Authored by: Dorothy J. Santos
It is sometimes necessary during the course of the administration of an estate or trust for a fiduciary to request that a Court determine the legal result of certain provisions of the governing document. This is done through a process known as a Construction Proceeding. In such cases, the fiduciary asks the Court to construe one or more provisions of the governing document so that the fiduciary can properly carry out the intent of the creator.
As you may suspect, Courts exercise this power sparingly and give great deference to the wishes of the creator of the document. For instance, the creator’s intent must be gleaned from the entire document and not any one word or phrase before a Court will interpret a provision. Moreover, the Court may find a certain disposition to be implied in the document, but only if such an inference is necessary due to a complete lack of intent on the part of the creator.
One of the New York County Surrogate’s Court judges recently had the opportunity to interpret a provision in a Will. The construction proceeding in the case of Matter of Henry Claman, highlights Courts’ deference in construction proceedings and also brings to light a seldom known rule regarding adopted children.
In Matter of Henry Claman, the Trustee of a trust created under the Will of Henry Claman petitioned the New York County Surrogate’s Court for a construction of the residuary clause of the Will. This case presented what Surrogate Kristen Booth Glen described as a “novel opportunity to limit the draconian provisions of the now repealed ‘precautionary addendum,’ which acts to deprive certain adoptees of inheritance rights.”
Mr. Claman died on July 15, 1924 leaving a Last Will and Testament dated April 22, 1924. Under the Will, Mr. Claman left his residuary estate in five parts, one to his wife outright and one to each of his four children in separate trusts. Each trust for a child of Mr. Claman provided, among other things, that one-half of the principal of the trust would be paid to the child upon the child attaining the age of 45 and the other half would be paid to the child’s descendants at the child’s death.
The trust at issue in this case is the trust created for the benefit of Mr. Claman’s daughter, Gladys. Gladys was the beneficiary of her own trust until her death in 2005. Gladys had two adopted children, one who survived her and one who predeceased her leaving children who survived her. The Court was faced with the question of whether Gladys’ surviving adopted child and the surviving children of her predeceased adopted child were the remainder beneficiaries of the trust.
Although narrowed by caselaw over time and ultimately repealed, there was an antiquated provision of the Domestic Relations Law known as the “precautionary addendum” in effect at the time of Mr. Claman’s death that limited adoptees’ inheritance rights in certain circumstances. Under the law as applied to this case, if the adoptees’ inheritance would defeat the rights of other remainder beneficiaries, then the precautionary addendum would apply to defeat the rights of the adoptees in favor of the other remainder beneficiaries.
The Court ultimately determined, based on the provisions of the Will, that the precautionary addendum did not apply to this case. Accordingly, Gladys’ surviving adopted child and the surviving children of her predeceased adopted child were deemed the proper remainder beneficiaries of the trust.
In this case it was necessary for the Court to construe the legal effect of the provisions of Mr. Claman’s Will in order to determine the proper remainder beneficiaries of a trust created thereunder. In this case and in other similar cases, whether the Court is providing guidance to a fiduciary or making a determination in a contested matter, its construction of the document governing the estate or trust certainly provides much needed clarity to the parties involved.