## Facts

- In 1917, Dagmar Bauer, then a New York resident, created an irrevocable inter vivos trust giving herself income for life, remainder to her husband, and reserving a general testamentary power of appointment over the remainder if her husband predeceased her.
- The trust provided that, if the power was not validly exercised by will, the remainder would pass to Bauer’s next of kin under New York law.
- Bauer’s husband died before Bauer, activating Bauer’s general testamentary power of appointment.
- Bauer later became domiciled in England and executed an English will and codicil, which were probated in England.
- By codicil, Bauer purported to exercise the New York power by creating a trust for two nieces, with remainder to a United Kingdom charitable corporation.
- Bauer’s New York next of kin challenged the appointment, arguing that New York law controlled and that, under the perpetuities rule applicable when the power was created (1917), the codicil trust was void; the appointees argued that English law or modern New York law would validate the appointment.

## Issues

1. Whether the validity and effect of a testamentary exercise of a general power of appointment created in a New York inter vivos trust is governed by New York law or by the law of the donee’s later domicile and will (England).
2. If New York law governs, whether compliance with the rule against perpetuities is measured from the time the power was created or from the time it was exercised.

## Decision

- The New York Court of Appeals held that New York law governed the validity and effect of the exercise of the power of appointment created in the New York trust.
- The court applied New York’s then-current rule for powers of appointment, measuring perpetuities validity from the time of exercise of the power rather than from its creation.
- Measured from the exercise date, the codicil trust did not violate the rule against perpetuities and was upheld.
- The next of kin did not take under the trust’s default provision.

## Legal Principles

- For a general testamentary power of appointment created in a trust governed by New York law, New York applies a donor-centered conflicts rule: the donor’s domicile and the law governing the creating instrument control the construction and effect of the donee’s exercise.
- Under New York’s modern approach to powers of appointment, perpetuities compliance for interests created by an exercise of a power is tested as of the time of exercise, not as of the time the power was created.
- When New York law is the governing law for the appointment, the court applies New York law as in force at the time of adjudication to determine validity.

## Conclusion

The court sustained the English codicil’s exercise of a general testamentary power reserved in a New York trust, holding that New York law controlled and that perpetuities validity is measured from the date the power is exercised, resulting in a valid appointment and defeating the default gift to the next of kin.


In re Bauer’s Trust, 14 N.Y.2d 272, 251 N.Y.S.2d 23, 200 N.E.2d 207 (N.Y. 1964)