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Jaffe v. Pournaras

Supreme Court of Rhode Island

February 23, 2018

Elaine Jaffe
v.
William C. Pournaras, Trustee of the Irrevocable Living Trust of Constantine W. Pournaras, Trustee of the Constantine Living Trust, and Personal Representative of the Estate of Constantine W. Pournaras.

         Providence County Superior Court (PB 14-2228) Associate Justice Michael A. Silverstein

          For Plaintiff: Bernard A. Jackvony, Esq. Matthew C. Reeber, Esq. Rebecca M. Murphy, Esq.

          For Defendant: James A. Bigos, Esq. Scott Partington, Esq.

          Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

          OPINION

          SUTTELL, CHIEF JUSTICE

         The plaintiff, Elaine Jaffe (Jaffe), and the defendant, William C. Pournaras (Pournaras), are the two surviving children of Constantine W. Pournaras (Constantine or decedent).[1] The matter presently before us is the defendant's appeal from a Superior Court judgment granting the plaintiff's request for declaratory relief and prohibiting the defendant from transferring assets of the decedent's irrevocable living trust into the decedent's estate. This case came before the Supreme Court pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. After considering the parties' written and oral submissions and reviewing the record, we conclude that cause has not been shown and that this case may be decided without further briefing or argument. For the reasons set forth herein, we affirm the judgment of the Superior Court.

         I. Facts and Procedural History

         Constantine, who passed away on November 10, 2012, executed three documents during his lifetime that are pertinent to this appeal: a revocable living trust (the living trust), an irrevocable living trust (the irrevocable trust), and a last will and testament (the will).

         The living trust was executed on December 2, 1993, amended on August 22, 2003, and amended a second time on October 17, 2008. In the living trust's most recent restatement, Constantine is named as trustor and sole trustee, and Pournaras is named as the sole successor trustee. According to Jaffee, the living trust was "funded with approximately $500, 000." The living trust provides that, upon Constantine's death, the trustee (Pournaras) "shall pay the property located at 43 Knollwood Avenue, Cranston * * * to * * * POURNARAS * * *"; the living trust also provides that, if the trust owned liquid resources, the trustee shall pay $50, 000 from those liquid resources to Jaffe, not including the aforementioned real property.

         The irrevocable trust was executed on August 22, 2003, and names Pournaras as trustee. Jaffe maintains that Pournaras advised her that the irrevocable trust contained assets worth approximately $694, 000. Article 4, section 2 of the irrevocable trust reserves to Constantine the power "to appoint any part or all of the [t]rust [e]state to or for the benefit of any of [his] descendants, in equal or unequal amounts, either directly or in [t]rust, as [he] may direct." The irrevocable trust specifies that this power of appointment is "exercisable by written instrument during [his] lifetime or by [w]ill or any [c]odicil thereto[.]" The power of appointment, however, is limited and cannot "be exercised in favor of [Constantine's] estate, the creditors of [his] estate or in any way that would result in any economic benefit to [him]." Also, article 8, section 1 directs Pournaras, as trustee, to divide the trust assets into "separate and equal shares" between Jaffe and Pournaras, as his surviving children, upon Constantine's death.

         The will was executed on October 17, 2008. It names Pournaras as personal representative and provides that he "shall distribute [Constantine's] residuary estate to the then acting [t]rustee" of the living trust (Pournaras). Section 5.01 of the will defines "residuary estate" as, in relevant part, "any property over which [Constantine] may have a power of appointment * * * less all valid claims asserted against [his] estate * * *."

         In January 2014, the will was admitted to probate and Pournaras was appointed as the personal representative of Constantine's estate. Jaffe filed a complaint in May 2014 seeking declaratory and injunctive relief to prevent Pournaras from transferring the assets of the irrevocable trust into Constantine's estate, and also to have Pournaras removed as trustee. In her complaint, Jaffe alleged that Pournaras intended to transfer assets from the irrevocable trust to Constantine's estate by exercising the limited power of appointment under article 4, section 2 of the irrevocable trust. In his counterclaim, Pournaras maintained that section 5.01 of the will was intended to be an exercise of the limited power of appointment contained within article 4, section 2 of the irrevocable trust.

         Jaffe and Pournaras filed cross-motions for summary judgment. Following a hearing, the Superior Court issued a decision on June 23, 2016, in favor of Jaffe; the court concluded that Pournaras's intended exercise of the limited power of appointment reserved by Constantine would be in contravention of Constantine's intentions as expressed in article 4, section 2 of the irrevocable trust by exposing the trust assets to the potential claims of creditors. The decision pronounced that Constantine's "clear intent, as expressed in [a]rticle [4], [s]ection 2 of the [i]rrevocable [t]rust, was that the limited power of appointment be exercised for the benefit of his descendants, rather than his creditors[, ]" and that, if the court "were to adopt Pournaras'[s] reading of [s]ection 5 of the [w]ill as a valid exercise of the decedent's limited power of appointment, the [i]rrevocable [t]rust assets would become part of the decedent's residuary estate and would then be subject to the claims of the decedent's creditors." The Superior Court prohibited Pournaras "from transferring the assets of the [i]rrevocable [t]rust into [Constantine's] estate[, ]" and directed him to divide the trust into two equal shares "to be distributed as otherwise provided in the trust instrument * * *."

         II. ...


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