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In re Trust of Nelson

Superior Court of New Jersey, Appellate Division

March 28, 2018

IN THE MATTER OF THE TRUST OF VIOLET NELSON, DECEASED.

          Submitted November 6, 2017

          On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. P-000001-15.

          Chiesa Shahinian & Giantomasi PC, attorneys for appellants/cross-respondents Jacob Nelson and Ayelet Nelson, Ariel Nelson and Alexandra Nelson-Tal (A. Ross Pearlson, Daniel D. Barnes and Brigitte M. Gladis, on the briefs).

          Lorraine Teleky-Petrella, attorney for respondent/cross-appellant Jared M. Lina.

          Before Judges Sabatino, Ostrer and Whipple.

          OPINION

          OSTRER, J.A.D.

         The principal issue in this appeal is whether a trial court may look beyond the apparently plain language of a trust that benefitted the settlor's "grandchildren, " to determine whether the settlor intended to benefit only some of her grandchildren. We conclude a court may. As the trial court here confined itself to the words found within the four corners of the trust, we reverse the grant of partial summary judgment to a claimed beneficiary, and remand for trial.

         I.

         The late Violet Nelson left trust property to her "grandchildren" per capita after the death of her husband, an income beneficiary. The trust stated that "the then principal and all accrued or undistributed net income of the trust shall be distributed in equal shares per capita and not per stirpes to Settlor's grandchildren who survive Settlor . . . ." On its face, the trust apparently benefited all six children of Violet's three children - sons Jacob (known as "Jack") and Robert, and daughter Jacoba.[1]

         Jack, the trustee, sought a declaratory judgment that Jacoba's two sons were not included among Violet's "grandchildren." He maintains that Violet did not consider Jacoba's sons to be her "grandchildren, " because Jacoba married outside their Orthodox Jewish faith. Jack contends that after Jacoba's marriage in 1970, Violet mourned her as if she were dead and cut off contact with her.

         That fact and other extrinsic evidence allegedly illuminate the restrictive meaning of "grandchildren" that Jack propounds. The attorney who drafted the trust stated that he understood that Violet did not count Jacoba's children among her grandchildren, nor even acknowledge their existence. He used the word "grandchildren" to include only Jack's and Robert's children. Although Jack and Violet's husband directed the attorney to draft the trust, the attorney said that he reviewed the trust with Violet, explained that only Jack's and Robert's children would benefit, and she understood.

         Jack acknowledges that after years of silence between Violet and Jacoba, the two attempted reconciliation in 1986. But he contends relations were cut off again after Violet learned that Jacoba's children had been baptized. Jack points to an unprobated will Violet signed in 1988. It identified Jacoba as her daughter, but omitted Jacoba's sons among the listed grandchildren, and expressly left nothing to Jacoba or her "surviving issue." A 2001 codicil also referred only to her "four grandchildren."

         One of Jacoba's sons, Jared Lina, opposed Jack's declaratory judgment action. Jared and his brother first learned the trust existed when its scrivener sent him a letter, asking him to renounce and waive any claim. Jared refused. He contended the trust was clear on its face. He also marshaled competing extrinsic evidence to show that Violet intended to bestow her property on her grandchildren without exception. He presented evidence of the reconciliation between his mother and Violet in 1986. He included letters in which Violet expressed her love for Jacoba and alluded to the role her husband played in the schism between them. Jared also described gatherings involving his branch of the family and Jack's family, to belie the claim that his mother's side was "dead" to the rest of the family. He noted that his mother visited Violet during her final illness.

         Jared filed a counterclaim, alleging that Jack breached his fiduciary duty by wrongfully retaining income from the trust after his father died, rather than promptly terminating the trust and distributing the principal and income to the grandchildren. Jared also sought an accounting and appointment of a successor trustee.

         After a period of discovery, Jared and Jack filed cross-motions for summary judgment on the trust's interpretation.[2] The trial judge determined that Jared and his brother were trust beneficiaries. The court relied solely on the plain meaning of "grandchildren." The judge concluded that In re Estate of Gabrellian, 372 N.J.Super. 432, 443 (App.Div. 2004), which we discuss below, barred the court from considering extrinsic materials. The judge acknowledged that had he looked beyond the trust's four corners, the evidence would have created a genuine issue of material fact, which would have precluded summary judgment for either side.

         The court later denied Jack's subsequent motion to reconsider. Jack contended the court should have applied the New Jersey version of the Uniform Trust Code (NJUTC), L. 2015, c. 276, codified at N.J.S.A. 3B:31-1 to -84, which was enacted while the cross-motions were pending. Jack invoked two sections of the new law that allow a court to construe or reform a trust to conform to a settlor's probable intent. N.J.S.A. 3B:31-31 (Section 31) states, "The court may reform the terms of a trust, even if unambiguous, to conform the terms to the settlor's probable intent if it is proved by clear and convincing evidence that there was a mistake of fact or law, whether in expression or inducement." The following section states, "Nothing ...


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