Cherniack v. Home National Bank & Trust Co.
1964 Conn. LEXIS 195, 151 Conn. 367, 198 A.2d 58 (1964)
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Rule of Law:
In Connecticut, a revocable inter vivos trust is not an invalid testamentary disposition, nor is it a fraudulent transfer against a surviving spouse's statutory share, because spousal property rights only attach to assets legally or equitably owned by the decedent at the time of death.
Facts:
- The plaintiff, Rose Cherniack, was married to the decedent from 1943 until his death in 1961.
- On August 8, 1957, the decedent executed a revocable trust indenture, naming the defendant bank as trustee and transferring nearly $200,000, the bulk of his assets, into it.
- The trust terms provided that the decedent would receive the net income during his life, with the power to amend or revoke the trust at any time.
- Upon the decedent's death, the trust provided for the income to be paid to his brothers, and the principal eventually to his brothers' children.
- Six days later, on August 14, 1957, the decedent executed a will leaving his wife, Rose Cherniack, a life estate in their home and one-third of the residue of his estate.
- Rose Cherniack was unaware of the trust's existence until shortly after her husband suffered a stroke in December 1960.
- A letter written by the decedent in 1960 confirmed his intent to have the bulk of his property go to his brothers and their children, which was his reason for creating the trust.
Procedural Posture:
- The plaintiff widow, Rose Cherniack, filed an action in the trial court seeking to have her deceased husband's trust agreement declared invalid and void.
- The plaintiff claimed the trust was an invalid testamentary disposition and a fraud on her rights as a surviving spouse.
- The trial court reserved two questions of law for the advice of the Supreme Court of Errors of Connecticut: '1. Is the trust indenture fraudulent and void as to the plaintiff's wife? 2. Should the trust indenture be cancelled?'
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Issue:
Does a revocable inter vivos trust, created by a spouse that transfers the bulk of his assets out of his probate estate, constitute a fraudulent transfer that is void as to the surviving spouse's statutory right of inheritance?
Opinions:
Majority - King, C. J.
No. A revocable inter vivos trust is not fraudulent as to the surviving spouse. First, the trust is not an invalid attempted testamentary disposition merely because the settlor retained a life interest and the power to revoke, as this court has previously held. Second, the trust cannot be set aside as a fraud on the wife's spousal rights. Under Connecticut statute (§ 46-9), marriage does not confer any interest in one spouse's property during the other's lifetime. A surviving spouse's statutory share (§ 46-12) only attaches to property the decedent owned 'at the time of his or her death.' Since the decedent validly transferred the property to the trust during his lifetime, the plaintiff had no legal or equitable right to it. One cannot be defrauded of that to which one has no right. Therefore, even if the decedent's intent was to reduce the assets his wife could inherit, the transfer was legally effective and not subject to her attack.
Analysis:
This decision solidifies the validity of revocable inter vivos trusts as a non-probate tool to circumvent a surviving spouse's statutory elective share in Connecticut. By establishing a bright-line rule that spousal rights only attach to property owned at death, the court rejects the 'illusory transfer' doctrine followed in other jurisdictions like New York. The case underscores that, in Connecticut, the intent behind a legally valid lifetime transfer is irrelevant when challenged by a surviving spouse. This precedent grants significant power to property owners in estate planning, allowing them to effectively disinherit a spouse by moving assets out of their probate estate before death.
