IN THE MATTER OF THE ALBERT G. AARON LIVING TRUST
Argued: November 2, 2017
Circuit Court for Baltimore City Case No. 24-C-15-003610
Barbera, C.J., Greene, Adkins, McDonald, Hotten, Getty,
Rodowsky, Lawrence F. (Senior Judge, Specially Assigned), JJ.
appeal reaches us from a dispute between Petitioners, certain
interested parties and beneficiaries of a trust created by
Albert G. Aaron, and Respondents, the Trustees appointed to
execute and oversee the trust. One term of the trust
agreement provided that a charitable foundation would be
created unless Mr. Aaron was survived by his wife, in which
case the foundation would not come into existence. Mr.
Aaron's first wife predeceased him, but Mr. Aaron
remarried. The parties dispute to which wife the provision
should apply. Resolution of that dispute determines whether
the charitable foundation survives.
and Procedural History
his life, Albert G. Aaron ("Mr. Aaron") transferred
most of his assets to a revocable trust, the Albert G. Aaron
Living Trust (the "Trust" or, when appropriate, the
"Trust Agreement"). He created the Trust on August
27, 2008, restated it in full on August 10, 2009, and amended
it eleven times between 2009 and 2013. Mr. Aaron was married
to Eileen Aaron ("Eileen") for many years, but they
were separated for the last several. Eileen died on November
1, 2012. On or about November 6, 2012, Mr. Aaron married
Myrna Kaplan ("Myrna"), his long-time girlfriend.
January 10, 2013, Mr. Aaron executed the Eleventh Amendment
to the Trust. It was the only amendment made after
Eileen's death and Mr. Aaron's marriage to Myrna. At
the time of that amendment, Mr. Aaron was battling esophageal
cancer. On January 26, 2013, sixteen days after making the
Eleventh Amendment, Mr. Aaron died at the age of 85. Myrna
survived Mr. Aaron.
Aaron and Eileen had one child together, Jonathan P. Aaron
("Jonathan"). Jonathan is married to Cheryl Aaron
("Cheryl"). Jonathan and Cheryl have two daughters,
Theda R. Aaron ("Theda") and Lena S. Aaron
("Lena"). Myrna, Jonathan, Cheryl, Theda, Lena, and
Frances A. Rossi ("Frances, " Mr. Aaron's
long-time assistant) are beneficiaries of the Trust. All
beneficiaries, aside from Myrna and several charitable
organizations who are not parties to this appeal, are
Petitioners here (hereinafter, collectively, the
"Beneficiaries"). Upon Mr. Aaron's death,
Respondents, Steven G. Albert and Howard E. Goldman, became
the Trustees and Trust Advisors of the Trust.
various Articles of the Trust Agreement lay out the terms of
the Trust. Article Two, "Family Information, " was
never amended. It provided the following:
I am married to Eileen Aaron. Any reference in this agreement
to "my wife" is a reference to Eileen Aaron.
* * *
I have also provided for the following individuals in this
Myrna Kaplan Friend[.]
Six through Twelve provide for specific distributions of
property and create several trusts: the "Marital
Deduction Trust, " the "Exempt Marital Deduction
Trust, " the "Non-Exempt Marital Deduction Trust,
" the "Myrna Kaplan Trust, " the "Frances
A. Rossi Trust, " and the "Grandchildren's
Trusts." Article Thirteen of the Trust Agreement,
Section 13.01, provides for the creation of a Consolidated
Residuary Trust. The Consolidated Residuary Trust was created
to hold the residuary of the trust property, so long as
either Myrna or Frances was living. The beneficiaries of the
Consolidated Residuary Trust are Myrna, Frances, Jonathan,
Cheryl, and Jonathan's descendants (Theda and Lena). The
Trustees were authorized to make distributions to those
beneficiaries and to use it as a source of payment for
obligations created under other Articles of the Trust
Agreement. Section 13.02 directed that, on the death of both
Myrna and Frances, the Consolidated Residuary Trust be
terminated and its assets distributed in accordance with the
subsequent sections of Article Thirteen. Once the
Consolidated Residuary Trust was terminated, Section 13.03
directed the Trustees to designate 25% of the remaining trust
property as the "Foundation Share" and the balance
of 75% as the "Family Share."
13.04 directed the Trustees to use the Foundation Share to
create the Aaron Family Foundation ("Foundation"),
a private organization within the meaning of § 509(a) of
the Internal Revenue Code and treated as tax-exempt under
§ 501(c)(3) of that Code. Section 13.04 contained the
following contingent clause at issue:
If my wife survives me, this distribution shall
lapse and the property subject to this distribution
shall instead be distributed under the other provisions of
(Emphasis added). Consequently, if Mr. Aaron outlived his
wife, the Foundation would be created. But if his wife
survived him, the distribution to the Foundation would lapse
and Mr. Aaron's other beneficiaries-i.e., Jonathan,
Cheryl, Theda, and Lena-would receive the remaining 25% of
the Consolidated Residuary Trust. The next five pages of
Section 13.04 stated the purpose of the Foundation,
established an Advisory Committee to control its charitable
activities, and detailed specific recurring distributions
that the Foundation was to make, among other things.
Aaron amended the Trust Agreement eleven times before his
death. The majority of the changes in the first ten
amendments concerned distributions to Myrna and Frances.
Those amendments did not reference Section 13.04 and are
largely irrelevant to the issue we decide.
Eleventh Amendment, however, made several significant changes
to the Trust Agreement. It amended Section 6.01, which
addressed the distribution of Mr. Aaron's automobiles, to
add that "[t]he Jaguar is conveyed to Myrna Kaplan
Aaron, my current wife." It also altered Section 6.04,
which concerned the creation of a Marital Deduction Trust.
The Amendment provided that "Section 6.04 originally
intended to be relevant for provisions of my past deceased
wife, Eileen Aaron, shall now be intended to be for my
current wife, Myrna Kaplan Aaron." In addition, the
amendment increased from $2 million to $8 million the amount
to be allocated to the Marital Deduction Trust and provided
that the Marital Deduction Trust should be used first to
satisfy all distributions to Myrna. The Eleventh Amendment
also "specifically revoke[d] the provisions of the First
Amendment which provided that Sections 7.01, 7.02, 7.03, and
7.04 of Article Seven were to be deleted if my spouse
survived me" and mandated that "such sections shall
apply to Myrna Kaplan Aaron."
Aaron made two other changes in the Eleventh Amendment that
are worth noting. Mr. Aaron changed the composition of the
Advisory Committee. Originally, the members were to be
Jonathan, Myrna, Richard G. Wohltman ("Richard"),
and Steven G. Albert. Paragraph E of the Eleventh Amendment
removed Myrna and Richard from the Committee and provided
that "[t]he remaining initial members shall select two
other members so that there will be four members in
total." Mr. Aaron also amended Section 6.06, which
concerned his real property interests, to provide in part
that "[i]f Myrna Kaplan Aaron should predecease me, this
distribution shall lapse[.]" Mr. Aaron referred either
to "Myrna Kaplan Aaron" or "Myrna Kaplan"
each time she was mentioned in the Eleventh Amendment.
Trust Advisors were authorized under Section 3.10(j) of the
Trust Agreement to amend any provision of the agreement to
"[c]orrect ambiguities, including scrivener errors, that
might otherwise require court construction or
reformation[.]" The Trust Advisors were not permitted to
"limit or alter the rights of a beneficiary in any trust
assets held by the trust before the amendment."
after Mr. Aaron's death, Myrna requested certain payments
from the Trustees pursuant to the amended Trust Agreement.
The Trustees, believing the requested payment amounts to be
excessive, filed for a declaratory judgment pursuant to
Section 3-408 of the Courts and Judicial Proceedings Article
and Maryland Rules 10-101 and 10-501. The parties reached a
settlement, memorialized in a Settlement Agreement. The
Trustees then filed in the Circuit Court for Baltimore City a
"Petition to Approve Settlement and Modify Trust."
The Trustees requested the circuit court to assume
jurisdiction over the Trust, approve the Settlement
Agreement, and approve the Trustees' proposed restatement
of the Trust Agreement (the "2016 restatement").
The intent of the proposed restatement was to simplify the
original Trust Agreement and eleven amendments into one
unified document that incorporated all of the changes. One
change the Trustees proposed was to remove the clause in
Section 13.04 containing the language "[i]f my wife
survives me, this distribution [to the Foundation] shall
lapse and the property subject to this distribution shall
instead be distributed under the other provisions of this
agreement." The Trustees reasoned that, upon
Eileen's death in November 2012, the provision became
August 26, 2015, the circuit court issued a Show Cause Order
directing the Beneficiaries to show cause why the petition
should not be granted. At issue were three contentions raised
by the Beneficiaries that are not relevant to this appeal.
Then, on February 4, 2016, the Beneficiaries filed a
Supplemental Response disputing the propriety of removing the
"if my wife survives me" clause in Section 13.04.
The Beneficiaries contended that a bequest providing for the
creation of the Foundation had lapsed because, they argued,
the term "my wife" referred not to Eileen but
rather to Mr. Aaron's second wife, Myrna.
hearing, the Honorable Althea M. Handy, ruling from the
bench, granted the relief requested by the Trustees and
approved the 2016 restatement. The court, reasoning that
"once Ms. Eileen Aaron passed away[, ] . . . that was
the critical date, " agreed with the Trustees that the
reference to "my wife" in Section 13.04 of the
Trust Agreement did not transfer automatically from Mr.
Aaron's first wife, Eileen, to his second wife, Myrna.
Beneficiaries noted an appeal. The sole issue before the
Court of Special Appeals, as it is here, was whether the
circuit court had erred in approving the 2016 restatement and
declaring, in particular, that the words "my wife"
in Section 13.04 of the Trust Agreement refer to Eileen, not
Court of Special Appeals affirmed the judgment of the circuit
court. In a soundly reasoned, unreported opinion, the
Honorable James R. Eyler, writing for the panel, held that
the words "my wife" referred to Eileen; therefore,
the distribution to the Foundation did not lapse. In the
Matter of the Albert G. Aaron Living Trust, No. 253,
slip op. at 4 (Md. Ct. Spec. App. Apr. 14, 2017). ...