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Law School Case Brief

Nat'l Shawmut Bank v. Joy - 315 Mass. 457, 53 N.E.2d 113 (1944)

Rule:

If an owner of property can find a means of disposing of it inter vivos that will render a will unnecessary for the accomplishment of his practical purposes, he has a right to employ it. The fact that the motive of a transfer is to obtain the practical advantages of a will without making one is immaterial.

Facts:

A settlor established a trust and named trustees under the trust. After the settlor's death, the trustees filed a petition for instructions regarding the distribution of the proceeds of the trust. The probate court ordered the proceeds to be paid to the settlor's statutory next of kin, according to the terms of the trust, which the settlor executed in 1936. The settlor reserved a power of appointment in the trust, and in default of exercise of the power of appointment, the trust principal and accumulated income were to be paid over to the settlor’s heirs under Massachusetts intestacy law. The settlor had also made a will in 1926, in which he bequeathed all of his property to the bank named as executor, in trust. Legatees under the 1926 will appealed from the probate court's order, maintaining that the trust property should be distributed to them under the 1926 will.

Issue:

Was the probate court correct in ordering that the proceeds of the trust be paid to the settlor’s statutory next of kin?

Answer:

Yes.

Conclusion:

The court affirmed, the decree, holding that the proceeds were properly paid to the next of kin. Although the retention of a power to revoke a trust would have invalidated the trust had it been used, the power was not used by the settlor. Also, the reservation of the power to make investments did not invalidate the trust. Finally, the trust was not invalidated by the settlor's retention of a life interest in the property for himself. The will was not a valid exercise of the power of appointment reserved by the settlor in the trust instrument. The settlor could exercise the power of appointment only by an instrument (a) under his seal (b) duly acknowledged by him and (c) deposited with the trustees. 

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