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Court Discusses Contruction of a Residuary Trust

A New York Probate Lawyer said the petitioner, the surviving trustee of a trust created on January 21, 1932, by and for the benefit of one Mrs. W, makes application for settlement of its account and asks for a construction whether the whole or any part of a legacy of $20,000 bequeathed under article fourth of the will of the donee, is payable from the corpus of the trust.

A New York Estate Lawyer said the pursuant to the trust agreement, the settlor, Mrs. W, reserved to herself the right to receive the income therefrom and directed that upon her request the trustee should pay over to her any part of the principal up to the sum of $50,000. In addition to the above, she reserved the power ‘to modify, alter or revoke this agreement, in whole or in part, to withdraw any of the principal of the trust fund therefrom in addition to the aforesaid $50,000.’ The agreement also provided that upon her death the principal should be ‘paid out and disposed of in such manner as the settlor might direct by any last will and testament made by her effectual at the time of her death.’

The settlor died on October 26, 1955, leaving a last will and testament dated January 20, 1949, which was admitted to probate. Paragraph fourth of the will provides: ‘As my adopted daughters, benefitted by the terms of the will of my late husband and my granddaughter, A, did not, she having been born after the execution of said will, I give and bequeath to my said granddaughter, A the sum of Twenty Thousand ($20,000) Dollars.’

Queens Probate Lawyers said that by paragraph sixth of the will, the testatrix bequeathed in trust to her executor and trustee ‘all the rest, residue and remainder of my estate, both real and personal, of every kind and nature including any and all moneys now held in trust for me under any Deed of Trust or Will, and over which I may have power of disposition, either by will or by the terms of any Deed of Trust heretofore or hereafter made by me.’ The testatrix then provided that the trust estate should be divided into three equal parts for the benefit of her two adopted daughters and her natural daughter, M.

Long Island Probate Lawyers said the personal estate, exclusive of the appointive funds, is insufficient to pay the legacy of $20,000 to her granddaughter, A, the legatee named in paragraph fourth of the will. The estate is valued at approximately $34,000. However, out of said estate $10,000 in real property is specifically devised and $10,000 from a life insurance policy is demonstratively bequeathed to two other granddaughters of the decedent.
The estate is also subject to administration expenses and debts in excess of $3,000, exclusive of federal and state estate taxes. The appointive fund has an approximate net worth of $101,000 before estate taxes.

The parties hereto have stipulated as to the following facts: That the decedent’s income did not appreciably vary during the period from January, 1949, the time of the execution of the will, to October, 1955, the date of testatrix’s death; that she owned substantially the same amount of income producing property at the time the will was executed and at the time she died; that the testatrix withdrew from the appointive fund approximately $44,000 during the years 1933 through 1949 but through the years 1947, 1948 and 1949 she withdrew $22,000; that she continued to withdraw funds therefrom after the execution of the will; that decedent had no other sufficient funds or income available to satisfy the needs for which these principals were made; that at the execution of the will she owned no substantial properties other than the trust fund and income therefrom; and that these withdrawals are evidence of the settlor’s intention to consider the principal of the trust as her own funds readily available to her.

The law presumes that a person knows the approximate extent of his or her property and we must presume that the decedent knew at the time of the execution of her will that her personal estate would not be able to meet her expressed intent to equalize the position of her three granddaughters by making up for the benefits that her granddaughter, A, had failed to receive from testatrix’s husband. It would thus appear that the testatrix must have intended to make available to the said A the moneys available in the corpus of the trust over which she had the power of appointment. The testatrix by reason of her power to modify or revoke the trust and by reason of her invasion of the principal to the extent of over $44,000 must have regarded the trust estate as constituting her own assets over which she had power of testamentary disposition and must have intended that the entire will, and not merely the residuary clause exercised her power of appointment under the trust indenture.

A situation substantially similar to the one herein arose in Matter of Burchell’s Trust, 278 App.Div. 450, 105 N.Y.S.2d 431. There the decedent created an inter vivos trust in 1891. At the time that she drew her will in 1943, her personal estate was less than she had at her death, which amounted then to $5,000 and a house in Florida.

‘In holding that the general legacies should be paid from the appointive fund the court said: ‘She must have known that unless the assets of her 1891 trust were to be drawn upon in order to fulfill these bequests, they would fail, almost entirely. She must have intended that her bequests should be met out of the assets of the inter vivos trust under her power of appointment.’ The court, however, was troubled by the fact that the power of appointment was exercised in the residuary clause alone and expressly in favor of the general legatees. In resolving this problem the court said: ‘It could hardly have been the purpose of the testatrix by this clause to give all the assets of her inter vivos trust to her residuary legatees, thus allowing her prior bequests to fail.‘
‘A residuary clause, by its very nature, is ordinarily intended to dispose of what is left after making provision for prior gifts. Only the ‘rest, residue and remainder’ after making these gifts was to pass to her residuary legatees. This clearly referred to the rest, residue and remainder of her inter vivos trust after payment of prior legacies, as well as to the insignificant amount of personal property to which she held absolute title. If it referred only to her individual estate, no residuary clause would have been necessary since all that she held in her own name would have been exhausted in paying but a small fraction of her prior bequests. The conclusion to be drawn is that the entire Will was deemed by the testatrix to be in exercise of her power of appointment under the trust indenture.’

Applying the principles above stated the appointive fund may be resorted to in satisfying the $20,000 legacy under paragraph fourth of the will. The account of the surviving trustee of the trust should be allowed as filed.

When you have problem interpreting a provision of a will, call the estate and probate lawyers of Stephen Bilkis & Associates at once. As some of the proviso in a will may conflict with other proviso, this could, however, be remedied by looking on the real intention of the testator.

Our Kings County Estate Attorneys and Kings County Will Contest Lawyers are always ready to provide you solutions in all your legal issues. Call us and we’ll advice you free of charge.

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