In re Passmore

Rule of Law:

When a donor creates a power of appointment requiring 'specific reference' in the donee's will, the donee effectively exercises that power if their will demonstrates a clear, deliberate intent to exercise any power of appointment granted by the donor, and that power is the only one conferred, especially when other clauses in the donor's instrument indicate the power's conditions should be without restriction or qualification.

Facts:

• In 1970, Charles F. Passmore (donor) executed a "Revocable Agreement of Trust" establishing an inter vivos trust for his own benefit, as well as the benefit of Laura Passmore (donee) and donee’s sisters, naming National Bank and Trust Company of Central Pennsylvania (Bank) as trustee.
• The trust provided that upon Charles's death, if survived by Laura, the trust principal would be divided into two new trusts: Trust A (qualifying for the marital deduction) and Trust B (remaining principal).
• Charles's trust agreement granted Laura a power of appointment over Trust A, stating it "shall be distributed as she may by her will appoint, making specific reference to Trust A under this Revocable Agreement of Trust," but immediately added that the power's conditions "shall be without restriction or qualification of any kind."
• The trust further stipulated that should Laura fail to effectively exercise this power over Trust A, its principal would be added to Trust B and distributed to specific charities and individuals.
• Charles F. Passmore died in March 1975.
• Laura Passmore died twenty-one months later.
• In her will, Laura stated: "I give, bequeath and devise all of my property... and expressly intend this act to constitute the exercise of any power of appointment which I may possess or enjoy under any Will or trust agreement executed by my husband, Charles F. Passmore..."
• Laura's will directed that the property subject to the power of appointment be held in trust for her sisters, and upon their deaths, 25% to the Blind Association of Harrisburg and 75% to the Good Shepherd Lutheran Church of Paxtang.
• Trust A was the only power of appointment Charles F. Passmore had conferred upon Laura.
• The parties stipulated that it was Laura’s intention, in executing her will, to exercise her power of appointment over Trust A.

Procedural Posture:

• National Bank and Trust Company of Central Pennsylvania (Bank) filed a Second and Final Account, proposing to disregard Laura Passmore's attempted exercise of her power of appointment over Trust A.
• The Good Shepherd Lutheran Church of Paxtang and the executor-trustee under Laura Passmore's will (exceptants) filed exceptions, asserting that Laura had validly exercised her power of appointment.
• The Bank and the exceptants entered into a Stipulation of Facts.
• The Orphans' Court Division of the Court of Common Pleas of Dauphin County dismissed the exceptions, ruling that Laura's exercise was ineffective due to a lack of specific reference to Trust A, citing Schede Estate.
• Laura's executor-trustee and the Church appealed the orphans' court's decision to the Supreme Court of Pennsylvania (the Church's separate appeal was later dismissed upon its joinder with the executor-trustee's appeal).