Walker v. Walker

Donald Walker created a revocable trust, which provided that, upon his death, the trust property was to pass to one of three trusts: a general marital trust, a special marital trust, and a nonmarital deduction trust. The general marital trust and special marital trust were to be funded only to the extent necessary to minimize federal estate taxes. However, Donald’s estate was not large enough for estate taxes to apply, and all of the estate passed into the nonmarital deduction trust. The nonmarital deduction trust gave Donald’s wife Virginia, as trustee, the power to make discretionary payments of principal to herself, as beneficiary. Upon Virginia’s death, any remaining trust principal was to be paid to Donald’s issue. After Donald’s death, Virginia became the sole trustee, and appointed Rockland Trust Company (trust company) as co-trustee. Virginia and the trust company (trustees) (plaintiffs) brought suit against the identifiable beneficiaries (defendants) to seek reformation of the trust, arguing that the trust failed to accomplish Donald’s goals because the provision giving Virginia a general power of appointment was included by mistake. The attorney who drafted the trust submitted an affidavit stating that Donald’s and the attorney’s intent was to draft the nonmarital deduction trust in such a way that the trust property would not be included in Virginia’s gross estate. The trustees request reformation of the trust to include an ascertainable standard that limits Virginia’s power as trustee to make payments to herself as beneficiary, which would negate any general power of appointment Virginia has.