Seidel v. Werner
1975 N.Y. Misc. LEXIS 2362, 364 N.Y.S.2d 963, 81 Misc. 2d 220 (1975)
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Rule of Law:
Under New York law (EPTL 10-5.3), a contract to exercise a testamentary power of appointment is void and unenforceable. This rule is not altered by the contract's incorporation into a foreign divorce decree, nor can such a contract be reinterpreted as a valid release of the power if its terms and intended effect differ from a release.
Facts:
- In 1919, Abraham L. Werner established a trust that gave his son, Steven L. Werner, a life interest and a testamentary power of appointment over his share of the trust's principal.
- The trust provided that if Steven failed to exercise the power, the principal would go to his surviving children.
- On December 1, 1963, Steven entered into a separation agreement with his second wife, Harriet, promising to make an irrevocable will exercising his power of appointment to create a trust for their children, Anna and Frank.
- On December 9, 1963, a Mexican court granted Steven and Harriet a divorce, incorporating and approving their separation agreement in the judgment.
- On March 20, 1964, Steven executed a new will exercising his power of appointment in favor of his third wife, Edith Fisch Werner, leaving her all property over which he had a power of testamentary disposition.
- Steven died in April 1971, leaving behind his children from his first and second marriages (including Anna and Frank) and his third wife, Edith.
Procedural Posture:
- Trustees of the Abraham L. Werner Trust filed a declaratory judgment action in a New York trial court.
- The suit sought a determination of who was entitled to the trust principal over which the decedent, Steven L. Werner, held a power of appointment.
- Defendants Harriet G. Werner, Anna G. Werner, and Frank S. Werner asserted counterclaims and cross-claims against defendant Edith Fisch Werner.
- The parties filed cross-motions for summary judgment on the competing claims to the trust principal.
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Issue:
Does a provision in a separation agreement, later incorporated into a foreign divorce decree, that requires a donee to exercise a testamentary power of appointment in a specific manner create an enforceable obligation against the donee's estate or the appointive property?
Opinions:
Majority - Silverman, J.
No. A contract to exercise a testamentary power of appointment is statutorily invalid and cannot be enforced. New York Estates, Powers and Trusts Law (EPTL) 10-5.3 expressly prohibits a donee of a power not presently exercisable from contracting to make an appointment. The court, citing Judge Cardozo, reasoned that the purpose of a testamentary power is to allow the donee to express their final judgment at the end of their life; permitting them to contract that right away would defeat the donor's intent. The Mexican divorce decree incorporating the invalid promise does not make it enforceable, as the validity of the provision under New York property law was not actually litigated and decided, and principles of comity do not require enforcement of an agreement that violates state public policy. Furthermore, the agreement cannot be construed as a valid 'release' of the power because it explicitly requires an affirmative exercise of the power, and the outcome under the agreement (a trust for only two children) is substantially different from the outcome of a default of appointment (outright distribution to all of Steven's children). While the children may seek restitution for the value given for the promise, that claim is against Steven's personal estate, not the trust property itself, as the trust property belonged to the donor, not the donee.
Analysis:
This decision strongly affirms the public policy, codified in EPTL 10-5.3, that testamentary powers of appointment must remain unencumbered by prior contracts, preserving the donee's freedom of disposition until death. It clarifies that merely embedding such a void promise within a foreign divorce decree does not immunize it from this prohibition under the doctrines of res judicata or comity. The court's refusal to reinterpret the contract to appoint as a release of the power prevents parties from circumventing the statute through clever drafting, thereby protecting the donor's original intent that the power reflect the donee's final wishes.
