Chapter 13—Power of Appointments
The testator can leave property as a gift outright to a person or the testator can leave property to a person to hold in trust for another person. Finally, the testator can leave property to a person and give the person the authority to select the new owner of the property. That authority is called a “power of appointment.” A power of appointment is the right to designate the new owner of property. A power of appointment is created by stating, “I leave my property to A in order that he may have the right to appoint the new owner.”
It is important to identify the parties to the transaction. The donor is the original owner of the property. If a trust is involved the donor is the settlor or the testator. The person who receives the power of appointment is the donee. The donor remains the owner of the property until the donee exercises his power of appointment and names a new owner of the property. Objects of the power are the pool of potential new owners of the property. The persons the donee appoints as the new property owners are called appointees. Even though the donee designates the appointees as the new owners of the property, those persons take title to the property from the donor. The default takers are those persons who take the property if the donee does not exercise the power of appointment. The property is referred to as the appointive property. Consider the following example. In his will, Mandy stated, “I leave my house to my son, William for life. When William dies, the house will go to any one of my children William appoints as the new owner. If William does not appoint a new owner of the house, the house will go to my cousin, Janice.” In the example, Mandy is the donee; William is the donor; Mandy’s children are the objects of the power; and Janice is the default taker. In the event the donor does not name a default taker and the donee fails to exercise the power, the property reverts to the donor’s estate. Once the property reverts to the donor’s estate, it goes to the takers of the donor’s residuary estate.
The two main types of powers of appointment are the general power of appointment and the special power of appointment. When the donor creates a general power of appointment, he does not place any restricts or conditions on the donee’s exercise of the power. Therefore, the donee can appoint the power to any one, including himself. There is no specific language needed to create a general power of appointment. The trustee just has to make sure that the exercise of the power is unrestricted. For instance the donor could state, “I leave my house to Paul to give to any one that he chooses.” On the other hand, a donor who creates a special power of appointment specifics certain individuals or groups as the objects of the power or conditions the exercise of the power on certain factors. A special power cannot be exercised in favor of the donee, the donee’s estate, the donee’s creditors or the estate of the donee’s creditors. A special power of appointment is created when the donor states “I leave my property to Ben to appoint to any one of my sisters that he so chooses.” Both the general and the special power of appointment may be inter vivos or testamentary. An inter vivos power of appointment must be exercised during the donee’s life. The testamentary power of appointment must be exercised by the donee’s will.
Notes and Problems
1. A special power of appointment may be exclusive or non-exclusive. If the power is non-exclusive, the donee may exclude entirely one of more objects of the power. Thus, the donee has the option of appointing all the property to one member of the class of permissible objects, and excluding the rest. When the case involves a non-exclusive power, the donee must appoint some amount to each of the permissible objects. The illusory appointment rule requires that each permissible object receives a substantial portion of the appointive property.
a) Gus’ will stated, “I leave the residue of my estate in trust for the benefit of Mae during her life, the remainder as Mae shall appoint by will to any one or more of her children.” Mae had four children, Bill, Sam, Gail, and Frank. Mae appointed all of the trust property to Gail. Is this permissible?
b) Thomas’ will stated, “I leave my house in trust for the benefit of Billy during his life, the remainder as Billy shall appoint by will to his children.” Billy had two children, Crystal and Polly. Billy appointed all of the trust property to Polly. Is this permissible?
c) Penny’s will stated, “I leave my apartment complex in trust for the benefit of Sandra for life, the remainder as Sandra shall appoint my will to my sisters.” Penny had three sisters, Gloria, Evon and Emma. Sandra appointed all of the trust property to Sandra’s daughter, Josie. Is this permissible?
In which of the following cases has a power of appointment been created.
a) “I leave my ranch to Joe in order for him to decide to whom to give it.”
b) “I leave my hotel to Joe for the benefit of any one of my sons that he chooses
c) “I leave the residue of my estate to Joe, so that he can provide for my children.”
d) “I leave my entire estate to Joe as long as he gives it to one of my nieces.”
e) “I leave my art collection to Joe, so that he may appoint it to whomever he chooses.”
4. In most jurisdictions, a power of appointment cannot be exercised in the residuary clause of a will. Instead of exercising the power of appointment, the donee can release the power. The power has been released when the donee gives up the right to exercise the power by written instrument. Once the power is released the property goes to the default taker or reverts back to the donor’s estate.
Doggett v. Robinson, 345 S.W.3d 94
WILLIAM J. BOYCE, Justice.
Robert R. Doggett, Florence E. Pollard, Paul R. Doggett, Paul Randolph Doggett, Jr., Mark Edward Doggett, and Matthew Joseph Doggett appeal the trial court’s summary judgment in favor of Mary Robinson,*96 as independent executor of the estate of John M. Robinson. We reverse and remand.
I. John Doggett’s Will
John Doggett executed a will prepared by attorney John M. Robinson. John Doggett was married to his second wife, Sylvia, when he executed the will in 1983. John had four children from his first marriage—John III, Robert, Florence, and Paul. Sylvia had one child from a prior marriage—Beverly Longuet.
John’s will directs that Sylvia receive his personal effects and distributes his remaining assets to two trusts: the Unlimited Marital Deduction Trust (“Marital Trust”) and the Family Trust. The will names John M. Robinson as the trustee of both trusts.
The will directs that Marital Trust income be paid to Sylvia during her lifetime, with the principal available for her support if necessary. Section 3.4 of John’s will grants Sylvia testamentary power of appointment over the Marital Trust principal by “specific reference” in Sylvia’s will. John’s will provides in section 3.6 that any unappointed Marital Trust assets will be distributed upon Sylvia’s death as specified.
The will also states that Family Trust assets may be distributed during Sylvia’s lifetime to Sylvia or to John’s descendants as necessary for their support. In section 4.3, John’s will grants Sylvia a lifetime power of appointment over the Family Trust income and principal, as well as a testamentary power of appointment by “specific reference” in her will. John’s will states that the Family Trust will terminate “when my wife dies or when no child of mine is living and under age 40, whichever is later.” John’s will directs any unappointed Family Trust assets existing upon termination to be distributed according to the same schedule as the unappointed Marital Trust assets.
With respect to both the Marital Trust and the Family Trust, John’s will places an express limitation on Sylvia’s power of appointment. Section 3.4 of John’s will, which governs the Marital Trust, states that Sylvia “shall not have the power to appoint trust principal to herself, her estate, her creditors or the creditors of her estate.” Section 4.3 of John’s will, which governs the Family Trust, states that Sylvia “shall not appoint trust property to herself, her creditors, her estate, or the creditors of her estate.”
John Doggett died in 1987. His will was probated, and Sylvia was appointed executor of his estate. It is alleged that neither trust was funded during Sylvia’s lifetime or after her death. John M. Robinson died in 2002.
II. Sylvia Doggett’s Will
Sylvia executed a will in 2002. After she died in 2006, her will was admitted to probate and Beverly was appointed executor of Sylvia’s estate.
This appeal focuses in significant part on sections 2.1 and 2.4 of Sylvia’s will. These sections provide as follows:
2.1 I give, devise and bequeath all of my property, real, personal and mixed, of every kind and character and description, and wherever situated, and any other property over which I may have a power of appointment or power of testamentary disposition, according to the provisions of this Article II.
* * *
2.4 I give, devise and bequeath all the rest, residue, and remainder of my estate and property to my daughter, Beverly Ann Longuet.
Sylvia’s will also provides in section 2.3 for the distribution of Sylvia’s personal effects, and makes three monetary bequests in section 2.2 to persons other than John’s children, John’s grandchildren, or Beverly.
III. Suit by John Doggett’s Children and Grandchildren
John’s surviving children—Robert Doggett, Florence Doggett Pollard, and Paul R. Doggett—sued Beverly individually and in her capacity as executor of Sylvia’s estate in 2007. They alleged, among other things, that (1) Sylvia failed to establish and operate the trusts properly; and (2) Beverly failed to provide an accounting of the assets in Sylvia’s estate and information about assets that should have been used to fund the trusts. Three of John’s grandchildren—Paul, Mark, and Matthew Doggett—filed a petition in intervention. We refer collectively to the original plaintiffs and intervenors as the “Doggett claimants.”
The Doggett claimants also sued Mary Robinson in her capacity as executor of John M. Robinson’s estate. The Doggett claimants alleged that John M. Robinson accepted appointment as trustee of the Marital Trust and the Family Trust under John’s will. They further alleged, among other things, that John M. Robinson failed to fulfill his obligations as trustee; assisted Sylvia in taking assets belonging to the trusts; failed to require assets to be segregated; made misrepresentations; and breached his fiduciary duties as trustee. The Doggett claimants contend that, as a result of this alleged conduct, Beverly improperly obtained trust property intended for them under John’s will. The Doggett claimants sought actual damages, punitive damages, costs and attorney’s fees, interest, the imposition of a constructive trust, and declaratory relief.
Beverly settled with the Doggett claimants on behalf of herself and Sylvia’s estate in 2008, leaving Robinson’s estate as the only defendant.
Robinson’s estate filed a traditional summary judgment motion under Rule 166a(c), arguing that it was not liable to the Doggett claimants because Sylvia in her will properly exercised her power of appointment in favor of Beverly. The Doggett claimants also filed a traditional summary judgment motion, arguing that (1) John’s will authorized Sylvia to exercise her power of appointment only in favor of John’s “descendants” as that term is defined in section 9.3 of John’s will; and (2) Beverly is not among John’s defined “descendants.”
The trial court granted partial summary judgment in favor of Robinson’s estate and denied the Doggett claimants’ motion. The trial court held: “As a matter of law, Sylvia Doggett validly exercised her power of appointment in favor of John Doggett’s descendant, Beverly Longuet; and … [b]ecause of the valid exercise of the power of appointment, [the Doggett claimants’] claims fail as a matter of law.” The summary judgment was interlocutory because attorney’s fees were not adjudicated.
After a one-day bench trial, the trial court signed a final judgment on November 4, 2009 that (1) incorporated its prior partial summary judgment; and (2) awarded attorney’s fees to Robinson’s estate. Robinson’s estate filed a motion to modify the final judgment, which the trial court granted in part and denied in part. The trial court signed an amended final judgment on December 1, 2009, and the Doggett claimants timely appealed.
This appeal turns on the interplay between John’s will and Sylvia’s will. The Doggett claimants contend that the trial court erred by denying their motion for summary judgment, and by granting summary judgment based on the trial court’s conclusion that Sylvia properly exercised her power of appointment in favor of Beverly. In their first issue, the Doggett claimants assert that Sylvia’s will did not validly exercise the power of appointment under sections 3.4 and 4.3 of John’s will. In their second issue, the Doggett claimants contend that Beverly is not among the defined “descendants” to whom Sylvia was allowed to appoint trust property under section 9.3 of John’s will. They also challenge the award of attorney’s fees in their third issue. Robinson’s estate raises one issue on cross-appeal, arguing that the trial court should have awarded costs and post-judgment interest in the final judgment.
I. Standard of Review
An appellate court applies de novo review to a traditional summary judgment under Rule 166a(c), using the same standard that the trial court used in the first instance. Duerr v. Brown, 262 S.W.3d 63, 68 (Tex.App.-Houston [14 Dist.] 2008, no pet.) (citing Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
The defendant as movant must disprove at least one essential element of each of the plaintiff’s causes of action in order to prevail on summary judgment., Wright v. Greensberg, 2 S.W.3d 666, 670 (Tex.App.-Houston [14th Dist.] 1999, pet. denied) (citing Lear Siegler Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991)). This burden requires the movant to show that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Id. (citing Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985)). In determining whether a material fact issue exists to preclude summary judgment, evidence favoring the nonmovant is taken as true, and all reasonable inferences are indulged in favor of the nonmovant. Id.
II. Exercise of the Appointment Power
All rules of will construction must yield to the basic intention and purpose of the testator as reflected by the entire instrument. Wright, 2 S.W.3d. at 672 (citing Shriner’s Hosp. for Crippled Children of Tex. V. Stahl, 610 S.W.2d 147, 151 (Tex. 1980)). The testator’s intent must be ascertained from the language used within the four corners of the instrument. Id. The question is not what the testator intended to write, but the meaning of the words actually used Id. In the absence of ambiguity, we must construe the will based on the express language used. Id. If the court can give a certain or definite meaning or interpretation to the words of an instrument, it is unambiguous and the court may construe it as a matter of law. Id. (citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). If, however, the meaning of the instrument is uncertain or reasonably susceptible to more than one meaning, it is ambiguous. Id. at 671. If it is ambiguous, then its interpretation presents a fact issue precluding summary judgment. Id.
A. Standards Governing Exercise of the Appointment Power
The interpretation issue addressed in this appeal focuses on a power of appointment. It is helpful to describe at the outset what the power of appointment entails.
“A power of appointment is a power of disposition given to a person over property not his own, by [someone] who directs the mode in which that power shall be exercised by a particular instrument.” Republic Nat’l Bank of Dallas v. Fredericks, 155 Tex. 79, 283 S.W.2d 39, 46 (1955) (internal quotation omitted). “It is an authority to do an act which the owner granting the power might himself lawfully perform.” Id. (internal quotation omitted). This power enables the donee to designate, within such limits as the donor may prescribe, the transferees of the property or the shares in which it shall be received. Id.
It also is helpful to describe what the power of appointment is not. “A power of appointment is neither property nor an estate, but is a mere right or power.” Krause v. Barton, 430 S.W.2d 44, 47 (Tex.Civ.App.-Houston [1st Dist] 1968, writ. ref’d nre). “The authority given to the donee of a power of appointment does not vest in him any estate, interest, or title in the property which is the subject of the power.” Id.
To exercise the appointment power granted in sections 3.4 and 4.3 of John’s will, Sylvia’s will “must refer to the power of appointment or the property subject to such power;” alternatively, Sylvia “must have owned no other property to which the will could have attached and thus the will have been a vain and useless thing except it be held to be an exercise of such power.” Republic Nat’l Bank of Dallas, 283 S.W.2d at 47. Robinson’s estate does not rely on the second or third bases to argue that Sylvia validly exercised her power of appointment in favor of Beverly. Therefore, we address the reference in Article II of Sylvia’s will to a power of appointment and examine whether Article II validly exercises the power granted in John’s will.
The inquiry in this case goes beyond the mere existence of a reference to the appointment power. “The general rule is that in order for a will or deed to constitute the exercise of a power of appointment*100 the intent to exercise such power must be so clear that no other reasonable intent can be imputed under the will.” Id. “‘If, from the circumstances or the instrument executed, it be doubtful as to whether it was the intention to execute the power possessed by the grantor, then it will not be held that by such act or conveyance that power was in fact executed.’ ” Id. (quoting Hill v. Conrad, 91 Tex. 341, 43 S.W. 789, 791 (1897)).
We note another hurdle that must be cleared in this particular case. Sections 3.4 and 4.3 of John’s will provide that Sylvia’s testamentary power of appointment over Marital Trust and Family Trust assets must be exercised by “specific reference.” Robinson’s estate contends that Sylvia exercised this power by “specific reference” in sections 2.1 and 2.4 of Sylvia’s will. The Doggett claimants contend that Article II’s reference to “any other property over which I may have a power of appointment” is not precise enough to be a “specific reference.”
With these standards as a backdrop, we examine whether Sylvia’s will validly exercised the appointment power granted in John’s will.
B. Application of the Standards to Sylvia’s Will
According to Robinson’s estate, Article II of Sylvia’s will exercised the appointment power granted to her in sections 3.4 and 4.3 of John’s will. Robinson’s estate contends in its appellate brief that Article II of Sylvia’s will “bequeathed to her daughter ‘any other property over which I may have a power of appointment.’ ” To make this argument, Robinson’s estate reads sections 2.1 and 2.4 of Sylvia’s will together.
Section 2.1 states Sylvia’s intent to give, devise, and bequeath “all of my property … and any other property over which I may have a power of appointment.” This language by itself does not appoint property to any identified recipient. Therefore, Robinson’s estate cannot rely solely upon section 2.1 as the vehicle by which Sylvia appointed trust property to Beverly.
Robinson combines this language from section 2.1 with language from a residuary clause in section 2.4 to formulate an appointment of trust property to Beverly. Section 2.4 states, “I give, devise and bequeath all of the rest, residue and remainder of my estate and property to my daughter, Beverly Ann Longuet.”
The formulation posited by the Robinson estate’s brief—under which Sylvia “bequeathed to her daughter ‘any other property over which I may have a power of appointment’ ”—omits section 2.4’s reference to “my estate and property.” As discussed more fully below, this omitted phrase is significant.
The Doggett claimants contend as a threshold matter that section 2.1’s language does not constitute the “specific reference” demanded by John’s will because section 2.1’s language does not explicitly refer to John’s will, the power granted in John’s will, or the trusts. We assume without deciding that Sylvia’s stated intent in section 2.1 to dispose of “any other property over which I may have a power of appointment” satisfies the “specific reference” requirement in sections 3.4 and 4.3 of John’s will. But that is only the first hurdle.
Even with this threshold assumption, Robinson’s estate still must establish that section 2.1’s reference to “any other property over which I may have a power of appointment” can be read in conjunction with section 2.4’s residuary clause to accomplish a valid exercise of the appointment power in favor of Beverly. Evaluating this latter proposition requires a close examination of the phrase “my estate and property” because that is what Sylvia gave “all of the rest, residue and remainder of” to Beverly in section 2.4.
Ordinary grammar and usage precepts teach that section 2.4’s reference to “my estate and property” means Sylvia’s “estate” and Sylvia’s “property.” Se McIntyre v. Ramirez, 109 S.W.3d 741, 746 (Tex. 2003) (interpreting phrase “a person who would ordinarily receive or be entitled to receive” in statute to mean a person who would “ordinarily receive” or “ordinarily be entitled to receive”); Cent. Power & Light Co. v. Bradbury, 871 S.W.2d 860, 863-64 (Tex. App.-Corpus Christi 1994, writ. denied)(interpreting phrase “ambulatory devices and services” in statute to mean “ambulatory devices” and “ambulatory services”); see also S. & P. Consulting Eng’rs. P.L.L.C. v. Baker, 334 S.W.3d 390, 401-02 (Tex.App.-Austin 2011, no pet) (acknowledging authority “preferring [the rule] that a single adjective preceding a list of nouns modifies each of the nouns” in statutory interpretation cases); Bonilla v. State, No. 14-08-00289-CR 2010 WL 2195440 at 9n.18 (Tex.App.-Houston [14th Dist.] June 3, 2010, no pet.) (mem.op.) (interpreting phrase “written order or grant of permission” in criminal statute to mean “written order” or “written grant of permission” according to “rules of grammar and common usage”). Robinson’s estate did not argue otherwise in the trial court.
Under this reading of “my estate and property” as Sylvia’s “estate” and Sylvia’s “property,” section 2.4’s residuary clause accomplished an appointment of trust property to Beverly if Sylvia “intended that the appointive estate become part of her residual estate, and that it pass … under the terms of her will” to Beverly. See Krause, 430 S.W.2d at 49. Such a reading comports with an understanding of the appointment power as “neither property nor an estate” by itself, which did not vest in Sylvia “any estate, interest, or title” in the trust property. See id at 47. The property subject to the appointment power would not become part of Sylvia’s “property” or Sylvia’s “estate” unless that property first was appointed to Sylvia or to Sylvia’s estate. See id at 49.
In short, the approach illustrated by Krause contemplates a two-step process. The property first is appointed to the testator’s estate and then reaches the recipient named in the residuary clause. See id. This court’s decision in Wright illustrates the same two-step process. See Wright, 2 S.W.3d at 673. (“Having found that Jacob did exercise the power of appointment, we further hold that by the terms of his will, Jacob intended that his appointive estate become part of his residual estate, and that the appointive estate under Lurine’s will passed to the trustee of the Jacob Greenberg Family Trust.”). But this mechanism was not available to Sylvia.
In regard to the Marital Trust, section 3.4 of John’s will unambiguously states: “My wife shall have the special testamentary power to appoint … provided, however, she shall not have the power to appoint trust principal to herself [or] her estate….” In regard to the Family Trust, section 4.3 of John’s will unambiguously states: “My wife shall not appoint trust property to herself … [or] her estate….”
If Sylvia could not appoint trust property to herself or to her estate, then section 2.4’s residuary clause bequeathing to Beverly “all the rest, residue and remainder” of Sylvia’s “estate” and Sylvia’s “property” could not capture the trust property. If section 2.4’s residuary clause could not capture the trust property, then that clause cannot be read in conjunction with section 2.1 of Sylvia’s will to bequeath to Beverly “any other property over which I may have a power of appointment.” Such an interpretation impermissibly contravenes the unambiguous limits in sections 3.4 and 4.3 of John’s will on Sylvia’s exercise of the appointment power. Cf. Krause, 430 S.W.2d at 48. (“The will of William H. Wilson authorized Mrs. Wilson to appoint her own estate….”). Therefore, as a matter of law, Robinson’s estate cannot rely on the two-step mechanism illustrated by Krause and Wright to establish that section 2.1 of Sylvia’s will worked in conjunction with section 2.4’s residuary clause to accomplish a valid exercise of Sylvia’s appointment power in favor of Beverly.
To address the limits established in sections 3.4 and 4.3 of John’s will, Robinson’s estate contends in a post-argument brief that “the trust principal need not—and does not—pass through Sylvia’s estate.” Instead, “Sylvia expressed her intent that the power of appointment be exercised and the property given in the same manner as her estate property, but not that it be appointed to her estate.” Robinson’s estate further argues that “[t]here is no need to treat the trust property as part of Sylvia’s estate” when construing sections 2.1 and 2.4.
Without expressly saying so, this alternative argument reads the residuary clause’s key phrase—“my estate and property”—to bequeath Sylvia’s “estate” along with “property [including property over *103 which I have a power of appointment].” This argument does not effectively circumvent the appointment power limits established in John’s will for two reasons.
First, the Robinson estate’s alternative argument requires this court to perform major surgery on section 2.4’s residuary clause by grafting the bracketed phrase [including property over which I have a power of appointment] onto “my estate and property.” Cf. Krause, 430 S.W.2d at 48-49 (residuary clause specifically disposed of all other property “which I may own or claim at the time of my death or over which I then shall have power of testamentary disposition”). We cannot do so because “courts may not redraft the will, vary or add provisions under the guise of construction of the language of the will in order to reflect some presumed intention of the testatrix.” Shriner’s Hosp., 610 S.W.2d at 151.
Second, the Robinson estate’s alternative argument requires choosing between multiple meanings of the word “property” when it is used in section 2.4’s residuary clause. As discussed above, the most natural reading of section 2.4 is one in which “my estate and property” means Sylvia’s “estate” and Sylvia’s “property.” Even if the Robinson estate’s interpretation is plausible, it is at best an alternative interpretation. Robinson’s estate cannot prevail merely by offering an alternative interpretation because the intent to exercise the appointment power “must be so clear that no other reasonable intent can be imputed under the will.” Republic Nat’l Bank of Dallas, 283 S.W.2d at 47.
It bears emphasizing that section 2.1 by itself appoints no property to Beverly or to any other identified recipient. The Robinson estate’s argument depends on combining section 2.1 with the phrase “my estate and property” in section 2.4’s residuary clause. Therefore, the burden of demonstrating a sufficiently “clear” intent to exercise the appointment power must be borne in significant part by section 2.4’s residuary clause.
Section 2.1 encompasses at least two distinct types of “property.” Sylvia refers to “my property” in section 2.1, which by definition does not include any property over which she had power of appointment. See Krause, 430 S.W.2d at 47. Sylvia also refers in section 2.1 to “any other property over. which I may have a power of appointment.” Because section 2.4’s reference to “property” reasonably could mean “my property” exclusive of appointive property, Sylvia’s intent to exercise the appointment power via section 2.4’s residuary clause is not “so clear that no other reasonable intent can be imputed under the will.” Republic Nat’l Bank of Dallas, 283 S.W.2d at 47. These circumstances create doubt “as to whether it was the intention to execute the power possessed by the grantor” and militate against a holding that the appointment power “was in fact executed” by “such act or conveyance” in section 2.4. See id. i (citing Hill, 43 S.W. at 791
For these reasons, the trial court erred in granting summary judgment based on a conclusion that “Sylvia Doggett validly exercised her power of appointment in favor of … Beverly Longuet.” The trial court therefore erred in granting summary judgment based on a conclusion that “[b]ecause of the valid exercise of the power of appointment, [the Doggett claimants’] claims … fail as a matter of law.” As a matter of law, Robinson’s estate cannot establish that Sylvia validly appointed trust property to Beverly via sections 2.1 and 2.4 of Sylvia’s will. We sustain the Doggett claimants’ first issue with respect to the grant of summary judgment and the award of attorney’s fees in favor of Robinson’s estate.
We reverse the trial court’s final judgment and remand this case for proceedings consistent with this opinion.
Schwartz v. Baybank Merrimack Valley N.A., 456 N.E.2d 1141
This case involves a testamentary power of appointment, the terms of which called for its exercise by specific reference to the power in the donee’s will. A judge of a Probate Court concluded, after trial, that the power had not been exercised by the residuary clause of the donee’s will which neither referred to the power nor purported to exercise any power of appointment. We conclude that the judge’s decision was correct and affirm his judgment.
The facts are drawn from the judge’s findings. On April 1, 1957, Mary F. Cox executed a will which provided that the residue of her estate be held in trust for the benefit of her daughter Dorothy Cox during Dorothy’s lifetime. Upon Dorothy’s death, the trustee of Mary’s trust was directed to pay the trust principal to such person or persons, including the executor of Dorothy’s will, as Dorothy “shall appoint by her will specifically referring to the power herein given to her.” If Dorothy failed to exercise her general power of appointment, the trust principal was to be paid to the New England Deaconess Hospital. Mary’s will was admitted to probate on August 5, 1968, and, on July 17, 1970, BayBank Merrimack Valley, N.A. (BayBank), was appointed to succeed the original trustee under the will.
On May 6, 1977, Dorothy Cox executed a will, prepared by the plaintiff Maurice Schwartz, an attorney. The will, insofar as relevant, gave to a friend a life estate in her home and its contents, created a trust to maintain the home, and left specific cash bequests to a niece and a nephew and three charities. The residuary clause of Dorothy’s will read as follows: “The said residue of my estate will be held in trust by my said Trustee … to pay the income thereof, to my … niece, LOUISA GILBERT, during her lifetime. Upon her death, said residue and any accrued income thereof, shall go to … BEAVER COLLEGE, of Glenside, Pennsylvania, outright, and said Trust will terminate.” Dorothy died on January 4, 1980, never having married and leaving no issue. Her will was allowed and, on March 26, 1980, Mr. Schwartz was appointed as her executor and trustee. Dorothy had insufficient assets at the time of her death to fund all the bequests in her will.
In addition, Mr. Schwartz, the sole witness at trial, testified as to the circumstances attendant upon his drafting of the will. He indicated that he had asked Dorothy about her assets and the funding of legacies, and that she had made reference to money in BayBank which could be used to pay the legacies. He also testified that he did not ask to see Mary’s will before he prepared Dorothy’s will, that he first became aware of Mary’s trust after Dorothy’s death, and that Dorothy never requested that her will exercise her power of appointment. Finally, Mr. Schwartz testified that Dorothy received substantial sums from another trust created by her father and administered by The First National Bank of Boston as trustee, that Dorothy knew that the residue of the estates of both her parents were managed by trustees, that she received income from both trusts of about $20,000 annually, and that Dorothy had a checking account at a BayBank office.
1. The facts require examination in light of several general principles pertaining to the exercise of powers of appointment and two Massachusetts decisions.
Generally, when the donor of a power of appointment prescribes a specific formality for the exercise of the power, there will be no effective appointment in the absence of the donee’s compliance with the formalities dictated by the donor. National Shawmut Bank v. Joy, 315 Mass. 457, 462, 53 N.E.2d 113 (1944). Restatement (Second) of Property § 18.2 (Tent. Draft No. 6 1983. This rule, however, is not absolute. Failure to satisfy the formal requirements imposed by a donor will not cause the appointment to fail if the donee’s action reasonably approximates the prescribed manner of appointment, especially where the appointee is a member of a favored class. Restatement (Second) of Property, supra § 18.3. 5 American Law of Property § 23.44 (1952). See Shine v. Monaha, 354 Mass. 680, 682, 241 N.E.2d 854 (1968). A donor’s requirement of specific reference ordinarily negates any presumption that a general residuary clause may exercise the power and mandates, for effective exercise of the power, an affirmative act by the donee at least approximating the indicated formality.
The reasons behind these rules are simple enough to discern. The donor of the power presumptively intends by the specific reference requirement that the donee (a) focus on the consequence of the appointive act and consider the donor’s wish with respect to the trust remainder if there is a default in exercise of the power, and (b) make an unambiguous written statement expressing a wish to exercise the power. With proper compliance, the specific reference device provides for the reasoned disposition of property by means of written and proven instruments which help to establish an unimpeachable record of title and serve to discourage unnecessary litigation.
These principles underlie two decisions of the Supreme Judicial Court within the last fifteen years which, while not directly on point, instructively discuss the subject of successful exercise of powers of appointment.
In Shine v. Monaha, 354 Mass. 680, 241 N.E.2d 854 (1968), the donor of an inter vivos trust required that a general power of appointment be exercised “by specific reference in her [donee’s] will to the full power hereby created.” The donee’s will provided for the distribution of “[a]ll the rest, residue and remainder of my property, including all property of which I have a power of appointment by virtue [of] any will or testament or inter vivos trust executed by my husband [the donor].” An effective exercise of the power was found, under the principles of approximation, because the donor’s purpose (to prevent inadvertent exercise of the power) had been satisfied by the donee’s deliberate references to all powers of appointment given by her husband, the donor. Not to be overlooked in the decision, is the court’s careful distinction from the case before it of situations, as in National Shawmut Bank v. Joy, supra, where the donor required a specific reference and the donee simply referred in general terms to any power of appointment the donee might possess. 354 Mass. 680, 241 N.E.2d 854.
In McKelvy v. Terry, 370 Mass. 328, 346 N.E.2d 912 (1976), the donor conferred on the donee a limited testamentary power of appointment to be exercised “by reference [in the donee’s will] to the limited power of appointment herein given to him.” The donee’s will provided for distribution of “[a]ll of the residue of my estate, including lapsed legacies and devises (and also including any property over which I may have a power of appointment under any instrument, it being my intention to exercise all such powers which I may have at my death).” The court found this residuary provision to be a sufficient exercise of the power, commenting (at 332) that “the meaning or design of the relevant clause of the [donee’s] will sufficiently matches any requirement of the [donor’s] trust instrument. That instrument calls for a ‘reference’ to the power, not a specific reference, and we think … that the residuary clause of the will is an adequate reference although it is inclusive of any power created by any instrument in the donee’s favor” (emphasis supplied). Referring to Shine v. Monahan, the court said (at 333): “We thought that there need not be exact compliance with the formality indicated by the donor where the approximation would satisfy his basic purpose. Less indulgence may be needed in the present case because the donor did not in terms require a specific reference.” These excerpts from the McKelvy case imply the special nature of a specific reference requirement and emphasize that compliance with such a requirement cannot be easily circumvented.
These principles and decisions provide the guidelines necessary to dispose of this case. The general testamentary power of appointment granted to Dorothy by Mary’s will expressly required that it be exercised by Dorothy’s will “specifically referring to the power.” The critical inquiry is “not whether [the] donee intended to appoint but rather whether [the] donee manifested her intent in the manner prescribed by [the] donor, i.e., by making specific reference ‘in her will’ to the power granted by [the] donor’s will” (emphasis original). Holzbach v. United Virginia Bank, 216 Va. 482, 485-486, 219 S.E.2d 868 (1975). See also Restatement (Second) of Property, supra, § 17.1. Unlike the situations in the Shine and McKelvy cases, the residuary clause of Dorothy’s will made no reference at all to any power. Lacking any attempt at compliance with the requirement of specific reference, there is simply no testamentary framework which will allow application of a rule of approximation. We conclude that Dorothy’s will fails to exercise the power of appointment given to her by her mother.
2. Some brief comment is in order on the plaintiff’s several arguments seeking to avoid the conclusion that there has been a default in the exercise of the power.
(a) The plaintiff’s reliance on the decision in Amory v. Meredith, 7 Allen 397 (1863), is misplaced. The rule in Amory provides that a general testamentary power of appointment will be deemed to have been exercised by a general residuary clause in the donee’s will, unless a contrary intention is demonstrated. The rule does not apply where the donor requires that the power be exercised by means of specific reference. See McKelvy v. Terry, 370 Mass. At 331-332, 346 N.E.2d 912. See also National Shawmut Bank v. Joy, 315 Mass. at 462, 53 N.E.2d 113.
(b) The fact that Dorothy’s will includes several pecuniary bequests which in total may have exceeded her assets at the time of death does not, in these circumstances, imply that the power has been exercised by implication. See Boston Safe Deposit and Trust Co., v. Prindle, 290 Mass. 577, 584, 195 N.E. 793 (1935).
(c) The plaintiff’s argument that property subject to a donee’s general power is actually the donee’s property is misplaced. Mary’s will clearly did not grant a general power of appointment exercisable without restriction. We find the plaintiff’s assertion to the contrary both untenable on the facts and unsupported by any authority dealing with a requirement of specific reference.
(d) While the testimony of Mr. Schwartz may have been properly admitted to show the circumstances attendant upon the execution of Dorothy’s will, see 2 Newhall, Settlement of Estates § 361 at 470 (1958), the pertinent texts of the wills of Mary and Dorothy, when laid side by side and read together, manifest no ambiguity. Extrinsic evidence is not admissible to contradict or control unambiguous language in a will. See Gustafon v. Svenson, 373 Mass. 273, 275, 366 N.E.2d 761 (1977); Gove v. Hammond, 385 Mass. 1001-1002, 430 N.E.2d 822 (1982). Nor is it admissible to correct an inadvertent omission by Dorothy or a mistake by the attorney who drafted the will. See Gustafson and Gove, supra. Finally, extrinsic evidence, in the absence of an ambiguity, is not admissible to show Dorothy’s intent, even if the result is the failure of the intended gift. Ibid. See also First National Bank v. Shawmut Bank of Boston, 378 Mass. 137, 144, 389 N.E.2d 1002 (1979). See generally, Liacos, Handbook of Massachusetts Evidence at 390-392 (5th ed. 1981 & Supp.1983).
1. In which of the following cases, has the power been exercised?
a) Bethany’s will stated, “I leave my rental properties in trust for Greg for life, the remainder as Greg shall appoint by will to any one that he chooses.” Greg appointed the rental properties to Donna. Then, Greg dies intestate.
b) Karen’s will stated, “I leave my computers in trust for Jim for life, the remainder as Jim shall appoint.” In his will, Jim stated, “I leave my entire estate, including property over which I have an appointive power to my friend, Jane.”
c) Rita’s will states, “I leave my entire estate in trust for Mitchell for life, the remainder as Mitchell shall appoint by will to any one of my children that he chooses.” Mitchell sent a note to Rita’s children telling them that he planned to leave Rita’s money to them.
d) Frances’ will states, “I leave my stocks in trust for Leonard for life, the remainder as Leonard shall appoint by will.” In his will, Leonard stated, “I leave the residue of my estate to Lisa.”
Class Discussion Tool 1
In her will, Stella stated, “I give my son Mark the rents from my apartment complex for the span of his life, and upon Mark’s death the apartment complex goes to whomever he appoints in his will.” Mark is a gambler and he loves to play high stakes poker. One night Mark lost all of his money, but he wanted to continue to play the game. Mark asked his friend Stan to borrow $50,000. Stan is a real estate developer. In exchange for the $50,000, Mark gave Stan a written promise to appoint him as owner of the apartment complex in his will. A few months later, Mark was killed when he was found cheating in a poker game. Mark will reads, “I leave all of my property including property of which I have a power of appointment to Rachel.” When Stan heard about the will, he sued Mark’s estate. He asked the court to give him the apartment complex or $50,000 plus interest. What type of power does Mark have? Can Stan get the apartment complex? Can Stan get the $50,000?
Class Discussion Tool 2
In her will, Olivia stated, “I give my son Jeremy the income from my retail store for life, and upon Jeremy’s death the store goes to whomever he appoints in his will. If Jeremy fails to exercise his power of appointment, the retail store will go to Jack.” Jeremy became ill and needed someone to take care of him. Jeremy told his cousin, Annie, that if she took care of him, he would appoint her as owner of the retail store. Jeremy and Annie put there agreement in writing. In his will, Jeremy stated, “I leave all of my property to Jenny. I leave all of the property over which I have a power of appointment to Annie in accordance with our written agreement.” Jack filed an action to have the contract declared void and unenforceable. What result?