Plimack's Estate, In re

• Decision Date: 03 January 1973
• Citation: 339 N.Y.S.2d 410,72 Misc.2d 476
• Parties: In re ESTATE of Irving PLIMACK, Deceased. Petition of Alfred PLIMACK and Alexander Henkin as Executors of the Estate ofIrving Plimack, Deceased, to Construe the Last Will and Testament of theDecedent herein and to Determine the Effect of Purported Notice of Electionagainst the Willherein by Surviving Spouse pursuant to the provisions of Sections 1420 and 1421of the Surrogate's Court Procedure Act. Surrogate's Court, Kings County
• Court: New York Surrogate Court

Page 410

339 N.Y.S.2d 410

72 Misc.2d 476

In re ESTATE of Irving PLIMACK, Deceased Petition of Alfred PLIMACK and Alexander Henkin as Executors of the Estate ofIrving Plimack, Deceased, to Construe the Last Will and Testament of theDecedent herein and to Determine the Effect of Purported Notice of Electionagainst the Willherein by Surviving Spouse pursuant to the provisions of Sections 1420 and 1421of the Surrogate's Court Procedure Act.

Surrogate's Court, Kings County.

Jan. 3, 1973.

Henkin & Henkin, Mount Vernon, for petitioner-executor.

Davis & Davis, New York City, for widow-respondent.

NATHAN R. SOBEL, Surrogate.

Although Mr. Plimack died in 1971, his will admitted to probate was executed in 1942. As a consequence, in making provision for his wife by trust for life rather than by outright disposition, Mr. Plimack (or his draftsman) did not have the benefit of the many court decisions and statutory amendments since 1942 governing the right of election. The widow raises issues that her elective share trust is 'inadequate', 'illusory' and 'potentially destructive'--all terms discussed infra. These are contentions rarely made with respect to elective share trusts in current wills. The decisions and the new statutes have made the rights of the surviving spouse explicit.

Mr. Plimack (or his draftsman), to satisfy Mrs. Plimack's elective share, created multiple (two) trusts, each a split income trust. Too often this technique of draftsmanship is a serious mistake from the viewpoint of both the right of election and marital deduction statutes. (The latter problem is not here involved.)

Mrs. Plimack's elective share is one-half of the net estate there being no children. (EPTL 5--1.1(a)(1)(A).) The will makes an absolute disposition to the widow of $7,500 and creates two split income trusts for her benefit. In the paragraph 'Sixth' trust, Mr. Plimack directs his trustees 'to distribute the net income therefrom--one-half to my beloved wife Gertrude Plimack and one-half to my beloved mother Jeanette Plimack'. The paragraph 'Seventh' trust is identical except that the income is split one-half each to Mrs. Plimack and testator's father, Harry. The father predeceased. Under other provisions of the paragraph, the mother is substituted. We thus have at date of death two trusts from each of which the widow is entitled to one-half the income and the mother the other half.

We discuss in general terms the contentions of the widow.

A disposition of trust income to a spouse in satisfaction of the Minimum elective share is never the equivalent of such an outright disposition. Many states do not permit it. (See e.g. Matter of Clark 21 N.Y.2d 478, 288 N.Y.S.2d 993, 236 N.E.2d 152.) The circumstances which induced the Foley Commission to recommend and the legislature to adopt such a provision are stated in part in the following excerpt from its 1928 report:

'It does not seem to the Commission to be desirable that the right to take the intestate share should be given to the surviving spouse in every estate, regardless of its amount. But while immediate necessities should be provided, there should be some limitation by way of permitting the income upon the balance of the intestate share to be paid over during the life of the surviving spouse. Therefore, in the larger estates the Commission proposes to preserve to the testator a right to create a trust, with income payable to the wife, upon a principal equal to or greater than her intestate share. In such cases, the widow will not be permitted to defeat her adequate testamentary benefits by any right of election.' (Leg.Doc.1928 No. 70)

The Commission recommended $25,000 for 'immediate necessities.' The statute as enacted (Decedent Estate Law, § 18, now EPTL 5--1.1) required an outright disposition for 'immediate necessities' of at least $2,500 (now $10,000 in wills executed after 8/31/66). The balance of no less than the minimum intestate share (now 'elective share') minus the outright disposition, could be left in trust for the surviving spouse 'for life'.

Many testators have taken advantage of the provisions of the statute authorizing income for life rather than outright disposition of the spouse's elective share. As the course of decisions establishes, often too great an advantage!

The courts and the legislature have dealt with basically three problems created by dispositions of income in trust: (1) those in which the dispositions in trust are 'inadequate', i.e., less in amount than the elective share; (2) those in which the disposition is adequate but made 'illusory' because of authority given to the trustees to allocate unproductive assets etc. to the trust of the surviving spouse and (3) those in which provisions in the will are 'potentially destructive' of the spouse's right of election because of power to invade either principal or income for the benefit of others than the surviving spouse or to limit such income for duration less than 'for life.'

I

The provisions for Mrs. Plimack are 'adequate' to meet the requirements of the statute. (EPTL 5--1.1(a).) As noted she receives a general disposition of $7,500. The total of all such effective dispositions to others is $4,500. She receives one-half the income from each of the two residuary trusts. One-half the income from two trusts is the equivalent of one-half the income of a single trust. (cf. Matter of Bevan, 185 Misc. 192, 57 N.Y.S.2d 693.)

The direction in the will that the executors shall pay all estate taxes out of the residuary which consists of the two trusts, does not make the trust dispositions inadequate. True, the pre-residuary general dispositions ($7,500 to the widow, $4,500 to others) are relieved of tax liability. By imposing all tax liability on the residuary, the widow is not required to pay more than her fair share of the taxes (Matter of Jacobsen, 61 Misc.2d 317, 306 N.Y.S.2d 290, affd. 33 A.D.2d 760, 306 N.Y.S.2d 297).

Nor does the failure of the testator to take advantage of the estate tax marital deduction give the widow a right of election. True, if she received her intestate share, or her elective share outright, or her trust in marital deduction formula, her disposition would be free of estate taxes and therefore somewhat larger. But this is not what the right of election statute requires. (Matter of Ruppert, 1 Misc.2d 1072, 148 N.Y.S.2d 541, affd. 2 A.D.2d 958, 157 N.Y.S.2d 902, affd. 3 N.Y.2d 731, 163 N.Y.S.2d 969, 143 N.E.2d 517; Matter of Edwards, 2 Misc.2d 564, 152 N.Y.S.2d 7, affd. 2 A.D.2d 838, 156 N.Y.S.2d 135, affd. 3 N.Y.2d 739, 163 N.Y.S.2d 974, 143 N.E.2d 520.) The net estate is computed without reference to estate taxes but when the widow's share is in law taxable she is required to pay her proportionate share. (EPTL 5--1.1(a)(1) (A).) It is conceivable that a direction in the will against apportionment may under some circumstances render the trust disposition to the widow 'inadequate' to satisfy her elective share but this is not such a case.

The contention that the gift of $5,000 made by testator shortly before his death to his mother affects the 'adequacy' of her intestate share is rejected. If it is an effective gift Inter vivos or Causa mortis (pre-9/1/66 will) it does not enter into the computation of the net estate. If it is not an effective gift it will simply increase the principal of the two residuary trusts. In terms of satisfying the statute, Mrs. Plimack has received her fully 'adequate' elective share. (EPTL 5--1.1(a)(1)(D); Matter of Hirst, 308 N.Y. 875, 126 N.E.2d 311; Matter of Becker, 50 Misc.2d 308, 270 N.Y.S.2d 307; Matter of Roland, 40 Misc.2d 1018, 244 N.Y.S.2d 743; Matter of Mayers, 184 Misc. 413, 51 N.Y.S.2d 471, affd. 269 A.D. 1027, 59 N.Y.S.2d 373.)

II

Since the stock of Industrial Studio, Inc., is no longer an estate asset, having adeemed, there are no powers given to the trustees which can make the trusts for the widow 'illusory.' As a practical matter, even if the stock had not adeemed, the shares would have to be allocated to one or the other residuary trusts of both of which the widow is the one-half income beneficiary. There is simply no distribution, allocation or valuation of the assets by the trustees which can prejudice the widow's right to income. These trusts simply cannot become 'illusory'. (Matter of Edwards, Supra, 2 Misc.2d 564, 152 N.Y.S.2d 7, affd. 2 A.D.2d 838, 156 N.Y.S.2d 135, affd. 3 N.Y.2d 739, 163 N.Y.S.2d 974, 143 N.E.2d 520.)

It is only briefly mentioned therefore, that in order to deal with powers of trustees which can make the trust for the surviving spouse 'illusory,' the legislature in 1936 (c. 234 adding Decedent Estate Law, § 18(1)(h)) provided that the grant to the fiduciaries of specified powers (listing nine) shall not give the surviving spouse an absolute right to an elective share; but the surrogate may, notwithstanding such authority in the will, direct an equitable distribution allocation, or valuation of the assets etc. This provision with slight modification is now EPTL 5--1.1(a)(1)(H) applicable to wills executed prior to September 1, 1966. The courts have held that the equitable powers of the surrogate extend beyond the nine specified powers in the statute. (Matter of Shupack, 1 A.D.2d 841, 149 N.Y.S.2d 20, mod. o.g. 1 N.Y.2d 482, 154 N.Y.S.2d 441, 136 N.E.2d 513; Matter of Edwards, Supra, 2 Misc.2d 564, 152 N.Y.S.2d 7, affd. 2 A.D.2d 838, 156 N.Y.S.2d 135, affd. 3 N.Y.2d 739, 163 N.Y.S.2d 974, 143 N.E.2d 520; Matter of Niedelman, 6 A.D.2d 291, 175 N.Y.S.2d 694, affd. 5 N.Y.2d 1043, 185 N.Y.S.2d 802, 158 N.E.2d 498; Matter of Clark, 275 N.Y. 1, 9 N.E.2d 753; Matter of Jacobson, Supra, 61 Misc.2d 317, 306 N.Y.S.2d 290, affd. 33 A.D.2d 760, 306 N.Y.S.2d 297; Matter of Jaffer, 58 Misc.2d 948, 297 N.Y.S.2d 655; Matter of Lowen, 58 Misc.2d 190, 294 N.Y.S.2d 957; Matter of Bauer, 54 Misc.2d 1060, 284 N.Y.S.2d 98, 55 Misc.2d 808, 286 N.Y.S.2d 323; Matter of Roland, Supra, 40 Misc.2d 1018, 244...