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FYI - Will Effectively Exercised Power of Appointment Even Though Not Admitted to Probate
Father (who died in 1981) established a living trust that divided into survivor's and family shares, with the former giving his surviving wife a general testamentary power of appointment and the latter giving her a power of appointment exercisable by will, deed, conveyance, bill of sale, gift or any other written instrument. If Mother did not exercise the powers of appointment, the survivor's trust would pour into the family trust, which would in turn be distributed unequally among daughter, granddaughter and grandson. Mother executed a will in 1985 purporting to appoint the entire trust corpus of both trusts; the survivor's trust was appointed outright to daughter and the family trust in equal shares among daughter, granddaughter and grandson; Mother died in 1997. Relying on advice of counsel, the trustee and family members decided not to seek probate of Mother's will.
Four years later (and one year after the statutory limit on probate of wills), the trustee began to suspect that it had made a mistake and petitioned for interpretation of the trust. Interestingly, daughter, granddaughter and grandson each took a different position. Daughter argued that the will, though never admitted to probate, was still a valid testamentary exercise of the powers of appointment and effected an equal division of the family trust and an outright distribution to her of the survivor's trust. Granddaughter took the position that the unprobated will was not a valid exercise of the testamentary power of appointment given in the survivor's trust (so that it poured into the family trust), but that it was a "writing" so that it effected an equal distribution of the family trust. Grandson took the position that the unprobated will could not effectively exercise either power of appointment, so that the survivor's trust poured into the family trust and the latter was unequally divided according to its original terms.
The trial court directed the trustee to treat both powers of appointment as having been effectively exercised by the unprobated will and both grandson and granddaughter appealed. The State Court of Appeals affirms, finding that the grandson is estopped from arguing against admission of the will because his pleadings rely on it and other documents not admitted in the trial below. Furthermore, because the will is not being admitted to vary from intestate succession but to modify the distribution of a separate document, and because no one has alleged that the will was improperly executed, produced by undue influence, or in any way defective, the statutory preclusion against admission of a will to probate more than three years after death is inapposite and does not prevent admission of Mother's will in this proceeding. Two interesting observations by the appellate court: in its opening paragraph the Court quotes Henry Fielding as writing "If you make money your god, it will plague you like the devil." "In this cause," writes the Court, "children have been turned against mother and mother against children because of money." In a footnote, the Court also observes that "the trustee's actions remind us of that oft-quoted saying, 'Have you ever discovered that you were only wrong because you thought you were wrong, but you were really right all along?"
Lumbard v. Farmers State Bank
Court of Appeals of Indiana, July 26, 2004
To view the full case click here.
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