O’Connell, et al. v. Houser, et al. (Lawyers Weekly No. 10-178-14)
NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us SJC-11698 MARY-KATHLEEN O’CONNELL & another,[1] trustees,[2] vs. GEORGE C. HOUSER, JR., & others.[3] October 28, 2014. Trust, Reformation. Taxation, Generation skipping transfer tax. The trustees filed a complaint in the county court seeking reformation of the trust established under Article Fourth of the Mary R. Houser Trust — 1991 to correct a drafting error that they contend frustrates the intent of the settlor and her husband to provide for their descendants in an efficient and tax-advantageous manner. Apart from the Commissioner of Internal Revenue, who has not appeared, the parties with competency to do so have stipulated for themselves and their minor, unborn, and unascertained issue to the facts underlying the complaint and assented to the relief requested. A single justice of this court reserved and reported the case to the full court.[4] Background. As part of their estate plans, George C. Houser (George Sr.) and Mary R. Houser (Mary) established trusts to provide income for their sons, George C. Houser, Jr. (George Jr.), and Horace M. Houser (Horace), while preserving principal for future generations. The George C. Houser Trust — 1980 (George Houser Trust) became irrevocable on George Sr.’s death in 1983. It established two trusts for Mary’s benefit during her lifetime, and gave her a power of appointment over one of the trusts (the marital trust). On Mary’s death in 1993, the principal remaining in the George Houser Trust was divided into two “share trusts,” one for each of the Housers’ sons. Each son was given a power to “appoint by his will” any property remaining in his respective share trust on his death “to such one or more of the Donor’s issue” or to trusts for their benefit. The parties represent that the property contained in the share trusts is not subject to the Federal generation skipping transfer (GST) tax.[5] The George Houser Trust provided that each share trust: “shall terminate whenever after the death of said child of the Donor [George Sr.] no issue of said child is living, or upon the expiration of twenty-one (21) years after the death of the last survivor of the Donor, the Donor’s wife MARY and all of the Donor’s issue by blood living at the Donor’s death, whichever shall first occur.” (Emphasis added). After George Sr.’s death and enactment of the GST tax, […]