Motes/Henes Trust, Bank of Bentonville v. Motes

Attorney John Johnson helped Helen Henes execute a will. The will stated that if Henes held any power of appointment at her death, Henes exercised that power to appoint, i.e., give, the property to her residuary estate. Later, Johnson helped Henes and her sister, Elizabeth Motes (plaintiff), to create an irrevocable trust to hold $6 million that they shared. The trust gave each sister a power to appoint her share of the trust’s assets to someone in her will if the sister specifically referred to the trust as the power’s source. Because the trust was irrevocable and could not be changed, Johnson included the power-of-appointment provision in the trust in order to allow the sisters to change who the trust assets would go to after their deaths by changing their modifiable wills. Johnson believed that Henes wanted her half of the trust’s assets to go to her residuary estate at her death and that the trust and will documents, as drafted, would accomplish that. Thus, Henes did not modify her will after the trust was created to include a specific reference to the trust. Henes died before Motes. The trust’s trustee (plaintiff) and Motes petitioned for a declaration that Henes’s will had not validly exercised Henes’s power to appoint half the trust’s assets because the will did not make a specific reference to the trust as the source of the power being exercised. The trial court ruled that the will’s general language was sufficient to exercise Henes’s power to appoint her share of the trust’s assets to her residuary estate. The trustee and Motes appealed.