A New York resident executed a will in 1950 leaving one-third of his residuary property outright to a daughter of a previous marriage and the remainder in trust for his second wife. She was to receive the income for life and was given a power of appointment over the principal of the trust undistributed at her death. The will is silent with respect to the disposition of the principal trust in the event that she fails to exercise the power. However, it is clear that a default would result in the trust being distributed to the issue of the daughter of the first marriage. The surviving spouse moved to Ohio and executed a will in Ohio in which she exercised her power of appointment over the trust assets in favor of her son by a previous marriage and his wife. The son was also a resident of Ohio at the time.
A New York Probate Lawyer said that the daughter of the deceased died in 1970 leaving her surviving four children. The surviving spouse died in Ohio and her 1981 will was filed for validation in that state. Ohio employs a modified common form of will validation, in which only a limited number of people must be notified that a will has been filed. This class does not include those who would be adversely affected by the exercise of a power of appointment included in the Ohio will. Therefore, no notice was sent to the grandchildren of the deceased who would take in default of the exercise of the power. The will was admitted for validation in Ohio. Ohio statutes provide for a four-month period, after a will is admitted for validation, for an interested party to contest the validity of the will. If not contested within this time limitation, the validation shall be forever binding. Such period has long expired and the will was not contested.
Upon the application of the trustee to settle its account in the proceeding, notice was given to the grandchildren. The petition prays that the court direct the principal of the trust be distributed to the son of the surviving spouse and his wife, in accordance with the will of his mother.
According to Manhattan Probate Lawyers, objections were thereafter filed by all four grandchildren, alleging that the surviving spouse was incompetent to make a will, that undue influence was exerted upon her by her son and that, in any event, she had indicated on several occasions on intent not to exercise the power of appointment. When confronted with the will of the surviving spouse apparently duly validated in Ohio and the finality of that proceeding, the issue for the court became the determination of its jurisdiction to determine the validity of the exercise of the power of appointment. Presented with the finality of the Ohio degree, New York is affirmed to hear and determine the undue influence exercised upon the surviving spouse, which would affect the validity of the disposition of property under the will of a man from New York being administered under its court’s jurisdiction.
Certain principles of both constitutional and state law along with elements of the common law are relevant and must be considered. A decree or judgment of one state, validly entered, is entitled to full faith and credit in a sister state. Balancing the basic principle, the due process clause of the U.S. Constitution claims that no State shall deprive any person of life, liberty, or property, without due process of law. Significant is an additional language of the section which states that no State shall deny any person within its jurisdiction the equal protection of the laws. It is remembered that the people who object herein were neither residents of Ohio at the time of the validation of the surviving spouse’s will, nor were they given notice of that proceeding and consequently did not appear therein thereby conferring jurisdiction on the Ohio court. The due process clause does not require such jurisdictional basis but applies to any person.
Having less force than the full faith and credit clause but still significant in dealings between the states is the common law doctrine of judicial comity which can be defined as the principle in accordance with which the courts of one state or jurisdiction will give effect to the laws and judicial decisions of another, not as a matter of obligation, but out of deference and mutual respect. Comity can be extended when the issue does not rise to the obligatory level of the full faith and credit clause, but nevertheless cries out for interstate recognition of local rules or customs.
As a general principle of New York law, the courts of the state will look to the law of the residence of the person who made the Will for the meaning and interpretation of language used by him in disposing of his personal property by Will. Furthermore, said Queens Probate Lawyers, a will disposing of personal property, wherever situated made within or without the state by a resident or nonresident thereof, is formally valid and admissible for validation in the state, if it is in writing and signed by the person who made the will, and otherwise executed and attested in accordance with the local law. It further states that the jurisdiction in which the will was executed, at the time of execution; or the jurisdiction in which the person who signed the will was resident of, either at the time of execution or of death.
With respect to the procedures employed by the judiciary in another state in validation proceedings, the state’s highest court has ruled that if a probate court of a sister state otherwise has jurisdiction it may make a decree admitting a will for validation which is binding upon non-residents, even though notice has, by statute, been dispensed with on the original validation, and such validation becomes conclusive in the absence of will contest within such period as is provided by the laws of that state.
When considering trusts, the general rule in New York is that the construction and effect of the will of a non-resident beneficiary of a power of appointment in so far as it involves an exercise of the power of appointment conferred by the will of the donor, is governed by the law of the state, the residence of the donor in power, and the location of the property. It is the established law of the state that the courts of New York alone must determine the validity and effect of a Will, whether will or deed, which purports to exercise a power of appointment under the will of a New York donor. That principle applies, not only to the construction of the will of the beneficiary, but also extends to the jurisdiction to admit or reject it as a will under the criteria of the validation law.
The assignees of the trust estate located in Ohio argue that the courts of the state are bound by the Ohio decree and should extend to it the full faith and credit required by the United States Constitution. Cases cited by them, with one exception, however do not address the issue of the exercise of a power of appointment but are limited to the admission of a will in a foreign state and the recognition given to the decree entered in that jurisdiction.
In the validation of the will of the grantee of the power in Ohio, the grandchildren of the person who made the will never appeared; indeed they never received notice of it. It is the issue that most troubles the court. In a case involving the necessity of citing persons adversely affected by the exercise of a power of appointment in the will of a New York residency, the court refused to dispense with service on them. The court reasoned, only by requiring the service of process on such parties would the validation decree be binding on them and preclude them from later litigating the matter. Furthermore, it is a fundamental principle of equity concerning parties that all persons interested in the subject matter and the relief granted shall be made parties.
The appointees of the power argue that the beneficiary of the will is conclusive in determining the disposition of her property which necessarily includes the principal of the trust considered. The testamentary exercise of a power either in a manner that continues property in trust or in the form of outright inheritances creates in the executor of the beneficiary no interest whatsoever in the property so appointed. A beneficiary with a power to appoint by will is a mere agent of the donor. When the beneficiary exercised the power granted to her by her father, she was not disposing of her own assets but, by authority conferred upon her by her father, she was disposing of property which never lost its identity as part of the father’s property. Until absolute vesting the property remains subject to the jurisdiction and control of the courts of the residence of the donor.
Consistent with its view, the transfer of appointive assets of a trust having New York as its state of administration would be determined in an independent New York proceeding and the fundamental validity, effect, and interpretation of the will purporting to exercise the power would be governed by New York law. In the case of a nonresident beneficiary, no determination by the foreign residence court in its validation proceeding would affect the New York proceeding.
Finally, the question is posed whether the decisions affirming the jurisdiction of New York courts to determine the validity of the exercise of the power of appointment only go to the substantive issue of the trust disposition or operation. Was there a violation of the rule against perpetuities or rules governing accumulations? The court is of the opinion that the decisions should not be so narrowly construed. Consider the case where there is either an informal accounting (with no notice to those adversely affected by the exercise of the power) or a formal accounting in which the petition does not name those adversely affected but merely attaches the will of the non-resident beneficiary of the power of appointment and alleges that the will was properly admitted for validation in a sister state. Under either of the situations, parties who may have information concerning undue influence brought to bear on the beneficiary of the power in exercise of said power would never have the opportunity to bring the information to the court which retains jurisdiction of the property so appointed. It is patently inequitable and prejudicial. Not only does it open the door to possible collusion, but it deprives a person or persons of establishing their purported right to property, without due process of law.
For the foregoing reasons, the court determines that it has jurisdiction to inquire into the validity of the exercise of the power of appointment contained in the will of a non-resident beneficiary of said power admitted to jurisdiction in a sister state. All interested parties shall have an opportunity to present facts to the court which would assist it in determining whether the exercise of the power, as contained in said will, over property located in this state and subject to this court’s jurisdiction, is valid and enforceable.
People move from one place to another, we may even acquire properties from a place that we’ve visited for a while. If you are caught in a situation wherein, your place of residence becomes a legal issue, feel free to contact Stephen Bilkis and Associates.