Archive for October, 2009
Astor’s Son Found Guilty
We previously have commented on the estate planning of Mrs. Astor, which led to her son facing several criminal charges. (See our posts of 8/4/09 and 8/6/09.) He now has been found guilty of most of those charges. http://www.nytimes.com/2009/10/09/nyregion/09astor.html?_r=1&hp
HOT TOPIC: Restricting Inheritance on Condition of Marrying Within A Certain Religion
The question in In re: Estate of Max Feinberg (Supreme Court of Illinois, Docket Number 106982, September 24, 2009) concerned the validity of a trust provision which the Court termed a “beneficiary restriction clause”. Max Feinberg died in 1986. Prior to his death, he executed a Will and created a Trust. The pertinent provisions of the Trust were that some of his assets were to be held in trust for the benefit of his grandchildren; however, any of the grandchildren who married outside the Jewish faith or whose non-Jewish spouse did not convert to Judaism within one year of marriage, would be “deemed deceased for all purposes of this instrument as of the date of such marriage”. In other words, if the grandchildren did not marry within their faith, they would not be entitled to a share of the money left in trust by their grandfather, Max.
Last year, the Illinois Appellate Court had found the Trust provision to be unenforceable because they ruled it was contrary to the public policy of the State of Illinois. (383 Ill. App. 3rd 992). The appeal to the Illinois Supreme Court created national interest and several Jewish organizations filed amicus briefs. The Supreme Court reversed the decision of the Appellate Court, but did not directly answer the broad public policy question. Because Max’s wife, Erla, had survived him and was given a limited power of appointment to direct assets after her death, her actions superseded those of her husband. She decided, however, to leave certain assets to each of then living grandchildren of Max who were not “deemed deceased” under the beneficiary restriction clause of Max’s Trust. Essentially, she was following Max’s wishes. Because of this intervening act, the Court found that no grandchild had a vested interest in the Trust assets and because the distribution plan adopted by Erla had no prospective application, the Court held that the beneficiary restriction clause did not violate public policy under those limited facts. So, to sum up, a restriction in a Trust that requires marriage within a faith is not “automatically” or “per se” a violation of public policy, but it might be depending upon the facts. What do you think public policy should be?