For purposes of this posting consider “residue” to mean the portion of a testator’s probate estate that passes pursuant to the residuary clause of his will and “remainder-in-corpus” (RiC) to mean the principal of a trust, whether inter vivos or testamentary, that has terminated due to the death of its income beneficiary.

In the case of a will without trust provisions, if its residue clause is ineffective, e.g., designated residuary taker predeceases testator without issue, the residue lapses and passes directly to testator’s heirs at law via intestate succession.

In the case of an inter vivos trust whose terms fail to designate who takes the RiC upon the income beneficiary’s death, the RiC may/may not pass to settlor’s heirs at law. That legal title to RiC is in trustee complicates matters. If UPC anti-lapse not in force, see appendix below, title then passes upon a resulting trust back to the settlor if alive, otherwise to his executor/personal representative. In latter case, let’s assume RiC is booked in as a residuary probate asset. If settlor’s will contains a provision that would pour residue over into the trust, which is likely how trust had been substantially funded initially, then the residue has now lapsed, the trust having terminated. The settlor’s heirs at law get the RiC. If there is no pour-over, then the RiC accrues to the residuary takers and to the probate estates of the residuary takers who pre-deceased the trust’s termination. If the inter vivos trust had been funded instead via a specific pour-over bequest/devise, then following imposition of a resulting trust, there is a lapse. The RiC “falls into the residue” and passes to the residuary takers, not to the settlor’s heirs at law.

As to a testamentary trust that lacks designated ultimate RiC takers, assume residue of settlor’s probate estate had constituted trust’s inception property. In that case, upon termination of trust the RiC passes via resulting trust to settlor’s executor/personal representative for disposition under the terms of the settlor’s will. The residue, however, now having lapsed, the settlor’s actual heirs at law determined as of the date of the settlor’s death take. (If a true heir of the settlor fails to survive to time of trust’s termination, the heir’s share being vested becomes part of the heir’s probate estate and follows its fortunes.) In Pycroft v. Gregory (1828) [Eng.], Lord High Chancellor John Singleton Copley [Lord Lyndhurst], the subject of my 1/7/23 JDSUPRA posting, shortly after taking office, ruled in favor of the heirs at law in such a situation, namely where terms of a testamentary trust had failed effectively to designate who was to take the RiC, the trust having been funded via specific devise of real-estate. Had will contained an effective residue clause, upon imposition of the resulting trust the RiC would have passed to the residuary takers, not the heirs at law.

A properly drawn trust instrument designates who ultimately takes whenever/however trust terminates. Absent such a designation, the property does not accrue to the trustee personally, unless settlor at outset had intended to make a completed gift of the RiC to the trustee free of trust, which is unlikely. Instead, the pre-existing vested equitable reversion becomes by operation of law possessory in settlor or his executor/personal representative. The resulting trust is equity’s procedural device for getting legal title to the RiC from trustee to the holders of the equitable reversion. In lieu of a formal re-opening of a deceased settlor’s probate estate, the resulting trustee, by statute or otherwise, may be permitted to make distribution directly to those who would have been entitled at the time of the settlor’s death to the property had the property not been entrusted. See, e.g., Fleet Nat’l Bank v. Hunt, 944 A.2d 846 (R.I. 2008). In other words, the settlor’s estate is re-opened notionally only. Which brings us to the fiendishly complex/convoluted notional provisions of UPC §2-707. They would extend anti-lapse to certain failed designations under trusts, and in so doing unsettle much of the long-settled doctrine that is the subject of this posting. The UTC neither negates nor modifies resulting-trust equitable doctrine and anti-lapse statutory doctrine, each body of law operating independently of the UTC.

Anti-lapse is covered in §8.15.55 of Loring and Rounds: A Trustee’s Handbook (2023), which section is reproduced in appendix below. Handbook is available for purchase at https://law-store.wolterskluwer.com/s/product/loring-rounds-trustees-hanbook-2023e/01t4R00000Ojr97QAB.