Estate of Beckwith

• Decision Date: 03 August 1976
• Docket Number: FIRST-CITY
• Parties: ESTATE of Hugh T. BECKWITH. In re Proceeding for Accounting, Estate of Hugh, T. Beckwith, Deceased, byNATIONAL BANK as Trustee under Decedent's Will. Surrogate's Court, Broome County
• Court: New York Surrogate Court

Page 615

386 N.Y.S.2d 615

87 Misc.2d 649

ESTATE of Hugh T. BECKWITH.

In re Proceeding for Accounting, Estate of Hugh, T.

Beckwith, Deceased, by FIRST-CITY NATIONAL BANK as

Trustee under Decedent's Will.

Surrogate's Court, Broome County.

Aug. 3, 1976.

Hinman, Howard & Kattell, Binghamton by C. Addison Keeler, Sr., Binghamton, of counsel, for trustee, petitioner.

Coughlin & Gerhart by Edward S. Dermody, Binghamton, of counsel, for Barbara Ann Moore, respondent.

Levine, Gouldin & Thompson, Binghamton by John H. Hartman, Binghamton, of counsel, for Tabernacle Methodist Church and Elizabeth Church Manor, respondents.

JOHN M. KEANE, Surrogate.

The question before the Court is simple. Did Louella Beckwith validly exercise the power to appoint the corpus of the marital deduction trust, with a value at the time the account was filed of $875,000.00, granted to her by Paragraph 'SIXTH' of the Last Will and Testament of her husband, Hugh T. Beckwith?

A valid appointment will pass the corpus to four charities named in the residuary clause of her Last Will and Testament. An ineffective appointment will pass the corpus to their daughter, Barbara Ann Moore, who was named the taker in default of a valid appointment.

The facts are not in dispute. The language of both Wills is unambiguous leaving only a question of law for a decision of the Court. To put the problem in proper perspective requires a brief review of the facts.

Hugh T. Beckwith executed his Last Will and Testament on September 21, 1964. He died August 28, 1968 and his Will was admitted to probate in this Court shortly thereafter on September 5, 1968.

Louella Beckwith executed her Last Will and Testament on April 19, 1971. She died June 5, 1975, and her Will was admitted to probate in this Court shortly thereafter on June 12, 1975.

The relevant provisions of Paragraph 'SIXTH' of the Last Will and Testament of Hugh T. Beckwith involved in this controversy are as follows:

'* * * I give, devise and bequeath said amount to my Trustee hereinafter named, IN TRUST, NEVERTHELESS, to hold, manage, invest and reinvest the same, to collect and receive the income therefrom, and to pay the entire net income therefrom annually, or more frequently, to my said wife during her life, and upon her death to pay over and distribute the then principal of the trust fund to and among such one or more persons or corporations, including her own estate and on such terms and conditions, either absolute or in further trust, as my said wife may appoint by her deed delivered by her in her lifetime to my said Trustee. No part of any estate taxes shall be payable out of this share so set apart for the benefit of my said wife. Any such appointment by deed shall become operative on the delivery of the deed to the Trustee but shall be subject to amendment or revocation by my wife's subsequent deed delivered by her in her lifetime to the Trustee, it being my intention that such power shall be exercisable by her alone and in all events at any time and from time to time during her life. Every such deed shall be acknowledged like a conveyance of real property entitled to record in the state of New York. If my wife fails to appoint effectively all of said principal, then upon her death such principal as shall not have been effectively appointed by her as aforesaid, shall be given to my daughter Barbara Ann Moore if she is then living, and if Barbara Ann Moore is deceased, said principal shall be given to her descendants per stirpes.'

As appears in the excerpt from the Last Will and Testament of Hugh T. Beckwith set forth above, he directed that the power of appointment be exercised by deed. Louella Beckwith in her lifetime executed no such deed and, of course, none was delivered to the trustee. In her Last Will and Testament Louella Beckwith made no reference to the power of appointment granted in the Will of her late husband. Her Will did contain a residuary clause in Paragraph 'THIRTEENTH' which reads as follows:

'I give, devise and bequeath the rest, residue and remainder of my property, including lapsed legacies, to ROSWELL PARK MEMORIAL INSTITUTE of Buffalo, New York, BROOME COUNTY HEART CHAPTER, INC., BROOME COUNTY UNITED FUND, ELIZABETH CHURCH MANOR, of Broome County, New York, in equal shares.'

Therefore, it can be seen that if the power of appointment was not validly exercised by the Last Will and Testament of Louella Beckwith, then the corpus of the trust will pass to Barbara Ann Moore, the daughter and only surviving child of the two decedents.

The threshold question is posed by EPTL 10--6.2(a)(3) which reads as follows:

'Where the donor has made the power exercisable only by deed, it is also exercisable by a written will unless exercise by will is expressly excluded.'

The same corporate fiduciary is trustee of the trust established under the Last Will and Testament of Hugh T. Beckwith and executor of the Last Will and Testament of Louella Beckwith. Counsel for the corporate fiduciary, acting in both capacities, argues that the provisions of the statute supersede the directions set forth in minute detail in the Last Will and Testament of Hugh T. Beckwith concerning the exercise of the power of appointment. The opposite position is taken by the counsel for the daughter, Barbara Ann Moore, who contends there has been a failure to exercise the power of appointment validly in accordance with the terms of the Will.

No decisions have been cited to the Court in which EPTL 10--6.2(a)(3) has been construed. Substantially the language came into the EPTL from Section 148 of the Real Property Law as part of the revision of the Powers section in the Real Property Law made by Chapter 864 of the Laws of 1964 effective June 1, 1965.

This revision resulted from a study appearing in the Third Report of the Temporary State Commission on the Modernization, Revision and Simplification of the Law of Estates (Legislative Document (1964) No. 19, page 456). Section 148(3) of the Real Property Law (the predecessor of EPTL 10--6.2(a)(3)) as revised in 1964 and effective June 1, 1965 read as follows:

'where the donor has made the power exercisable only by deed, it is also exercisable by a written will, executed as required by law;'

The Comment, p. 456 of the study mentioned above states as follows:

'Subsection 3 is now and was a departure from existing law set forth in present section 168. A long step in the direction of the proposed new subsection 3 has been taken by the common law, as formulated in Restatement of Property § 347, which is expanded in § 347, Comment b. The proposed new subsection 3 is modeled on Minn. Stat. § 502.64 which has been law in that state for 20 years. Few conveyors prescribe that a power of appointment can be exercised Only by an Inter vivos instrument. If and when such a prescription is encountered it is reasonable to say that 'all purposes of substance which the donor could have intended are accomplished by a will of the donee' (see Rest. of Prop. § 347, Comment b).'

The above comment in the opinion of this Court understates the 180 degree change in course from the prior statutory law on this subject. Research by the Court has established that the law existing before the amendment had continued virtually unchanged since its enactment in the Revised Statutes effective January 1, 1830 (Pt. 2, c. 1, Tit. 2 § 116). Examination of subsequent editions through the 7th edition of the Revised Statutes shows that § 116 continued unchanged except for a different section number in the 4th--7th editions.

Chapter 547 of the Laws of 1896 under a heading of 'Chapter XLVI of the General Laws--the Real Property Law,' continued the language unchanged at § 148 of article 4. When Chapter 52 of the Laws of 1909 established the Real Property Law as one of the Consolidated Laws, this language continued as § 168. It remained § 168 in the Real Property Law until the amendments made by Chapter 864 of the Laws of 1964 mentioned above.

Under the practice of the Temporary Commission, sometimes known as the Benett Commission, proposed revisions were put into the existing Consolidated Laws. At the legislative session of 1966 there was combined into a single bill all of the substantive law of estates to be known as the Estates, Powers and Trusts Law.

The bill as introduced (Senate Intro. No. 816 and Assembly Intro. No. 1549) carried over Section 148(3) as EPTL 10--7.2(a)(3) in the following language:

'Where the donor has made the power exercisable only by deed, it is also exercisable by a written will.'

The bill was amended before final passage and was reprinted as amended. In the amended version which was passed as part of Chapter 952 of the Laws of 1966, there was added what appears to this Court a short significant addition which is underlined in the language of EPTL 10--6.2(a)(3) below:

'Where the donor has made the power exercisable only by deed, it is also exercisable by a written will Unless exercise by will is expressly excluded.'

The language has remained unchanged since the EPTL became effective September 1, 1967.

In addition, see the practice commentary in the supplement of McKinney's Consolidated Laws for EPTL 10--6.2(a)(3) (Book 17B, 1975--1976, p. 145) by Hon. I. Leo Glasser, one of the counsel for the Temporary Commission:

'Sub-paragraph (a)(3) re-enacts the former RPL § 148(3) revised to include the phrase 'unless exercise by will is expressly excluded.' At common law, a power to be exercised by deed could not be exercised by will. I Sugden on Powers (3d Am. ed.) 306. See also, Coleman v. Beach, 1885, 97 N.Y. 545, 556. This subparagraph changes that early rule, unless the donor has expressly prohibited an exercise by will (see discussion under 'paragraph (a)' Supra). The rationale of this sub-paragraph is that since the donee of a power exercisable by deed could exercise that power up to the moment before his death,...