In re the Estate of Bellows

Citations: 103 A.D.2d 594; 480 N.Y.S.2d 925; 1984 N.Y. App. Div. LEXIS 20185

Court: Appellate Division of the Supreme Court of the State of New York; October 28, 1984; New York; State Appellate Court

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Stella Reynolds Bellows, the testatrix, passed away on December 21, 1924, leaving behind her husband Charles M. Bellows and three children: Margaret Clark, Donald Bellows, and Reynolds Bellows. Her will from 1917 and a codicil executed shortly before her death established three separate trusts. Upon appraisal in 1925, it was found that the first two trusts lacked any existent property, rendering them ineffective. The estate, valued at approximately $670,000, primarily from gifts from her father and the liquidation of her business holdings, was to be distributed according to the third trust's residuary provisions outlined in the fifth paragraph of her will.

This paragraph created a trust for the estate’s remaining assets, designating net income distributions of $5,000 annually to her husband during her father's lifetime, with any excess going to her children. After her father's death, if the estate's income reached $20,000 annually, her husband was to receive $10,000 per year, with any additional income split among the children during his lifetime. Upon her husband's death, the principal would be divided among her surviving children, with provisions for distribution to their children or siblings in the event of a child's death.

Charles M. Bellows died in 1952, and the trust continued for the testatrix’s children. Upon the deaths of Margaret and Reynolds in 1969 and 1970, their trust shares were distributed to their children. Donald, the last surviving child, died on February 21, 1981, without issue or surviving siblings. The will did not account for this scenario. In May 1981, Citibank, as trustee, interpreted that the trust’s corpus for Donald should be distributed to the issue of his deceased siblings, resulting in half of the remaining principal being allocated to the testatrix’s five grandchildren (Donald’s nieces and nephews).

Each grandchild received $14,000, totaling $70,000 in distributions. Mary Whitnell and Vera D’Aragon objected to these distributions, arguing that remaining trust assets should be treated as intestate property. In December 1981, Citibank, N.A., as trustee, filed for judicial settlement to clarify the will's provisions regarding the trust for Donald Bellows. The Surrogate found no explicit instructions for distributing the trust corpus upon the death of the last child without issue, leading to a determination that the assets should be distributed according to intestacy laws. The court reversed this decision, emphasizing that a will should reflect the testator's intent based on the entire document, rather than isolated provisions. Courts may infer intentions not explicitly stated when the overall language of the will suggests such intentions, even if the testator did not foresee specific contingencies.

Gifts by implication are generally disfavored, but may be upheld if there is a strong probability of the donor's intention to give the gift, making contrary intentions unlikely. In **Matter of Thall**, the testator established a trust providing for his wife’s lifetime income, with the remainder going to his sister and her two sons upon the wife's death. The will accounted for various contingencies regarding the nephews but failed to address one nephew's death without issue, leaving his share in question. The Court of Appeals determined that the testator's intent was clear enough to imply a gift to the grandniece, as the testator intended his sister’s descendants to inherit, regardless of the nephews' deaths in an unexpected order.

In **Matter of Selner**, the testator left his estate to three sons as trustees for his widow’s lifetime use, without specifying the corpus's disposition if she survived him. After the testator's death, the widow lived for eight more years, complicating the estate's distribution. The court reversed a decree declaring the testator intestate regarding the corpus, concluding that he implicitly bequeathed it to his sons, based on the entirety of the will and the testator's evident intent. The Court of Appeals noted that Selner represented an exceptional case where judicial correction was warranted due to clear errors or omissions in the will.

In interpreting a testamentary disposition, courts are obligated to honor the clear intent of the testator, even if the language is poorly crafted or inaccurate. Historical precedent allows for the recognition of gifts by implication when the testator's intent can be discerned, as observed in Masterson v. Townshend. The principle of favoring testacy over intestacy is paramount, indicating a presumption that a testator intends to distribute their entire estate, as established in cases such as Matter of Winburn and Matter of Dammann. Furthermore, heirs by blood are preferred over non-relatives, particularly descendants over collateral relatives, as noted in Matter of Larkin.

The current case presents a strong presumption of an implicit gift to the testatrix's grandchildren from the residuary estate trust. A thorough review of the testamentary document reveals the testatrix's intention to avoid intestacy and benefit her direct descendants. The trust provisions indicate that the corpus would be distributed to her children, and subsequently to their issue. Specific references to two failed trusts illustrate the distribution plan: assets are to be held in trust for the testatrix’s father, with income provisions benefiting her husband and children. Upon the death of her father or husband, the principal and any accumulated income are directed to her children, ensuring that their descendants inherit accordingly, while shares of any deceased children would be redistributed among the surviving children.

The testatrix bequeaths all funds and interest held in the firm of J.E. Reynolds & Co. to the Peoples Trust Company in trust, mandating that these assets be withdrawn shortly after her death and invested to generate income. The net income is to be paid to her husband, Charles M. Bellows, for his lifetime. Upon his death, the trust fund will be divided among the testatrix's surviving children, with each receiving income from their respective shares during their lifetimes. If a child dies, their share's principal will pass to their descendants, or if they have no issue, to their surviving siblings.

A codicil dated December 3, 1924, shortly before the testatrix's death, reduces Charles's annual income from $10,000 to $6,000 due to concerns over his recent investments. The testatrix expresses confidence that her children will ensure their father's financial well-being. Additionally, all provisions for Charles’s benefit are contingent upon his remaining unmarried and not supporting anyone other than their children or descendants. If he remarries or supports others, his income will be capped at $3,000 per year, with any excess distributed equally among the children.

The provision expresses the testatrix's intent to prioritize the welfare and happiness of her children, relying on her husband to provide for them if her estate does not supply adequate income. Gifts to Charles Bellows are conditional upon him remaining unmarried, with provisions that restrict his support to the testatrix’s children and their descendants. The testatrix aimed for her estate to benefit her children or their lineal descendants without allowing any part to fall into intestacy, which would result in an undesired distribution among unrelated parties. The court emphasizes a rule favoring testacy, presuming the will reflects the testatrix’s intent to dispose of her entire estate. The testatrix's omission regarding the contingency of her son Donald's death without issue should not undermine her clear intent to benefit her direct descendants. Consequently, the court concluded that the trust corpus for Donald should go to the grandchildren of Margaret Bellows Clark and Reynolds Bellows, reversing the Surrogate’s Court's decree and remanding the matter for further proceedings. The will contains ambiguities regarding trust language, but the overarching intent to preserve the estate for direct descendants is clear.