## Facts

- A testator created a residuary trust for his wife for life, then divided the remainder into two equal shares for the life use of his daughter and son.
- As to the daughter’s share, the will granted her a special testamentary power to appoint the property “to and among her children or any other kindred who shall survive her.”
- The will provided a default gift over if the daughter failed to make a valid appointment (to her descendants, or if none, to the testator’s heirs/next of kin).
- The daughter died without children or descendants; her mother and brother survived her.
- The daughter’s will purported to appoint $250,000 of the appointive property to a cousin and included other dispositions, including a cash gift to her brother.
- The scrivener prepared a contemporaneous letter in which the cousin promised that, if he received the $250,000 bequest, he would pay $100,000 of it to the daughter’s husband.
- The husband was outside the permissible class of appointees; a spouse was not treated as “kindred” under the donor’s limitation.
- Evidence showed the letter arrangement was part of the plan before the daughter executed her will, used to pass part of the appointive property to the husband indirectly.

## Issues

1. Whether an appointment under a special testamentary power is a fraud on the power, and void in whole or in part, when paired with an agreement requiring the appointee to transfer part of the benefit to an impermissible object.
2. Whether a court may sever a partially improper appointment and uphold the bona fide portion benefiting a permissible appointee.
3. Whether a separate disposition in the donee’s will required modification to avoid a Rule Against Perpetuities violation.

## Decision

- The court held that a donee of a limited power must exercise it in good faith for the donor’s intended purpose; otherwise the execution is a fraud on the power and void.
- The appointment was invalid only to the extent it was designed to benefit the husband through the cousin’s promise.
- The court upheld the appointment to the cousin for $150,000 and declared void the $100,000 portion intended to reach the husband.
- The invalid portion passed under the donor’s default gift-over provisions.
- The court affirmed the lower court’s disposition as modified to prevent a Rule Against Perpetuities problem as to another bequest.

## Legal Principles

- A special (limited) power of appointment must be exercised bona fide for the end designed by the donor; an exercise for an unauthorized purpose is a fraud on the power and void.
- An indirect transfer arrangement that uses a permissible appointee as a conduit to benefit an impermissible object is invalid to the extent of the unauthorized benefit.
- When an appointment contains both a bona fide benefit to a permissible appointee and a separable, defined portion tainted by an unauthorized scheme, a court may sever the transaction and sustain only the valid portion.
- A decree construing testamentary dispositions may be modified to eliminate a potential violation of the Rule Against Perpetuities.

## Conclusion

A limited testamentary power cannot be used to route appointive property to persons outside the donor’s permitted class through collateral agreements; however, where the improper benefit is severable, the court may uphold the valid portion of the appointment and void only the tainted amount, with the invalid portion passing under the donor’s gift over.


In re Carroll’s Will, 274 N.Y. 288, 8 N.E.2d 864 (N.Y. 1937)