Security Trust Co. v. Irvine
33 Del. Ch. 375, 93 A.2d 528 (1953)

  • Wilson died leaving a will that gave the income generated by a trust held by Security Trust to his two sisters, Martha and Mary, and possibly Margaret, ‘if she should be left a widow.’
    • Wilson also had two brothers, but they didn’t get any trust income like his sisters were given.
  • The will further stated that upon the deaths of both Martha and Mary, the trust was to be divvied up between all five siblings, with the share of any predeceased siblings going to that sibling’s children.
  • Wilson and four of his siblings died, leaving Mary the only survivor. Then she died, triggering the sale of the trust and the divving up of trust assets.
  • There was some controversy over how to interpret Wilson’s trust.
    • Margaret’s heir (Irvine) argued that Martha and Mary only got life estates, and that the residuary estate was only to be divvied up between the other siblings.
    • Martha and Mary’s heirs disagreed.
  • The Delaware Chancery Court was called in to determine two issues:
    • First, did the residuary estate left to the siblings vest at the date of Wilson’s death or at the death of the last life tenant (aka Mary).
      • The Chancery Court found that the siblings’ interests vested at the time of Wilson’s death, even though none of them would get possession of their share until Mary and Martha died.
    • Second, if the residuary estate did vest upon Wilson’s death, do the life tenants take as members of the class of siblings receiving the residuary estate?
      • The Chancery Court found that Martha and Mary were members of the class and were entitled to inherit a share of the residuary estate.
    • Finally, since Martha, Mary, and Margaret had no children, do their shares of the residuary estate lapse as mandated by Wilson’s will, or do their shares go to the heirs they designated in their wills?
      • Wilson’s trust specifically said that the shares should go to his siblings’ children. It said nothing about them going to other beneficiaries of the siblings’ wills.
      • The Chancery Court found that if a sibling dies with no children, then their share of the residuary estate goes to whomever they bequeath it to in their wills.
        • The bequest in Wilson’s will should be considered to be vested subject to defeasement. If certain conditions are met (having kids and dying before Martha and Mary), then that sibling’s share is divested and given to the children. If that condition is not met (because there are no kids), then the sibling’s share is part of their estate free and clear with no restrictions on who they can bequeath it to.
  • One big difference between vesting and anti-lapse is that if a bequest is vested it goes to the estate of the heir. If a bequest falls under anti-lapse, then it goes to the children of the heir, it does not transfer through the heir’s estate.