In re the Final Accounting of United States Trust Co.

18 Misc. 2d 145, 188 N.Y.S.2d 273, 1959 N.Y. Misc. LEXIS 3764
CourtNew York Supreme Court
DecidedMay 6, 1959
StatusPublished
Cited by1 cases

This text of 18 Misc. 2d 145 (In re the Final Accounting of United States Trust Co.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Final Accounting of United States Trust Co., 18 Misc. 2d 145, 188 N.Y.S.2d 273, 1959 N.Y. Misc. LEXIS 3764 (N.Y. Super. Ct. 1959).

Opinion

Jacob Markowitz, J.

Motion to settle an account wherein the successor trustee also requests construction of certain provisions of the original trust indenture and the efficacy upon it of two subsequently executed instruments.

The settlor in 1895, along with other provisions for the inter vivos distribution of her property, created a trust naming herself as life beneficiary, and one of her daughters successor life beneficiary. Upon the death of the survivor of them, $8,000 of the corpus was to be distributed among the settlor’s children or the surviving issue of each of them, with the income from the balance going to the surviving issue of the afore-mentioned daughter who have not reached 25 years of age, and the corpus distributed to such issue after 25. Two sons of the settlor [147]*147were named trustees and power was given them to name their successors.

The settlor died in 1902 and thereafter her daughter received the net income from the trust. In 1916 a new instrument was drawn whereby an attempt was made to change the 1895 document by creating upon the death of the then current life beneficiary, a succeeding life interest in her only child, a daughter then over the age of 25. (It should be noted that under the original trust, the latter if she survived her mother and being over 25 would be entitled to the entire corpus.) It also provided for the latter to have a power of appointinent over the corpus, and in default of her use thereof the distribution of the corpus was to be made to her issue, and in default of such issue to the children of the original settlor or their surviving issue per stirpes. By this document also, two of the said children of the original settlor waived their undivided interest in the $8,000 mentioned in the original indenture. Provision was made for the appointment of an Illinois bank as successor trustee in the event the then trustees could no longer act or refused to do so. The trustees, the other children of the settlor, the then life beneficiary and her daughter all joined in this document.

In 1923, after the death of one of the trustees, the successor trustee wishing to resign, and upon the refusal of the successor trustee named in the 1916 instrument to serve, a new document was drawn naming as trustee a New York bank, the petitioner herein. This final document was signed by the surviving trustee and the life beneficiary (both of whom were the only surviving children of the settlor), the daughter of the life beneficiary, and the surviving issue of the deceased children of the settlor, one of whom was an adopted daughter.

In 1957 the life beneficiary under the 1895 instrument died, thus terminating the trust unless as it was affected by the subsequent documents. Her daughter survives.

The 1895 indenture was clearly executed in Ohio. It is unclear as to where the other documents were executed, although there is some ambiguous reference in the 1916 document to the laws of Illinois.

Petitioner requests to be advised as to the following:

(a) Whether the $8,000 provided for in the 1895 trust is distributable to the issue of the settlor, other than the issue of the daughter who succeeded the settlor as life beneficiary, and whether such issue includes the afore-mentioned adopted daughter of one of the settlor’s children;

[148]*148(b) whether such distribution should be made per stirpes or per capita;

(e) the effect, if any, of the 1916 assignment by two of settlor’s children of their respective interest in the said $8,000; and

(d) whether the balance of the corpus should be distributed to the surviving child of the settlor’s succeeding life beneficiary under the 1895 trust, or to the petitioner as trustee or to any other trustee.

To dispose of the • questions raised, the validity of each instrument must first be determined.

The 1895 instrument must be interpreted in light of the laws of Ohio, that being the situs of the property and domicile of the settlor at the time of the execution of the trust (Restatement, Conflict of Laws, § 296; Hutchison v. Ross, 262 N. Y. 381). Applying Ohio law to the trust herein, which consisted entirely of personalty, it is clear that it is valid under both present statutes and Ohio law as it existed at the time of its creation (see Page’s Ohio Rev. Code, § 2131.08; Page’s Ohio Gen. Code, § 10512-8, and comment thereunder pointing out that an earlier abrogation, since repealed, of the common-law Rule against Perpetuities did not apply to estates of personalty).

The 1916 modification of the trust, however, must be deemed invalid, except insofar as it designated a successor trustee. However, it was of no consequence even to that extent, inasmuch as the designated trustee refused to act. It is a general rule, absent a contrary provision in the document, that after a trust is executed and in force it cannot be altered or amended without the consent of all parties in interest (54 Am. Jur., Trusts, § 68). The gift herein was to a life tenant, then income to her issue until age 25 when they would be entitled to the principal, but upon failure of such issue, to the children of the settlor or their surviving issue. It is clear that since the life tenant was alive at the making of this instrument, those entitled to share in the remainder could not be ascertained. Only upon her death could all the beneficiaries be determined. So long as there remained a possibility that contingent interests might vest, the trust was incapable of modification (3 Scott, Trusts, § 340; cf. Restatement, Trusts, § 340, comment e). This is true whether Ohio or Illinois law is applied (Long v. Cleveland Trust Co., 44 Ohio Opns. 177; Tree v. Rives 347 Ill. App. 358) axxd is applicable to the attempted assignments of the contingent iixterests therein as well as the other modifications. Accordingly, the 1916 agreement, except for the appointment of a successor trustee, was ineffective for all purposes, inclusive of the attempted assignment by two of the settlor’s children.

[149]*149The 1923 document merely names a successor beneficiary, a power given to the trustee by the original trust indenture. The other parties to that agreement as well as to the 1916 agreement were not necessary for the purpose of designating a successor trustee. Therefore, this instrument is valid.

It would thus appear that distribution of the trust estate should be made in accordance with the settlor’s original intention, to wit, the principal less $8,000 to be paid to the surviving daughter of the life tenant who died in 1957.

"With respect to the $8,000, the trust instrument provides as follows: “They (the trustees) shall pay to me during my natural life, the entire interest or income arising from said property, and after my death they shall pay the income or interest thereof, for her care, maintenance or comfort, to my said daughter Clara- and after her death and mine they shall distribute among my children to each one, share and share alike, or, in ease of the death of any of my children to their respective surviving issue, eight thousand dollars ($8000.) * * * and pay over the interest or income of the remainder thereof to any issue of my daughter Clara surviving her, until such issue shall have arrived at the age of Twenty five years (25) when the said remaining principal shall be paid to such issue ’ ’.

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Bluebook (online)
18 Misc. 2d 145, 188 N.Y.S.2d 273, 1959 N.Y. Misc. LEXIS 3764, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-final-accounting-of-united-states-trust-co-nysupct-1959.