Dickerson v. Union National Bank of Little Rock
268 Ark. 292, 595 S.W.2d 677 (1980)

  • Dickerson created a trust. The trust was to continue to until the death of both of her sons and their widows (if any) and until the youngest child of either son turns 25. At that time, the assets of the trust is to be distributed to the heirs of Dickerson’s sons.
    • Dickerson had 2 children, Cecil and Martin. There were seven grandchildren.
  • Dickerson died. Cecil entered the will into probate and the Probate Court approved of the accounting and closed the administration of the estate. The money to fund the trust was transferred to Union National Bank, as the trustee.
  • 10 years later, Cecil came back to court and challenged the validity of the trust.
    • Cecil claimed that the trust violated the Rule Against Perpetuities.
  • The Trial Court rejected Cecil’s argument. Cecil appealed.
    • The Trial Court found that Cecil should have raised objections to the trust when it was first entered into probate.
      • Therefore the issue is res judicata.
    • The Trial Court found that the trust did not violate Rule Against Perpetuities.
  • The Arkansas Supreme Court reversed and terminated the trust.
    • The Arkansas Supreme Court found that the issue of whether the trust violated the Rule Against Perpetuities was never considered by the Probate Court, so there was never a ruling and it is still raisable.
      • Union National, as the trustee, was the one who should have raised the issue during probate. It wasn’t Cecil’s responsibility.
    • The Arkansas Supreme Court found that the trust violated the Rule Against Perpetuities because there was a possibility that the estate would not vest within a period measured by the lives in being at the testator’s death plus 21 years.
      • The trust would not terminate until the death of Martin’s widow. Martin was presently married, but there was the possibility that, his wife might predecease him and then as an 80 year old man he might marry an 18 year-old. This new widow (who was not yet born at the time of Dickerson’s death) could live another 21 years after the deaths of all named persons in Dickerson’s will.
      • In this case, the Rule Against Perpetuities says that you can’t have a trust that vests more that 21 years after the death of the last person named in the will. The 18 year-old golddigger has a decent chance of outliving Martin and Cecil by 21 years. Therefore, the trust is invalid.
      • The Rule Against Perpetuities was also violated because the trust didn’t vest until the youngest son turns 25. If Cecil or Martin has a child and then they all die within the next 4 years then the interest would vest more than 21 years after the death of the last life in being.
    • Union National unsuccessfully argued that the trust vests at the deaths of Cecil and Martin, it is only the right of possession that is deferred until the termination of the trust.
  • It is important to note that the Rule Against Perpetuities comes into effect even if there is the possibility that it could be violated. The Court doesn’t have to wait to see if Martin actually shacks up with someone before they terminate the trust.
  • This is a good example of why you don’t want to use status terms (like a ‘widow’) as measuring lives. Unnamed people can often violate the Rule Against Perpetuities.
    • Some States assume that if you use a status term, the Court will construe that term to be referring to the most obvious person (aka Martin’s first wife). You could also say that the term widow was a latent ambiguity and try to include extrinsic evidence.