In re Carroll's Will
274 N.Y. 288, 8 N.E.2d 864 (1937)
Carroll died and his will
established a testamentary trust.
The trust gave a life income trust to his wife. After his wife's death, the trust would be split
into two parts; one part would be used for a life income trust for his son (Ralph) and the other would be used
for a life income trust for
his daughter (Elsa).
The will specified that Elsa
could leave the principle in her trust to their "to her children or
any other kindred who survive her in such manner as she think
That's known as a special
power of appointment.
Carroll's will also had a
clause saying that if Elsa did not exercise her power, then the money
would go her kids. If she had no kids, the money would revert back to
Carroll's estate to be given to his surviving heirs.
Elsa's kids were therefore takers
Elsa died without any kids.
Elsa really wanted to leave
the money to her husband, but she couldn't do that because the special
power of appointment didn't allow her
to leave money to non-relatives.
Elsa's will gave $5k to
Ralph, $250k to her cousin Paul, and the rest into a trust.
Paul sent Elsa a letter
promising to pay Elsa's husband (Foster) $100k if he inherited the $250k
Elsa could not legally will
the money from her father's trust to her Foster because he wasn't
Elsa had previously tried to
write a clause into her will leaving her share of the trust to her
brother Ralph with a request that he pay $10k a year to Foster, but her
lawyer adviser her that the clause wasn't enforceable.
When Elsa's will was submitted
for Probate, the Probate Court found that the promise made to Paul
"so vitiated and permeated the bequest that the appointment
constituted a fraud upon the power and made the bequest to him void."
The Appellate Court partially
reversed. Paul appealed.
The Appellate Court found
that the unenforceable part of the will was the $100k that Elsa wanted
Paul to give to Foster, but that the other $150k that Elsa wanted Paul to
have free and clear was ok.
The New York Supreme Court
reversed the Appellate Court and found the entire $250k gift to Paul to be
The New York Supreme Court
found that it was impossible to say how much Elsa would have given Paul
if they didn't have a deal. Therefore it is impossible to separate the
$150k from the $100k. Hence, the entire bequest must be void.
Plus, Paul had unclean
hands, so he doesn't deserve to take.
The Halsbury's Laws of England
suggest that the exercise of a power of appointment may be held fraudulent if:
The execution was made for a
It was made in pursuance of
an antecedent agreement to benefit persons not objects of the power, or
It was made for purposes
foreign to the power.
Elsa had a complete power to
give the money to any relative she wanted for any reason. However, that
power is limited when there is a bargain to benefit a non-object of the