NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6555
SPONSOR: Lavine (MS) 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 testa-
tor 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 Surro-
gate'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 2-1.16 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 bene-
fit 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 testa-
tor 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 2-1.16 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 distributed by representation as defined in EPTL 2-1.16 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 grand-
children 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 2-1.16.
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.
2012 LEGISLATIVE HISTORY: S.7463-A (Bonacic)(Rules) A.9478-A
(Lavine)(passed Assembly);
