2005 NY Slip Op 25129, *; 8 Misc. 3d 200, **;
793 N.Y.S.2d 318, ***; 2005 N.Y. Misc. LEXIS 639
In the matter of a proceeding to set aside the Limited Testamentary
Power of Appointment created by Verena Goetz, as Attorney-in-Fact for Robert H.
Goetz, under a December 12, 2000 Second Amendment to the Goetz Revocable Trust
Agreement.
273/2001
SURROGATE'S COURT OF NEW YORK, WESTCHESTER COUNTY
2005 NY Slip Op 25129; 8 Misc. 3d 200; 793 N.Y.S.2d 318; 2005 N.Y.
Misc. LEXIS 639
March 31, 2005, Decided
NOTICE: THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE
PENDING THE RELEASE OF THE FINAL PUBLISHED VERSION. THIS OPINION IS UNCORRECTED AND SUBJECT TO
REVISION BEFORE PUBLICATION IN THE PRINTED OFFICIAL REPORTS.
CASE SUMMARY
PROCEDURAL POSTURE: Petitioner son sought summary judgment setting
aside a limited power of appointment under which his deceased mother, pursuant
to a power of attorney granted by his deceased father, amended a trust created
by his father. Respondent daughter, who was the father's estate's successor
executor and the mother's estate's executor, opposed the motion.
OVERVIEW: The father, shortly before his death, signed a trust
amendment revoking the trust's division of its residue equally among his
children and granting the mother a limited testamentary power of appointment so
she could adjust bequests among the children. Under her will, the son received
nothing, including a share of assets of the trust. The amendment the father
signed was not notarized, as required by the trust, so it was not effective.
The next day, the mother, as the father's attorney in fact, signed the
amendment. While the trust reserved to the father the power to amend it, the
trust did not explicitly confer such authority on an agent, such as the mother,
nor did the power of attorney confer such authority on her. N.Y. Gen. Oblig.
Law § 5-1502G, regarding estate transactions, did not authorize an
attorney-in-fact to amend a trust created by a principal. The trust and the
power of attorney had to be construed as written, and the law did not allow a
grantor's attorney-in-fact to modify a trust created by the grantor when the
trust instrument did not explicitly authorize the method of amendment used, so
the amendment the mother signed was void.
OUTCOME: The son's summary judgment motion was granted, as was his
petition, and the trust amendment the mother signed was declared to be void,
and her attempted exercise in her will of the power of appointment granted in
that amendment was likewise void.
CORE TERMS: power of attorney, grantor, revoke, amend, authority to
amend, power of appointment, gift, revocable, void, inter vivos trust, summary
judgment, estate planning, codicil, signature, lifetime, executor, trust
instrument, interest in land, same manner, ineffective, ambulatory, modify,
family trust, inter vivos, real estate, coordinated, contending, conferring,
authorize, effective
LexisNexis(R) Headnotes Hide
Headnotes
Estate, Gift & Trust Law > Powers of Attorney
HN1 An attorney in fact may act for her principal in all matters which
do not require that the principal act for himself, to the extent permitted by
law and the terms of the power of attorney (N.Y. Gen. Oblig. Law § 5-1502O. More Like This Headnote
Estate, Gift & Trust Law > Trusts > Revocable Living Trusts
HN2 N.Y. Est. Powers & Trusts Law § 7-1.16 provides that a lifetime
trust is irrevocable, unless it expressly provides that it is revocable, and if
it is, the trust may be revoked or amended in the creator's will, or by the
method set forth in N.Y. Est. Powers & Trusts Law § 7-1.17(b). That section
provides, inter alia, that any amendment or revocation authorized by a trust
must be in writing and executed by a person authorized to amend or revoke the trust.
The statute clearly presumes that a grantor may reserve to himself, or grant to
another person, the authority to revoke or amend an inter vivos trust. More Like This Headnote
Estate, Gift & Trust Law > Powers of Attorney
Estate, Gift & Trust Law > Trusts > Modification &
Termination
HN3 The scope of the authority to revoke or amend a trust is defined by
the terms of the trust indenture and New York law, just as the scope of
authority granted under a power of attorney is governed by the terms of the
power of attorney itself, and, of course, the applicable law. More Like This Headnote
Estate, Gift & Trust Law > Powers of Attorney
HN4 The statutes concerning powers of attorney are found in N.Y. Gen.
Oblig. Law § 5-1501 et seq. More Like
This Headnote
Estate, Gift & Trust Law > Powers of Attorney
Estate, Gift & Trust Law > Trusts > Modification &
Termination
HN5 N.Y. Gen. Oblig. Law § 5-1502(A), (B) and (C), which set forth an
attorney in fact's authority in relation to transactions involving real estate,
chattels and goods, and bonds and shares, respectively, each contains a
subsection granting the authority to execute and deliver a modification of a
trust, mortgage or other instrument which the agent may think useful for the
accomplishment of any of the purposes enumerated in N.Y. Gen. Oblig. Law §
5-1502A(9)). N.Y. Gen. Oblig. Law §§ 5-1502B and C contain this same
language. More Like This Headnote
Estate, Gift & Trust Law > Powers of Attorney
HN6 In general, N.Y. Gen. Oblig. Law § 5-1202A(9), regarding powers of
attorney, refers to the purchase, sale, management, assignment or other acts
necessary for dealing with real property, granting an agent the authority to
dispose of any estate or interest in land.
More Like This Headnote
Estate, Gift & Trust Law > Trusts > Modification &
Termination
HN7 A grantor's power of revocation of a trust has, historically, been
deemed a personal right, terminating upon death, which cannot be exercised by
an executor or legatee who is not granted that right in the trust. More Like This Headnote
Estate, Gift & Trust Law > Trusts > Modification &
Termination
HN8 Compliance with the method set forth in a trust instrument for
amendment is required for an amendment to be effective. More Like This Headnote
Estate, Gift & Trust Law > Trusts > Revocable Living Trusts
HN9 Revocable inter vivos trusts are commonly employed as estate
planning tools and are coordinated with the grantor's will, functioning in much
the same manner as a will. More Like
This Headnote
Estate, Gift & Trust Law > Trusts > Modification &
Termination
HN10 Because an amendable trust remains ambulatory, alterations to it
can affect a testator's estate plan in substantial ways, in the same manner as
a codicil. More Like This Headnote
Estate, Gift & Trust Law > Trusts > Interpretation
HN11 Instruments must be construed as written, by their own terms, and
courts may not add to or alter their provisions in the guise of interpreting
them, nor interpolate into them broad grants of authority not included by the
parties. More Like This Headnote
COUNSEL: Stanley M. Ackert III, Esq., Gersen, Blakeman & Ackert
LLP, Attorneys for Petitioner, New York, NY.
Gail M. Boggio, Esq., McCarthy, Fingar, Donovan, Drazen & Smith,
LLP, Attorneys for Respondent, White Plains, NY.
JUDGES: Anthony A. Scarpino, J.
OPINIONBY: Anthony A. Scarpino
OPINION:
[**200] [***319]
Anthony A. Scarpino, J.
[**201] Stephen Goetz, the petitioner in this
proceeding to set aside a limited power of appointment, now moves for summary
judgment, contending that an attorney-in-fact may not use that authority to
amend a trust created by another person and confer upon herself a limited power
of appointment over the trust remainder. Sylvia Perle (respondent) is the
successor executor of the estate of the late Robert Goetz (Robert) and the
executor of the estate of Verena Goetz (Verena). She opposes the petitioner's
motion, contending that both the creation and exercise of the power were
lawful.
The Goetz family trust was created on May 11, 1995 as a part of the
family's estate planning by Robert, Verena's husband and the father of both the
petitioner and the respondent. Article ELEVENTH of the trust provides that the
grantor reserves to himself the right to revoke or amend the terms of the trust
during his lifetime. On March 9, 1995, Robert executed a statutory short-form
durable power of attorney in Verena's favor, granting her the full authority
included in the form at that time. Robert executed a first amendment to the
trust on August 31, 2000, making an adjustment in a gift to Sylvia. In December
2000, Verena and Robert became concerned that a California real estate
transaction between the petitioner and his father was not entirely fair to his
parents. Robert had become very ill and it was clear that he would pass away
before they could complete their investigation of the transaction. Their
longtime estate attorney testified at a deposition that he visited them at home
to discuss their estate plans and it was decided that, rather than Robert
taking decisive action before the investigation was completed, Robert would
revoke the trust provision dividing the residue equally among their children,
and instead grant Verena a limited testamentary power of appointment so that
she could adjust the bequests as appropriate among the four children. To that
end, a second amendment to the trust was prepared for Robert's signature.
On December 11, 2000, one of the lawyers who prepared the amendment
took it to the Goetz home, but although Robert signed the document, the
attorney did not notarize his signature. She testified that she no longer
recalled why not, speculating that perhaps she had doubts as to his competence.
The following day, Verena, as Robert's attorney in fact, signed the second
amendment. Robert passed away on December 15, 2000. Verena [*2]
herself passed away on February 1, 2002, leaving a Last Will and
Testament dated August 23, 2001 which expressly disinherited [**202]
the petitioner and exercised the power of appointment in favor of her
other three children.
Verena's will was admitted to probate after this court granted summary
judgment dismissing the petitioner's objections, [***320]
which included a protest of the second amendment to the trust. The court
declined to address the effectiveness of the power of appointment in the
context of the probate proceeding, requiring instead that this miscellaneous
proceeding be commenced.
The petitioner contends that, as a matter of law, Verena's attempted
amendment of the inter vivos trust under the power of attorney was invalid
because Verena used it to make a gift to herself, did not have the authority to
amend or revoke the trust, and exceeded the authority granted her under the
power of attorney.
The respondent points out that the trust, the power of attorney and
Robert's and Verena's wills were the product of careful planning, representing
a coherent, coordinated testamentary scheme for both of them. Verena was a
trustee of the Goetz family trust, as well as its income beneficiary, had fully
participated in all of their financial decisions, and had held her husband's
power of attorney since 1995. Respondent argues that Robert had made the gift
of the remainder interest to his four children in the body of the trust, and
the second amendment alters that disposition only to the extent of giving
Verena the authority to designate which children would share in the gift,
rather than conferring a gift upon Verena herself. The respondent contends that
the amendment was signed by Verena due to Robert's failing physical condition,
but was consistent with their plan and Robert's expressed wishes.
The parties have agreed that the issue presented here is one of law,
rather than fact, as the facts are not in issue. The question of law presented
here is whether an inter vivos trust may be amended by the use of a power of
attorney when neither instrument explicitly authorizes such amendments.
HN1An attorney in fact may act for her principal in all matters which
do not require that the principal act for himself (Zaubler v Picone, 100 A.D.2d
620, 621, 473 N.Y.S.2d 580 [1984]), to the extent permitted by law and the
terms of the power of attorney (see GOL § 5-1502 O; Cymbol v Cymbol, 122 A.D.2d
771, 772, 505 N.Y.S.2d 657, [1986]; Mallory v Mallory, 113 Misc 2d 912, 450
N.Y.S.2d 272 [1982]).
HN2The New York Estates, Powers and Trusts Law (EPTL) section 7-1.16
provides that a lifetime trust is irrevocable, unless it expressly
provides [**203] that it is revocable, and if it is, the trust
may be revoked or amended in the creator's will, or by the method set forth in
EPTL § 7-1.17[b]. That section provides, inter alia, that any amendment or
revocation authorized by a trust must be in writing and executed by a person
authorized to amend or revoke the trust. The statute clearly presumes that a
grantor may reserve to himself, or grant to another person, the authority to
revoke or amend an inter vivos trust (see Turano, Practice Commentaries,
McKinney's Cons Laws of NY, Book 17B, EPTL § 7-1.17 at 335).
HN3The scope of the authority to revoke or amend a trust is, therefore,
defined by the terms of the trust indenture and New York law, just as the scope
of authority granted under a power of attorney is governed by the terms of the
power of attorney itself, and, of course, the applicable law (see In re Estate
of Farley, 186 Misc 2d 355, 356, 717 N.Y.S.2d 500 [2000]; Cymbol v Cymbol, 122
A.D.2d at 772; Zaubler v Picone, 100 A.D.2d at 621).
Article ELEVENTH of the trust sets forth the method for amending or
revoking it. [*3] It provides:
[***321]
"The GRANTOR hereby reserves the continuing right and power, by
instrument (other than a Will or Codicil thereto) executed and acknowledged by
the GRANTOR and delivered to the Trustees during the GRANTOR'S lifetime, to
revoke this Trust Agreement in whole or in part, or to alter or amend any terms
or provisions thereof in any way except that the GRANTOR shall have no power to
increase the duties or obligations of the Trustees without their written
consent".
This provision clearly reserves the power to amend or revoke to the
grantor, and conforms to New York law (see EPTL §§ 7-1.16, 1.17). However, it
does not explicitly confer the same authority upon the grantor's agent, or upon
any other person. The petitioner argues that EPTL 7-1.17[b] requires that, if
an agent or other person is to be granted the authority to amend a trust, the
indenture must so specify, and Article ELEVENTH does not do so.
It is not disputed that Robert himself retained the authority to amend
the trust, and, had the second amendment been notarized, it would have been
effective. However, for reasons which remain unclear, Robert's signature was
not acknowledged as required by Article ELEVENTH. Regardless of Robert's
intentions, whatever they may have been, he did not fully comply [**204]
with the formalities necessary to amend the trust, and neither the trust
nor the power of attorney explicitly authorized Verena to amend it.
The respondent argues that the power of attorney did, indeed, include
the authority to make trust amendments. HN4The statutes concerning powers of
attorney are found in the General Obligations Law, sections 5-1501 et seq. The
respondent points toHN5 GOL §§ 5-1502(A)(B) and (C), which set forth the
attorney in fact's authority in relation to transactions involving real estate,
chattels and goods, and bonds and shares, respectively. Each of these sections
contains a subsection granting the authority to execute and deliver a
modification of a trust, mortgage or other instrument "which the agent may
think useful for the accomplishment of any of the purposes enumerated in this
section" (GOL § 5-1502A[9]). Sections B and C contain the same language
quoted from A[9], and the respondent asserts that they form the basis of a
broad grant of authority in relation to trusts. In particular, the respondent
contends that the trust principal is real estate, so that the provisions of GOL
§ 5-1502A[9], together with GOL § 5-1502, grant Verena the authority to amend
the trust, as Robert intended.
HN6In general, GOL § 5-1502A[9] refers to the purchase, sale,
management, assignment or other acts necessary for dealing with real property,
granting the agent the authority to "dispose of any estate or interest in
land". The transaction here does not concern the disposition of an
interest in land. Instead, it concerns the designation of persons entitled to
take the residue of a trust. Additionally, it must be noted that the section of
the General Obligations Law dealing with estate transactions (GOL § 5-1502G)
does not contain the quoted language concerning trust amendments, nor does the
GOL contain a section conferring upon agents authority over trust transactions
in general.
HN7A grantor's power of revocation has, historically, been deemed a
personal right, terminating upon death, which cannot be exercised by an
executor or legatee who is not granted that right in the trust (Culver v Title
Guarantee & Trust Co., 296 NY 74, 78, 70 N.E.2d 163 [1946]; In re Race's
Trust, 9 Misc 2d 155, 157, 169 N.Y.S.2d 600 ([1957]). HN8Compliance with the
method set forth in [*4] the trust instrument for [**205]
amendment [***322] is required for an amendment to be effective
(see Estate of Rothwell, 189 Misc 2d 191, 196, 730 N.Y.S.2d 664 [2001]; Culver
v Title Guarantee & Trust Co., 296 NY at 78). Reading GOL §§ 5-1502 and
5-1502 as a broad, implicit grant of authority to amend any and all revocable
inter vivos trusts necessarily overrules, or substantially modifies, this line
of cases sub silentio.
Further, HN9revocable inter vivos trusts are commonly employed as
estate planning tools and are coordinated with the grantor's will, functioning
in much the same manner as a will (see Matter of Tisdale, 171 Misc. 2d 716,
718-719, 655 N.Y.S.2d 809 [1997]). Because the Goetz revocable trust was
created as a part of the decedent's overall estate planning at the same time as
his will, the trust can be deemed to "functions as a will since it is an
ambulatory instrument that speaks at death to determine the disposition of the
settlor's property" (Matter of Tisdale, 171 Misc 2d at 719). HN10Because
an amendable trust remains ambulatory, alterations to it can affect the
testator's estate plan in substantial ways, in the same manner as a codicil.
Were the court to recognize the second amendment to the Goetz trust as valid,
it could logically be compelled to recognize the validity of a codicil executed
by the testator's agent under a power of attorney, a result not permitted under
present law (see EPTL 3 -1.1 et seq).
Most substantially, the instruments at issue here do not contain the
terms and grants of authority which the respondents seek to read into them.
HN11Instruments must be construed as written, by their own terms, and courts
may not add to or alter their provisions in the guise of interpreting them, nor
interpolate into them broad grants of authority not included by the parties
(Mercury Bay Boating Club v San Diego Yacht Club, 76 N.Y.2d 256, 267, 557
N.E.2d 87, 557 N.Y.S.2d 851 [1990]; Manning v Glens Falls Nat. Bank and Trust
Co., 265 A.D.2d 743, 744, 697 N.Y.S.2d 203 [1999]. The petitioner has not cited
any New York law or precedent which supports the proposition that an agent may
use a power of attorney to modify a trust instrument which does not explicitly authorize
that method of amendment. Other states have found attempted amendments not
expressly authorized in the trust document or the power of attorney itself to
be void and ineffective (Cal. Probate Code § 15401[c]; Tn. St. § 35-15-602; see
also Williams v Springfield Marine Bank, 131 Ill. App. 3d 417, 419, 475 N.E.2d
1122, 86 Ill. Dec. 743 [1985]; Muller v Bank of America, N.A., 28 Kan. App 2d
136, 143, 12 P.3d 899 [2000]; Leahy v Old Colony Trust Co., 326 Mass 49, 52, 93
N.E.2d 238 [1950]).
[**206] The parties' other contentions have been
considered and found to be without merit.
Accordingly, the motion for summary judgment is granted, and the
petition is granted in its entirety. The second amendment to the Goetz Family
Trust is declared to be void and of no effect, and the attempted exercise by
Verena Goetz in her Last Will and Testament of the power of appointment is
likewise void and ineffective.
Settle decree.
Dated: White Plains, NY
March 2005
HON. ANTHONY A. SCARPINO, JR.
Westchester County Surrogate