A recent court case shed light on the importance of taking not only current family relationships into consideration when planning your estate, but also potential step-relatives that may join your family later on. The case involved a North Dakota couple who set up two trusts for their grandson. The trust designated their grandson’s brothers and sisters as the beneficiaries upon his death.
After the trusts were created, the grandson’s parents divorced. His father remarried and had two children with his second wife. The grandson died suddenly in 2011. He was unmarried with no children and had no will. Under North Dakota law, his father’s two children with his second wife were considered his brothers and sisters and were eligible beneficiaries of the trusts.
The grandparents argued for an interpretation of the trust that would exclude the step-siblings as beneficiaries, or to be granted permission to modify the trusts to specify only lineal descendants as beneficiaries. Based on their testimony regarding their intentions of the trust and on evidence they misinterpreted the phrase “brothers and sisters” as referring to only full blood siblings, the court allowed the grandparents to reform the trusts.
