This is a petition by the executors for a determination of the validity of the purported exercise by decedent's widow of a claimed right of election to take against decedent's will under EPTL 5-1.1.
The will was executed in 1959. Decedent died in November, 1967.
After preresiduary gifts of $6,000 to decedent's sister and secretary, the will bequeaths one third of the rest, residue and remainder in trust to pay the income of the trust (after administration expenses and taxes properly payable by the trustees therefrom) to decedent's widow during her life and upon her death to convey the principal, together with all accrued income and profits, to decedent's children, then living. In the event that the net income of the trust should at any time be less than $200 per month, then decedent directed the trustees to pay his wife out of corpus, the difference between $200 and the net income for said month.
I. LIMITED RIGHT OF ELECTION
Clearly, the widow has at least a limited right of election pursuant to EPTL 5-1.1 (subd. [a], par. , subpar. [F]).
By reason of the preresiduary gifts, "the aggregate of the provisions in the will for the surviving spouse, including the principal of a trust * * * is less than the elective share" i.e., less than one third of the net estate. Therefore, "the surviving spouse has the limited right to elect to take the difference between such aggregate and the amount of the elective share". (EPTL 5-1.1, subd. [a], par. , subpar. [F].)
Furthermore, as the will leaves nothing outright to the widow, the widow has the right to take $2,500 under the remaining provisions of EPTL 5-1.1 (subd. [a], par. , subpar. [F]). "In every estate, the surviving spouse has the limited right to withdraw the sum of twenty-five hundred dollars if the elective share is equal to or greater than that amount. * * * Where a trust is created for the life of the surviving spouse, such sum of twenty-five hundred dollars * * * is payable from the principal of such trust." II. RIGHT OF ELECTION TO TAKE ENTIRE ELECTIVE SHARE ABSOLUTELY
The more difficult problem is whether the widow has a right to take her elective share -- one third of the principal of the net estate -- outright and not subject to trust. This in turn depends upon the question whether the trust in this case qualifies as the kind of trust, such that the amount of the principal thereof may be counted toward the provision for the widow's benefit within the meaning of EPTL 5-1.1 (subd. [a], par. ) for the purpose of determining whether the widow has a right of election beyond the limited right given by subparagraph (F).
The problem here is whether this is a trust with the income payable to the widow for life. The widow argues that the will does not give her the income of the trust for life because:
(a) Stock dividends are directed by the will to be considered principal, whereas the widow relying on EPTL 11-2.1 (subd. [e], par. ) says that any such distribution of 6% or less is income as a matter of law.
(b) The will directs that dividends payable in securities of another company, extraordinary dividends, liquidating dividends, rights to subscribe to new stock and stock received pursuant to such right shall be considered two-thirds principal and one-third income. Under the Principal and Income Act (EPTL 11-2.1, subd. [e]) distributions of securities of another company or extraordinary cash dividends are deemed wholly income. (EPTL 11-2.1, subd. [e], par. .) (Rights to subscribe, and liquidating dividends are treated as wholly principal under the act; EPTL 11-2.1, subd. [e], pars.  and .)
(c) The will gives the trustees the power to determine the manner in which administration expenses shall be apportioned as between corpus and income.
The executors say that by reason of the small size of this trust -- about $50,000 -- it is unlikely that it would ever be invested in corporate stocks, so that the problems of treatment of various corporate ...