senate Bill S4852

Relates to the disposition to issue or brothers or sisters of testator not to lapse and the application to class dispositions

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 26 / Apr / 2013
    • REFERRED TO JUDICIARY
  • 04 / Jun / 2013
    • 1ST REPORT CAL.1020
  • 05 / Jun / 2013
    • 2ND REPORT CAL.
  • 10 / Jun / 2013
    • ADVANCED TO THIRD READING
  • 11 / Jun / 2013
    • SUBSTITUTED BY A6555

Summary

Relates to the disposition to issue or brothers or sisters of testator not to lapse and the application to class dispositions.

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Bill Details

See Assembly Version of this Bill:
A6555
Versions:
S4852
Legislative Cycle:
2013-2014
Law Section:
Estates, Powers and Trusts Law
Laws Affected:
Amd ยง3-3.3, EPT L
Versions Introduced in 2011-2012 Legislative Cycle:
A9478, S7463, A9478

Sponsor Memo

BILL NUMBER:S4852

TITLE OF BILL: An act to amend the estates, powers and trusts laws,
in relation to the disposition to issue or brothers or sisters of
testator not to lapse and the application to class dispositions

This is one in a series of measures being introduced at the request of
the Chief Administrative Judge upon the recommendation of her
Surrogate's Court Advisory Committee.

This measure would clarify the application of EPTL 3-3.3, the
anti-lapse statute, to multi-generation class gifts which under. EPTL
2-1.2 must be distributed by representation as defined in EPTL 1-2.16
and to clarify the application of statute to future interests created
in testamentary trusts.

EPTL 3-3.3 (a) (3) applies the concept of the anti-lapse statute to
class gifts by treating a class gift to issue of the testator or
brothers or sisters of the testator as a series of gifts to the
individual members of the class with one exception. In the words of
the statute, "no benefit shall be conferred hereunder upon the
surviving issue of an ancestor who died before the execution of the
will" in which the gift was made. The application of this provision to
single-generation classes is straightforward. Consider a disposition
in the testator's will that says "I give $100,000 to my brothers and
sisters." At the time of execution of the will one sibling is dead
with two children living at that time and two other siblings of the
testator are alive. By the time the testator dies one of the siblings
has died and two children of that sibling survive the testator. The
children of sibling dead when the will was executed receive nothing
and the children of the sibling who died after execution of the will
share their parent's share of the class gift (and they each receive
$25,000).

The ambiguity arises when the gift in the will is to the testator's
"issue." That is a class gift and literally subject to the rules of
3-3.3(a)(3). The resulting problems are illustrated by the following
family tree:

Testator
Child A Child B Child C
G/C 1 G/C 2 G/C 3 G/C 4 G/C 5 G/C 6

Example 1. The testator's will disposes of the residuary estate to "my
issue". At the time of the execution of the will Child A is deceased
and all other persons are alive. The disposition is to a class gift to
issue of the testator and a literal reading of EPTL 3-3.3(a)(3) would
exclude grandchild 1 from sharing in the disposition at testator's
death because Grandchild 1's ancestor, Child A, died before the
execution of the will. This result is contrary to the rules of EPTL
2-1.2 and 1-2.16 which say that gifts to issue must be distributed by
representation and then define representation.

Example 2. The second ambiguity can be illustrated by assuming that
Grandchild 1 is indeed excluded from sharing in the disposition and
that both Child B and Child C die after the execution of the will but
before Testator. If EPTL 3-3.3(a)(3) applies to the disposition


because it is indeed a class gift, the issue of the beneficiary who
dies before the testator take their ancestor's share. Therefore, Child
B's children will each receive 1/6 of the residuary estate (1/3 of
1/2) and Child C's children will receive 1/4 each (1/2 of 1/2).
Again, this is contrary to the provisions of EPTL 2-1.2 which says
that a disposition to issue is to be distribution by representation as
defined in EPTL 1-2.16 under which provision each of Grandchildren 2
through 6 receive 1/5 of the residuary estate.

The proposed amendment would clarify the application of the anti-lapse
statute in this situation by first, making it clear that EPTL
3-3.3(a)(1) and (2) apply to dispositions to individuals and second,
that 3-3.3(a)(3) does not apply to a disposition to the testator's
issue or to a class described by words which are equivalent to issue.
Under the amendment, in Example 1, Grandchild 1 would take 1/3 of the
residuary estate and Child A and Child B would each take 1/3. In
Example 2, where all three of the children predeceased Testator, the
six grandchildren would each receive 1/6 of the residuary estate. In
both cases the result is a distribution by representation to the
Testator's issue who survive Testator and conforms to EPTL 2-1.2 and
1-2.16.

The second change makes clear that the anti-lapse statute applies to a
gift of a future interest in a trust created by a will. For example,
the testator's will creates a trust to pay the income to the
testator's surviving spouse for life, remainder to the testator's
children, A, B and C. If A dies after execution of the will and before
the testator, there is a strong argument that the gift would fail and
B and C would be the only remainder beneficiaries of the trust. Under
the second proposed amendment, the gift to the children would be
treated like any other testamentary disposition to a child, and A's
remainder interest would belong to A's issue by representation.

This measure, which would have no fiscal impact upon the State, would
take effect immediately; provided, however, that it would apply only
to the estates of decedents who shall have died on or after such
effective date.

2013 Legislative History: OCA 2013-43R Assembly 6555 (M. of A. Lavine)
(reported)

2012 Legislative History: S.7463-A(Bonacic)(Rules)
A.9478-A(Lavine)(passed Assembly);

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4852

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 26, 2013
                               ___________

Introduced  by Sen. BONACIC -- (at request of the Office of Court Admin-
  istration) -- read twice and ordered printed, and when printed  to  be
  committed to the Committee on Judiciary

AN  ACT to amend the estates, powers and trusts laws, in relation to the
  disposition to issue or brothers or sisters of testator not  to  lapse
  and the application to class dispositions

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph (a) of section 3-3.3 of the estates,  powers  and
trusts law, as amended by chapter 595 of the laws of 1992, is amended to
read as follows:
  (a) Unless the will whenever executed provides otherwise:
  (1)  Instruments  executed  prior to September first, nineteen hundred
ninety-two.  Whenever a testamentary disposition INCLUDING A DISPOSITION
OF A FUTURE ESTATE OTHER THAN A FUTURE ESTATE  SUBJECT  TO  A  CONDITION
PRECEDENT  OF  SURVIVING THE TESTATOR is made to [the] A BENEFICIARY WHO
IS ONE OF THE TESTATOR'S issue or [to]  a  brother  or  sister  [of  the
testator], and such beneficiary dies during the lifetime of the testator
leaving  issue  surviving such testator, such disposition does not lapse
but vests in such surviving issue, [per stirpes] BY REPRESENTATION.
  (2) Instruments executed on or after September first, nineteen hundred
ninety-two. Whenever a testamentary disposition INCLUDING A  DISPOSITION
OF  A  FUTURE  ESTATE  OTHER THAN A FUTURE ESTATE SUBJECT TO A CONDITION
PRECEDENT OF SURVIVING THE TESTATOR is made to [the] A  BENEFICIARY  WHO
IS  ONE  OF  THE  TESTATOR'S  issue  or [to] a brother or sister [of the
testator], and such beneficiary dies during the lifetime of the testator
leaving issue surviving such testator, such disposition does  not  lapse
but vests in such surviving issue, by representation.
  (3)  The  provisions  of  subparagraphs  (1) and (2) OF THIS PARAGRAPH
apply to a disposition made [to issue, brothers or sisters as  a  class]
IN   THE   FORM   OF   A   CLASS   GIFT  OTHER  THAN  A  DISPOSITION  TO

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09935-02-3

S. 4852                             2

"ISSUE,""DESCENDENTS," OR A  CLASS  DESCRIBED  BY  LANGUAGE  OF  SIMILAR
IMPORT,  as  if  the disposition were made to the beneficiaries by their
individual names, except that no benefit shall  be  conferred  hereunder
upon the surviving issue of an ancestor who died before the execution of
the will in which the disposition to the class was made.
  S  2.  This act shall take effect immediately; provided, however, that
it shall apply only to the estates of decedents who shall have  died  on
or after such effective date.

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