A New York Probate Lawyer said that records reflect that the instant proceeding was brought by the petition of a Trust Company as the surviving trustee of the trust created by the will of the decedent for his son for (1) an instruction to the trustees as to the validity of the purported exercise by the will of the son 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 company 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, who died on December 31, 1939, a resident of 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, who died on March 20, 1968, and whose will was admitted to probate on March 26, 1968. The son left him surviving his wife, a natural son, (from whom there has been no issue), and an adopted son, who is the father of the three infants constituting the infants herein. (c) The testator’s son was a beneficiary, as well as a trustee, under a trust created by the will of his father. Pursuant to that trust, the son 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, testator’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, the son, purported to exercise the power of appointment given him pursuant to his father’s will.
A New York Estate Lawyer said the threshold consideration in the instant case 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 court held that 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 estate, 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.
Nassau County Probate Lawyers said that 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. The Appellate Division of the Supreme Court, First Department, was faced with a similar problem in In re Hart’s Will. In that case, the testator left the residue of his estate in trust, the income payable to his nephew for his life, the testator further conferring a testamentary power of appointment upon his nephew. The donee nephew provided in his will for a further trust of the principal of the subject trust corpus, with income payable to his wife during her lifetime. The Court, discussing the applicable authorities at length reversed a contrary decision by the Surrogate and held that, by authorizing his nephew to dispose of the principal of the trust ‘in such manner’ and ‘in such shares’ as the nephew might by his will appoint, the testator had authorized the appointment in further trust, inasmuch as such language indicated the testator’s indifference to the quality or manner of estate appointed.
A further question respecting the testator’s intention is involved. When the testator’s will was executed, as well as when he died, the maximum possible period during which the absolute power of alienation could be suspended, was that which could be measured by tow 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, Staten Island Probate Lawyers said that in 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.
Another issue is whether, in the Testator’s Will, ‘Issue’ Should be Construed to Include an Adopted Child and His 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, 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. Accordingly, since no contrary intent is expressed in the testator’s will, the Court will construe the will to include the adopted son, and his three children, to be ‘issue’ capable of taking pursuant to an exercise of the power of appointment.
Lastly, as to whether an Appointment in Further Trust is Permitted by Law, the court ruled that, 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 were all in being on the date of the creation of the trust and of the power of appointment. Since the applicable permissible period is that set forth in Section 9-1.1, which was in effect on the date of the son’s death, 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 pursuant to the applicable statutory law.
No cases have been found specifically determining the constitutionality of Section 10-8.2 of the Estates, Powers and Trusts Law, but there have been several decisions in which that section and companion statutes contained under the Law have been applied in circumstances similar to those presented in the instant case. For the will of the son has provided that in the event the appointment in further trust is invalid, a legal life estate and remainder is created which would have the similar effect of giving his wife the income of the subject property for her life, and the principal thereafter to his issue. As discussed, the only significant difference between the two provisions is that the further trust would continue for what would be, presumably, a longer period, since it would not be terminated until the death of both his widow and his son. In view of the provisions of the applicable statutes, as well as the cited judicial precedents, it would appear that the appointment in further trust by the will of the son is a valid exercise of the power of appointment created pursuant to the will of the testator.
In cases involving estate litigation, estate administration, will contest and the likes, it is very important that we speak and consult with the experts in such fields. Stephen Bilkis & Associates, with offices throughout New York, has the services of its seasoned Kings County Probate Lawyers and its skilled New York Estate Attorneys who will ensure that your rights are protected whether as an heir, trustee, beneficiary, or someone whose rights may be affected. Hence, seek the assistance of your lawyer involving legal matters.