In New York a construction proceeding involves a petitioner asking the Surrogate’s Court to interpret language in a will or trust that is unclear. The language may be open to conflicting interpretations, the language may be inconsistent with other terms of the will, or the language simply might not make sense.
In In re Petition of Nadler, the decedent was survived by three adult children. Four years prior to her death, the decedent created trust that was funded by shares of a realty company. One of the decedent’s children is a trustee. Under the terms of the trust, the children as beneficiaries were entitled to the income from the trust. Five years after the decedent’s death, the primary asset of the realty company was sold for over $8 million, and a year later the realty company was dissolved.
The petitioners, the beneficiaries of the trust, petitioned the Nassau County Surrogate’s Court for a judicial construction to provide that because of the sale of the assets the realty company and its dissolution, there is no longer a need for the trust. As a result, the trust should end and its assets distributed to the beneficiaries of the trust. The petitioners argue that because the trust does not contain directions related to what should happen in the event of the dissolution of the realty company, there is an ambiguity that requires to court to make a judicial construction. The petitioners point to language in a related trust that allows for the court to step in to resolve any ambiguity related to the trust termination date. The petitioners also rely on the law which states that a trust can be terminated when its purpose ends.