Archer v. Moody, 544 S.W.3d 413 (Tex. App.—Houston [14th Dist.] 2017, pet. filed).
Upon death of his last grandchild, the settlor
provided for the property to be distributed “in equal shares per
stirpes” to the settlor’s then living great-grandchildren and surviving
issue of his deceased great-grandchildren. When the last of the three
grandchildren died and the trust terminated, a dispute arose regarding
how to distribute the property – does each great-grandchild receive an
equal share (per capita) or do the great-grandchildren divide the share
his or her parent would have received (per stirpes)? This difference is
important because the grandchildren had different numbers of children
(two had two and one had four). The trial court held that each
great-grandchild received an equal share (1/8). The great-grandchildren
who came from the two children families appealed claiming that they were
each entitled to 1/6.
The appellate court reversed. The court determined
that the trust instrument was not ambiguous and thus it may ascertain
its meaning as a matter of law. The court explained that “per stirpes”
contemplates a distribution to the great-grandchildren based on the
share of their deceased ancestor. The trial court erred in giving no
meaning to the per stirpes language and only focusing on the per capita
phrase. The court stated, “We presume the settlor placed nothing
superfluous or meaningless in the trust instrument and that the settlor
‘intended very part, sentence, clause, and word to have a meaning and to
play a part in the disposition of his property.’”
Moral: To avoid confusion, a will or trust
should not combine terms that could arguably lead to different
distributions. Instead, use only one phase, such as “per capita,” “per
stirpes,” “per capita with representation,” or “per capita at each
generation.” To further reduce potential problems, provide a definition
of the term used which explains in a step-by-step format how to make the
distribution.