Vetrick v. Keating

Vincent O’Hara established a trust (the Vincent Trust) under which he gave his wife, Marjorie O’Hara, a limited power of appointment to distribute trust assets in her will to their eight children. Marjorie’s will left shares of the Vincent Trust’s assets outright to five of her eight children but left assets to the other three children in testamentary trusts. The trust created for Vincent and Marjorie’s daughter Judith O’Hara Vetrick (plaintiff) (the Judith Trust) also created a remainder interest in Judith’s children. The Judith Trust named Marjorie’s financial advisor, Jeffrey Keating (defendant), as co-trustee along with Judith. Marjorie’s intent was to protect Judith’s share. Judith challenged the Judith Trust, arguing that by giving Judith’s children a remainder interest, Marjorie exceeded her power of appointment. The trial court held that Marjorie had violated the power of appointment by adding Judith’s children as remainder beneficiaries, but that the remainder-interest provision could be severed and the Judith Trust could be enforced as modified. The trial court further directed that any remaining assets in the Judith Trust upon Judith’s death must revert to the Vincent Trust. Judith appealed, arguing that (1) her share of the trust assets should have been given to her outright rather than in trust; (2) severing the remainder interest from the Judith Trust undermined Marjorie’s settlor’s intent; and (3) any remaining assets in the Judith Trust should pass to Judith’s children and not revert to the Vincent Trust.