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Petitioners Request Settlement of Their Account as Surviving Trustees


New York Probate Lawyers said this is a proceeding by the petitioners, and a Bank, for the judicial settlement of their account as surviving trustees of an express trust created by the father in a letter writing dated March 10, 1902, and for the construction of the trust instrument in conjunction with the will of the testator for whose immediate benefit the trust was created.

A Kings County Estate lawyer said that in March, 1902 testator had four sons. On March 10th of that year he established the instant trust in a letter addressed to Joel and a few days later delivered the securities constituting the corpus of the trust to his 2 sons, as trustees.
The settlor augmented the corpus of the trust pursuant to instruments executed in 1905, 1907, 1909, 1910 and 1911. On December 24, 1909 the 2 sons as trustees, properly designated their brother (now a co-petitioner) as a co-trustee.

The settlor died on July 4, 1915. His son, the original life beneficiary died on May 30, 1924, survived by one son, who had been born on October 16, 1914. Said son, the elder left a will, dated April 21, 1920, which did not refer to the power of appointment granted him by the trust instrument. Following various specific gifts of both realty and personalty, the will disposed of the residue.

A New York Estate Lawyer said that after the death of Joel the elder in 1924, the trustees applied in income from the trust fund to the use of Joel the younger. The latter died in an airplane accident on October 18, 1955, survived by his son, sole lineal descendant, born on February 5, 1943, who is represented herein by the special guardian. The will of the decedent, the younger was admitted to probate in California, where letters of administration c. t. a. were issued on June 29, 1956. The Surrogate’s Court, New York County, later issued limited ancillary letters of administration c. t. a.

Westchester County Probate Lawyers said that during 1953 the son executed written bills of sale, assigning to an individual, interests in the corpus of the trust to the extent of $24,000. On October 8, 1954, he executed a loan agreement with the First National Bank of Philadelphia, Philadelphia, Pa., now the First Pennsylvania Banking and Trust Company, in which he assigned all his interest in the corpus as security for a loan of $375,000. On September 2, 1955 there was served upon the corporate trustee-petitioner a warrant of attachment against the property, in an action against him brought by the United States of America to recover $6,069.48 with interest from February 26, 1948.

The accounts of the trustees have been judicially settled on four prior occasions, resulting in judgments entered respectively on February 27, 1926, March 22, 1934, May 4, 1942 and November 24, 1944.

Suffolk County Probate Lawyers said the instant petitioner, who was a defendant therein, set up a cross answer denying that all the interests were merged. The plaintiffs therein contended that the trust was indestructible during the lifetime of the son. The court granted the plaintiffs’ motion for judgment on the pleadings, struck out the defense and held that while was entitled to the income of the trust, he was not then entitled to immediate possession of the corpus.

When the decision denying the claim to immediate possession of the corpus was rendered in 1942, the infant represented herein by the special guardian, was not yet born. The special guardian here urges a certain measure of conclusiveness of the 1942 judgment to the issues raised in this proceeding. While the rights of persons thereafter born may under certain circumstances be determined in proceedings antecedent to birth, the present issues such as those raised by the creditors, so differ from that essential to the judgment in the prior litigation as to preclude the application of the principles of res judicata.

As set forth above, the trust instrument provided that upon the death of the survivor, the trustee were to pay over the corpus to said children and lineal descendants, in such shares, whether equal or unequal, and upon such terms, as you may direct by your Last Will and Testament, or if no such direction is given, then in equal shares per stirpes and not per capita.’

Section 18 of the Personal Property Law provides as follows: ‘Personal property embraced in a power to bequeath, passes by a will or testament purporting to pass all the personal property of the testator; unless the intent, that the will or testament shall not operate as an execution of the power, appears therein either expressly or by necessary implication.’

To the same substantial effect, except for the omission of the word ‘therein’, is section 176 of the Real Property Law.

The power of appointment given to Joel the elder, being limited to exercise by will to the classes of his ‘children and lineal descendants,’ was a special testamentary power of appointment in trust, applicable to personal as well as real property. Such a special power, as well as a general power, is embraced by sections 18 of the Personal Property Law and 176 of the Real Property Law, supra.

It is settled that a testamentary gift of the residue is sufficient to execute a power of appointment which has been conferred upon the testator unless it appears expressly or by necessary implication from the language of the will that the will should not operate as an execution of the power. Section 18 of the Personal Property Law and the companion Real Property Law section make the intention of the testator the controlling factor and create a rebuttable statutory presumption of an intention to exercise the power.

Clearly there was no express provision in the will of Joel the elder, showing that he did not intend to exercise the power. In a case, it was stated that the term ‘necessary implication’ found in sections 18 and 176 ‘results only when the will permits of no other interpretation. ‘Necessary’ is defined to mean, ‘Such as must be;’ ‘Impossible to be otherwise;’ ‘Not to be avoided;’ ‘Inevitable.’. The intent not to execute the power, therefore, must not be implied unless it so clearly appears that it is not to be avoided.’

The emphatic command of the statutes is illustrated by the holdings that a power of appointment conferred in a subsequent trust agreement is validly exercised by a previously executed will containing no specific exercise of any power of appointment.

The guardian strongly urges that since Joel the elder left his residuary estate, in the event his son predeceased him, to a cousin, an ineligible appointee under the power, this fact necessarily implies that the testator did not intend to exercise the power of appointment. He cites in support of this contention. These cases are distinguished and placed in proper perspective in another case, in a manner in which this court concurs. It is true that in the case, the will was executed before the power was given and therefore without knowledge of its terms.

Having held that the effective exercise of the power of appointment by the will of Joel the elder entitles his son’s estate to the corpus of the trust, the court will now consider whether the trust ended upon the death of the younger Joel in 1955 or whether it will continue during the lifetime of a petitioning trustee for the benefit of lineal descendants.

The personal representative of the younger son’s estate and his creditors maintain that the trust instrument is not the product of expert drafts-manship; that words like ‘children’ and ‘lineal descendants’ were used loosely and that the settlor intended merely to create a spendthrift trust for the benefit of his son, with a remainder in children.

The guardian, on the other hand, contends that the settlor purposely used proper legal terms of varied meaning which should be strictly and literally construed, that as a ‘lineal descendant’ his ward need not have been in esse when his grandfather Joel died in 1924, and that the settlor was not only interested in future estates, but intended to protect them fully during the stipulated term of decedent’s life.

The relationship between the stipulated term and the natural term where only the construction of a valid trust was involved, was considered in a case where the testator created a trust for the benefit of his granddaughter during the lives of his two sons. Upon the death of the sons, the trust was to terminate and the corpus was to be paid over to the grandchild or her heirs. The grandchild died before the two sons. The court found that the primary object in the mind of the testator was to create a trust for the sole use and benefit of the granddaughter, and upon her death even before the expiration of the stipulated term the trust terminated and the corpus passed to her heirs at law.

In the opinion of the court, the position of the guardian on his branch of the case appears to be sound. The use by the settlor of the words ‘lineal descendants,’ obviously of broader import than the word ‘children’, used elsewhere, connotes a consideration for other than issue of the first degree. Obviously, the creation of a spendthrift trust for the elder was not the sole object of the settlor, since otherwise there would have been no need for or purpose to the second sentence of Article ‘First’ and the measurement of the trust on the additional life of the decedent.
It is held that the trust has not terminated so that demands for immediate payment from the remainderman’s interest are premature. The United States Government as a creditor does not ask for payment but asks only that its lien by attachment be established. Such relief is authorized by section 916(6), Civil Practice Act, and it is granted.

No objections have been interposed to the account although the special guardian has reserved on that branch of the proceeding. He may have until September 6, 1957 to serve and file his supplemental report and objections, if any, to the account. If there be any such objections further decision will be rendered thereon. If there are no objections to the account, an order may then be settled accordingly.

If you are an heir, whose right as such was deprived, our Kings County Will Contest Lawyers here in Stephen Bilkis and Associates will protect your interest as such. We will file the necessary action for your protection. For other matters, we also have Kings County Estate Attorneys.

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