Newman v. Dore - 275 N.Y. 371, 9 N.E.2d 966 (1937)

Rule:

Where the settlor transfers property in trust and reserves not only a power to revoke and modify the trust but also such power to control the trustee as to the details of the administration of the trust that the trustee is the agent of the settlor, the disposition so far as it is intended to take effect after his death is testamentary. Perhaps from the technical point of view such a conveyance does not quite take all that it gives, but practically it does. That is enough to render it an unlawful invasion of the expectant interest of the wife.

Facts:

The deceased passed away, leaving a last will and testament that contained a provision for a trust for his wife for her life. Additionally, the deceased's will left one-third of his both real and persona to his wife. However, three days before his death, the deceased executed trust agreements by which, in form at least, he transferred to the trustees all his real and personal property. Under such agreements, he reserved the enjoyment of the entire income as long as he should live and a right to revoke the trust at his will; and, in general, the powers granted to the trustees were made "subject to the settlor's control during his life," and could be exercised "in such manner only as the settlor shall from time to time direct in writing." Plaintiff beneficiary brought an action to compel defendant trustees to carry out the terms of a trust executed by the deceased. The trial court found that the trust agreements were made, executed, and delivered by the deceased for the purpose of evading and circumventing state law and particularly the Decedent Estate Law, §§ 18 and 83. The appellate court affirmed the trial court’s decision. Plaintiff beneficiary appealed. 

Issue:

Was the deceased’s trust conveyance valid, thereby warranting the beneficiary’s action to compel the trustees to carry out the terms of the trust? 

Answer:

No.

Conclusion:

On appeal, the court held that the deceased's trust conveyance was not valid because it was illusory. Moreover, the court held that the deceased's never intended to divest himself of his property and the evidence illustrated that he was unwilling to divest himself of his property even when he was near death. The lower courts’ decisions were affirmed.