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The petition herein prays for the judicial settlement of the accounts of the trustees and for a construction of the validity and effect of the last will and testament of testator and the appointment thereunder of Mr. E Jr. and for the issuance of letters of trusteeship to Mrs. E Jr. and for the setting of compensation of the attorneys.
The instant proceeding was brought by the petition of United States Trust Company from New York as the surviving trustee of the trust created by the will of Mr. E Sr. for his son Mr. E Jr. for (1) an instruction to the trustees as to the validity of the purported exercise by the will of Mr. E Jr. of a testamentary power of appointment pursuant to the testator’s will, (2) a judicial settlement of the accounts of the trustees, and (3) a determination of the commissions payable to the petitioner as surviving trustee.
It appears that the infants who are represented by the guardian ad litem are interested in the instant proceeding by reason of the following circumstances:
(a) The testator herein is Mr. E Sr., who died on December 31, 1939, a resident of Dutchess County, New York, and whose will was admitted to probate in this Court on January 15, 1940.
(b) The infant wards herein are the three grandchildren of the testator’s son, Mr. E Jr., who died on March 20, 1968, a resident of New York County, New York, and whose will was admitted to probate on March 26, 1968, by the Surrogate’s Court of New York County. Mr. E Jr. left him surviving his wife, Mrs. E Jr., a natural son, AR (from whom there has been no issue), and an adopted son, EE, who is the father of the three infants constituting the infants herein.
(c) Mr. E Jr. was a beneficiary, as well as a trustee, under a trust created by the will of his father, Mr. E Sr., the testator herein. Pursuant to that trust, Mr. E Jr. was entitled to the net income from that portion of the trust corpus which had been set aside for his benefit and, in addition, was entitled to appoint such corpus, ‘in such estates, interests and proportions’ as he ‘shall in and by his last will and testament in that behalf direct, limit and appoint,’ to a class of persons consisting of the testator’s issue and the spouses of such issue. In default of such an exercise of the power of appointment, Mr. E Sr.’s will provided that the property subject to the power would be given absolutely to the issue of the child possessing the power or, if the child were not survived by such issue, then absolutely to the testator’s issue then surviving.
(d) By his will, which was admitted to probate as mentioned above, Mr. E Jr. purported to exercise the power of appointment given him pursuant to his father’s will, as set forth above.
Mr. E Jr.’s will further provided that his adopted son, EE, would be deemed his child and issue for all purposes of his will.
The questions presented by the trustee’s request for instructions cover the validity of the purported exercise by the will of Mr. E Jr. of the testamentary power of appointment pursuant to the testator’s will:
I. Whether the Testator’s Will should be Construed to Authorize an Appointment in Further Trust.
The threshold consideration is the testator’s intention regarding the power of appointment, as reflected in his will, and specifically whether an appointment in further trust is authorized. The testator’s will provides that, upon the death of each of his children, the capital of the respective trust created for that child’s benefit will be given ‘unto such person or persons out of a class composed of my issue and the spouses of such issue and in such estates, interests and proportions as such child shall in and by his last will and testament in that behalf direct, limit and appoint.’ In providing that the power of appointment may be exercised ‘in behalf’ of members of the class ‘in such estates, interests and proportions’ as the child may direct, it is apparent that the testator intended to authorize the child to make a testamentary gift of any interest in the property whatsoever, whether an income interest, life interest, or otherwise, and by any means the child might deem appropriate, including a trust, or any other device to accomplish the gift thus made. Any other construction would imply that the testator’s inclusion of the words, ‘in such estates, interests and proportions,’ have no significance.
Moreover, judicial precedent indicates that such language as that found in the testator’s will should be construed to authorize an appointment in further trust.
A further question respecting the testator’s intention is involved. In 1936, when the testator’s will was executed, as well as in 1939, when he died, the maximum possible period during which the absolute power of alienation could be suspended, was that which could be measured by two lives in being on the date of such a suspension. Inasmuch as the trust created by the testator contained ‘spendthrift’ provisions which would suspend the absolute power of alienation, and inasmuch as the trust term was measured by ‘two lives’ then in being (the respective lives of his wife and his children), it is clear that under the law then prevailing the testator had exhausted the maximum permissible period for such a trust. Therefore, it could be argued that the testator could not have intended the trust to be extended for any additional period, through exercise of the power of appointment bequeathed to his children or otherwise.
However, such an argument would proceed from a false assumption. There is no indication that the testator’s creation of a trust term measured by two lives has any bearing on his intention with respect to the testamentary power of appointment; the assumption that any such relationship exists, and that any information regarding the testator’s intention with respect to the scope of the power of appointment can be deduced from the length of the trust he created, would appear, therefore, to be totally unfounded. Indeed, as discussed above, the words of the testator’s will which do describe the testator’s interest with respect to the scope of the power indicates clearly that, except for a limitation to the described class of potential legatees, the testator intended to authorize any exercise of the power in favor of such persons as the donee might deem appropriate, and that he was simply indifferent as to the type of interest in the subject property and the manner of conveyance which might be established through exercise of the power. The fact that laws affecting the manner of creating property interests were amended after the testator’s death to liberalize the manner in which property interests can be created should not, therefore, alter the conclusion that the testator’s will would authorize an appointment in further trust herein.
II. Whether, in the Testator’s Will, ‘Issue’ Should be Construed to Include an Adopted Child and His Issue.
Whether the testator’s will should be construed to authorize the particular appointment in further trust made by Mr. E Jr.’s will, however, presents a further question, to wit: Are the appointees under Mr. E Jr.’s will within the class of persons to whom the power of appointment was limited? Should the testator’s will be construed to include as ‘issue’ adopted children and their issue?
The testator’s will is silent with respect to the meaning of ‘issue’. Furthermore, it should be noted that the statute set forth in Section 2–1.3 of the Estates, Powers and Trusts Law, which specifically provides for the inclusion of adopted children and their issue within the term ‘issue’ unless a contrary intention is indicated, is not applicable to the instant case because such provision was not effective until March 1, 1964, and its effect is prospective only. The same is true with respect to the definition of ‘issue’ contained in Section 1–2.10 of the Estates, Powers and Trusts Law, which applies only to the wills of persons dying after its effective date, September 1, 1967.
However, as the Court held in In re Grace’s Will, 46 Misc.2d 878, 261 N.Y.S.2d 236 (1965), the statutory inclusions of adopted children within classes such as ‘issue’, unless a contrary intention appears, is merely a codification, albeit also a clarification, of judicial precedent established for many years. As pointed out in the memorandum filed herein on behalf of petitioners, in Matter of Park’s Estate, 15 N.Y.2d 413, 260 N.Y.S.2d 169, 207 N.E.2d 859, the Court of Appeals held that, in a situation substantially identical with that involved herein, an adopted child and his issue were ‘issue’ within the meaning of the testator’s will. Accordingly, since no contrary intent is expressed in the testator’s will, the Court will construe the will to include the adopted son of Mr. E Jr., EE, and his three children, to be ‘issue’ capable of taking pursuant to an exercise of the power of appointment.
III. Whether an Appointment in Further Trust is Permitted by Law.
Since it appears that the testator’s will would authorize the appointment in further trust made by Mr. E Jr. herein, the only remaining question to be considered in determining the validity of that appointment is whether such an appointment in further trust would be permitted by law.
Pursuant to the applicable sections of the Estates, Powers and Trusts Law, there is no doubt that the appointment in further trust herein is valid. Since the subject power of appointment is not a general power which was presently exercisable, the permissible period of the rule against perpetuities begins at the time of the creation of the power, that is, on the date of the testator’s death, December 31, 1939. Furthermore, the permissible period which is applied is not that which was in effect in 1939, but that which was in effect at the time the power was exercised. It appears that all of the lives by whom the term of the trust herein would be measured (Mrs. Z, widow of the testator, the testator’s children, Mrs. E Jr., widow of Mr. E Jr., and Mr. E Jr.’s son AR) were all in being on the date of the creation of the trust and of the power of appointment herein, December 31, 1939. Since the applicable permissible period is that set forth in Section 9–1.1 of the Estates, Powers and Trusts Law, which was in effect on the date of Mr. E Jr.’s death (March 20, 1968), and since that statute provides for a permissible period measured by ‘lives in being at the creation of the estate and a term of not more than twenty-one years,’ it is clear that the appointment in further trust is valid
In view of the provisions of the applicable statutes discussed above, as well as the cited judicial precedents, it would appear that the appointment in further trust by the will of Mr. E Jr. is a valid exercise of the power of appointment created pursuant to the will of the testator herein.
In examining the account of the trustees, the Court find that the allocation of the principal and income stated therein, to be correctly made and computed and the account should be allowed and judicially settled as filed.
The provisions of a will must not only be in accordance with the principles of law but must also be clear enough to have no room for its construction. The will of the testator must be upheld at all time.
To help you with the writing of your will, contact the Stephen Bilkis & Associates. Our Kings County Probate Attorneys and Kings County Estate Lawyers are always ready to help you.