In the Matter of the Petition of Marian Smithers Moore, as Income Beneficiary of the Trust created Under Paragraph (c) of Article TENTH of the Last Will and Testament of Gertrude F. Smithers, Deceased, For an Order Directing the Provisions of Section 11-2.4 of the New York Estates, Powers and Trusts Law to Apply to Said Trust.
Gerald W. Griffin, Esq. (for Naneen Ford Richter, petitioner's daughter) Carter Ledyard & Milburn, LLP
John M. Olivieri, Esq. White & Case (for Marian Smithers Moore, petitioner)
Lindsay B. Deller, Esq. (for JPMorgan Chase Bank) JPMorgan Chase Bank, N.A.
Edward W. Mccarty III, J.
This is an application by Marian Smithers Moore, the income beneficiary of the trust created under Paragraph (c) of Article TENTH of the will of Gertrude F. Smithers, seeking a direction that the optional unitrust provisions of EPTL 11-2.4 apply to the trust, retroactively to January 1, 2013. For the reasons that follow, the application is granted.
Gertrude F. Smithers died on February 12, 1983 leaving a will dated June 3, 1982 and a First Codicil dated November 8, 1982 (collectively "the will"), which were admitted to probate by decree dated February 18, 1983. Under Article TENTH (c), a trust was created for the benefit of the decedent's daughter, Marian Smithers Moore. The trust provides that the trustees pay or apply the net income to Marian during her lifetime. After Marian's death, the trustees are directed to pay the income to Marian's issue living from time to time, per stirpes. The trust terminates upon the death of the survivor of Marian and her children living at the time of the decedent's death. Upon termination, the then remaining principal is to be paid to Marian's then living issue, per stirpes, or if none, to the decedent's then living issue, per stirpes.
Letters of trusteeship issued to Morgan Guaranty Trust Company and R. Brinkley Smithers on December 30, 1983. Successor letters of trusteeship issued on August 8, 1984 to Charles Smithers and Eugene D. Wadsworth to serve with Morgan Guaranty Trust Company. Eugene D. Wadsworth died on July 20, 2002. Charles Smithers, the sole surviving individual trustee, died on November 22, 2007. Marian elected not to appoint a successor individual trustee. JPMorgan Chase Bank, N.A., the successor in interest to Morgan Guaranty Trust Company, is currently the sole trustee.
Marian has now filed the instant petition asking that the trust be converted to a unitrust pursuant to EPTL 11-2.4. According to the petition, Marian's total distributions from the trust in 2008 were $232, 694.51 and they have decreased every year since then. The petitioner states that she is an elderly woman whose healthcare and other living expenses have been increasing in recent years, and it is very difficult for her to make ends meet given the decreasing distributions.
When petitioner asked the trustee about the decreasing distributions, the trustee responded that its current policy is to utilize the "power to adjust" in EPTL 11-2.3 (b) (5) (A) to pay income beneficiaries 2.75% of the value of the trust principal annually. The trustee also stated it would be willing to increase the annual payout to 3% if Marian's daughters consented. As a result, the petitioner has now brought the instant petition to request retroactive application of EPTL 11-2.4 so that she will receive a 4% unitrust interest in the trust, commencing on January 1, 2013.
EPTL 11-2.4 (e) (2) (B) provides, in pertinent part, as follows:
"At any time, the court having jurisdiction of a trust to which this section otherwise would not apply, upon the petition of the trustee or any beneficiary of the trust and upon notice to all persons interested in the trust, may direct that this section shall apply to the trust and that Article 11-A shall not apply to the trust."
EPTL 11-2.4 (e) (5) (B) provides that:
"In any proceeding brought pursuant to subparagraph (e) (2) there shall be a rebuttable presumption that this section should apply to the trust."
Citation issued to all of the interested parties, including the trustee. The trustee filed an answer stating that "JPMorgan, as trustee, neither advocates nor objects to Petitioner's request for Section 11-2.4 of the EPTL to apply to the Trust." Counsel for the decedent's granddaughter, Naneen Ford Richter, who is the daughter of the petitioner, has submitted an affirmation stating that his client has no objection to the petition based upon her understanding that the application of EPTL 11-2.4 will continue after the death of the petitioner so that ...