Employing the term spouse in trust instruments: An unambiguous term can still be “textually” ambiguous

Charles E. Rounds, Jr.
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A trust term can be unambiguous and ambiguous at the same time. Consider the term spouse. In Trust Agreement of Johnson, 194 N.J. 276, 944 A.2d 588 (2008), the court wrestled with the issue of whether a class of trust beneficiary characterized as “spouses” of certain designated individuals included their surviving spouses, i.e., their widows and widowers. While the trial court found the word spouses to be “unambiguous on its face,” the appellate courts disagreed. They saw the term spouses as contextually ambiguous. The trial court, in holding that “spouses” included surviving spouses, was guided by the plain meaning rule. The appellate courts in upholding the decision of the trial court saw themselves as resolving a contextual ambiguity. All three courts took into consideration extrinsic evidence, particularly the testimony of the scrivener as to the settlor's probable intent.

Here is another “unambiguous” provision for the benefit of someone’s “spouse,” in this case the spouse of the settlor’s only living son. At the time of the trust’s execution (funding) he was married to Cynthia. Later he divorced Cynthia and married Carol. Was Cynthia now out and Carol now in? Or was it still Cynthia, and Cynthia alone? The trial court’s finding of the latter was affirmed on appeal. “We decline to redraft the Trust to reach a presumed intent to benefit a potential replacement ‘spouse.’” See Ochse v. Ochse, No. 04-20-00035-CV, 2020 WL 6749044 (Tex. App.—San Antonio Nov. 18, 2020). Both courts found it contextually unambiguous that “spouse” meant Cynthia, and Cynthia alone. There was no “evidence” to the contrary.

These language-construction issues play out at the intersection of the parol evidence rule and the plain meaning rule. See generally §8.15.6 of Loring and Rounds: A Trustee’s Handbook (2021), which section is reproduced in its entirety in the Appendix below.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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