Probate Proceeding, Will of Anthony J. D'Elia, Deceased.
Michael L. Lieberman, Esq. (guardian ad litem).
Jeanne M. Corea, Esq. (for estate).
Edward W. McCarty, J.
In this probate proceeding, the guardian ad litem appointed for the two minor children of the decedent's pre-deceased daughter has filed his report. The guardian ad litem has advised the court that there is an issue as to whether the residuary bequest in the purported will is defective because it pours-over into a trust which was not in existence at the time the purported will was executed. Accordingly, the court must determine the effectiveness of the pour-over provision, as well as the guardian ad litem's fee.
The decedent, Anthony J. D'Elia died on October 8, 2011, leaving a purported will dated March 22, 2011. The decedent was survived by his wife, Ann, and four children, John, Mary Beth, Anthony and Michael. The decedent also had a daughter, Margaret A. Reynolds, who pre-deceased him. Margaret's two minor children, Lindsey Reynolds and Bryan Reynolds, are the guardian ad litem's wards. The purported will has been offered for probate by the decedent's son, John, the nominated executor thereunder.
Article III of the purported will provides as follows:
"I give, devise, bequeath, and dispose of all the residue and remainder of my estate, to the Trustee(s) named in THE ANTHONY J. D'ELIA FAMILY TRUST, executed on or before the date of this Will and prior to the execution of this Will, of which I am the Settlor, and my son, JOHN D'ELIA, is the Trustee. I direct that the residue of my estate shall be added to, administered, and distributed as part of that trust, according to the terms of the trust and any amendment made to it before my death. It is not my intent to create a separate trust by this Will or to subject the trust or the property added to it by this Will to the jurisdiction of the probate court.
If the disposition specified in the previous paragraph of this Article III is inoperative or is invalid for any reason, or if the trust referred to in this Article III fails, is revoked, I incorporate herein by reference the terms of that trust, together with any amendments made thereto executed on or before the date of this Will, without giving effect to any amendments made subsequently; and I bequeath and devise the residue of my estate to the Trustees named in the trust as Trustees, to be held, administered, and distributed as provided in the trust instrument incorporated in this Will."
No provision is made for the guardian ad litem's wards in either the purported will or the Anthony J. D'Elia Family Trust (hereinafter "the trust"). The trust agreement creating the trust provides that upon the settlor's death, a credit shelter trust is created for the decedent's spouse, Ann. Upon Ann's death, the principal of the credit shelter trust is directed to be distributed in accordance with a limited power of appointment given to her. In default of Ann's exercise of the limited power of appointment, the trust principal is payable to the decedent's four surviving children named above, per stirpes. The balance of the main trust, after the creation of the credit shelter trust, is payable to the Ann T. D'Elia Family Trust.
The purported will was executed by the decedent on March 22, 2011. The trust was signed by the decedent, as settlor, on March 22, 2011; however, the trustee, John, did not sign the trust agreement until March 29, 2011. Accordingly, the issue raised by the guardian ad litem, and which the court must address, is whether the bequest of the decedent's residuary estate fails because the trust was not in existence at the time of the execution of the will.
The general rule in New York with respect to incorporation by reference is that "an unattested paper which is of a testamentary nature cannot be taken as a part of the will even though referred to by that instrument" (Matter of Lew, NYLJ, Dec. 2, 2002, at 17, col 1 [Sur Ct, New York County]). There are, however, certain exceptions created by statute to the general rule prohibiting incorporation by reference. EPTL 3-3.7 permits a testator to make a pour-over bequest to a trust in a will "provided that such trust instrument is executed and acknowledged by the parties thereto in the manner required by the laws of this state for the recording of a conveyance of real property, prior to or contemporaneously with the execution of the will, and such trust instrument is identified in such will."
Under certain circumstances, even in the absence of a statutory exception, the courts have deviated from a strict application of the rule where "adequate safeguards" are employed so that the doctrine is not carried to "a drily logical extreme" (Matter of Ivie, 4 N.Y.2d 178, 181 ). If the "opportunity for fraud is for all practical purposes eliminated, the testamentary provision may be upheld" (Matter of Ivie, 4 N.Y.2d 178, 181 ; see also Matter of Fowles, 222 NY 222, 233 ). As Judge Cardozo stated in Fowles, the rule against incorporation by reference "is a rule designed as a safeguard against fraud and mistake" (Matter of Fowles, 222 NY 222, 233 ).
Incorporation by reference has been permitted by some courts where the receptacle trust was not properly acknowledged (Matter of O'Brien, 233 A.D.2d 561 [3d Dept 1996]). In Matter of O'Brien (233 A.D.2d 561 [3d Dept 1996]), the Third Department found that the trust agreement was not acknowledged in accordance with the dictates of EPTL 3-3.7; however, the court held that the charitable residuary bequest would not lapse because there was no evidence of fraud. Moreover, the court recognized the "presumption against intestacy with respect to residuary bequests and the principle that, where the testator seeks to leave monies for a charitable purpose, a liberal construction of the terms of the will should be given in order to uphold and validate the bequest" (Matter of O'Brien, 233 A.D.2d 561, 562 [3d Dept 1996]). Accordingly, even though the notary did not endorse a certificate of acknowledgment, the pour-over provision was given effect. In Matter of Dickstein (146 Misc.2d 164 [Sur Ct, Westchester County 1989]), however, where neither the grantor's nor the trustee's signature was acknowledged, a contrary result was reached. The court in Dickstein held as follows:
"EPTL 3-3.7 is clear and explicitly requires that the inter vivos trust instrument be executed and acknowledged by the parties thereto. It is conceded by all the parties hereto that the inter vivos trust was not acknowledged by any of the parties thereto. Thus, the unavoidable conclusion is that the pour-over ...