John M. Connolly

The estate trustees sought the opinion, advice, or direction of the court regarding the application of the rule in Saunders v. Vautier to a testamentary trust created for a beneficiary under a limited property will.

The court addressed whether the trust known as the “Susan Fund” could be terminated with immediate distribution depending on whether the beneficiary exercised a power of appointment by deed or will.

The court held that the rule in Saunders v. Vautier would not apply where no appointment was made, but would apply if the beneficiary appointed another beneficiary or her estate by deed.

The reasons clarified the implications of an earlier decision concerning a related trust and confirmed when the beneficiary could compel termination of the trust.

The beneficiary of a testamentary trust applied for termination of the trust and immediate distribution of its capital.

The trust provided that the beneficiary would take the capital absolutely 21 years after the testator’s death and granted her a power of appointment by deed or will.

The estate trustees sought the court’s opinion on whether the rule in Saunders v. Vautier applied, arguing that contingent interests and a potential gift-over prevented early termination.

The court held that the beneficiary’s life interest combined with the power of appointment by deed gave her effective dominion over the trust property and that no other person could ultimately benefit from the trust.

Applying the rule in Saunders v. Vautier and relying on Robinson v. Royal Trust Co., the court concluded that the beneficiary was entitled to immediate distribution of the trust assets.