated, provided always, however, that an adopted child and such adopted child's lawful blood descendants shall be considered in this instrument as lawful blood descendants of the adopting parent or parents and of anyone who is by blood or adoption an ancestor of the adopting parent or of either of the adopting parents . . . . [(emphasis added).]

However, the trust expressly excluded any child adopted by any of the settlor's brothers after the date of execution of the trust agreement.

Maria was Foster's niece, a natural daughter of one of Foster's brothers. She resided in Bethlehem Township, Hunterdon County. Maria's only marriage was annulled in 1953, and she had no natural children. In 1991, when she was sixty-years old, Maria adopted four adults: plaintiffs, Bruce Lea Lauriault, Sally Vaughan Lauriault and Elizabeth Chandler Lauriault Pearson, and Virginia Lewis Lauriault, who predeceased Maria. They were the orphaned children of Maria's first cousin; their grandmother was Maria's mother's sister.

Prior to the adoption, on September 18, 1990, Maria's attorney informed the corporate trustee, Mercantile, that Maria was contemplating the adult adoptions and sought the advice of its legal department as to whether the adoptions would entitle the adult adoptees to be beneficiaries under the trust. Specifically, Maria's attorney wrote:

I represent Maria B. Fenton who has contacted me concerning the possibility of adopting four adult persons so they might succeed to the income paid under the trust upon the death of Miss Fenton.

My reading of Article II of the Foster T. Fenton Revocable Trust Agreement leads me to conclude that persons adopted by Miss Fenton can succeed as income beneficiaries upon her death.

In his letter dated October 11, 1990, Frank W. Waxman, Mercantile's vice president, agreed that upon her death, Maria's trust income would be paid per stirpes to the adoptees who survived her.

At the adult adoption hearing on July 26, 1991, Maria testified that she had known the four adults "since they were born." Bruce testified that he lived in Georgia and had known Maria since 1974, but that his "major contact" with her "in the last 15, 16 years" took place three years previously at his grandmother's ninetieth birthday party. Sally, who also lived in Georgia, first met Maria in 1988 and since then had maintained contact with her mostly by telephone. Elizabeth and Virginia testified that they had recently met Maria. For about a year prior to the adoption hearing, Elizabeth and Maria exchanged telephone calls, letters, and pictures. Virginia and Maria exchanged telephone calls "for about a year or two."

At the hearing, Maria told the court that she was seeking the adoption because she wanted to have a "nice, close family" and had no children of her own. Maria also told the court that she received about $30,000 a year as a beneficiary under a Maryland trust agreement and that her adopted adult children would receive something under the trust after she died. Based upon the testimony and pleadings, the court was satisfied that the statutory requirements were met and entered a judgment of adoption on July 16, 1991.

On March 3, 1992, Maria's attorney delivered to Mercantile copies of the final judgment and amended birth certificates. In his transmittal letter, the attorney wrote: "Now that Maria B. Fenton has adopted these four persons, it is my understanding they will be considered her children with respect to the trust agreement of the late Foster T. Fenton." On May 20, 1992, W.C. Smith at Mercantile sent a response confirming that under then-existing law, the adoptees would take under the trust. Specifically, on behalf of the corporate trustee, Smith wrote:

While I agree with the reasoning and conclusion based on the facts and the law that existed as of the date of his [Waxman's] letter to you, we have no way of knowing how the term "issue" will be defined when this trust terminates. If, at that time, there is any doubt whatever, we will ask counsel for the trust ...


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