FUTURE INTERESTS - POWERS-FRAUD ON A SPECIAL POWER

Authors

Bernard L. Trott S. Ed., University of Michigan Law SchoolFollow

Abstract

H was co-trustee under a trust agreement executed by his father which provided for payment of a specified monthly sum to H for life and after his death to his wife W. The trust was to terminate upon the death of the survivor of H and W, and thereupon the other trustee was to deliver 20% of the corpus to each of three named persons, A, B, and C. The trust instrument further provided that H was to have absolute power, with approval of the co-trustee, to prescribe that the distribution of this 60% of the corpus should be made in different proportions than those provided. W predeceased H. H remarried and, desiring to secure a benefit for his second wife from the trust, proposed that each of the three beneficiaries, A, B, and C, agree to pay a sum equal to 7½% of the total trust fund to R, the second wife, on receipt of their 20% shares. A and B agreed to this proposal but C refused to assent. H thereupon purported to exercise his power and changed the percentages to read, 28% to A, 28% to B, and 4% to C. This change was approved by the co-trustee and shortly thereafter the trust was terminated by the death of H. C sought a declaratory judgment as to the effect of the attempted exercise of the power. Held, the attempted exercise was void as a fraud on the power, since it was made for the purpose of benefiting a non-object. Horne v. Title Insurance and Trust Co., (D.C. Cal. 1948) 79 F. Supp. 91.

Recommended Citation

Bernard L. Trott S. Ed., FUTURE INTERESTS - POWERS-FRAUD ON A SPECIAL POWER, 47 Mich. L. Rev. 848 (1949).
Available at: https://repository.law.umich.edu/mlr/vol47/iss6/19