## Facts

- Clarence M. Vought’s will created a testamentary trust paying income to his widow, Edna Vought, for life, with principal to be distributed equally to his sons, Chance and Peter, upon Edna’s death.
- The will provided that trust principal was “not assignable” and that income or principal could not be reached by garnishment or similar process “while in the hands of the Trustees,” except as permitted by law.
- During Edna’s lifetime, Chance executed multiple instruments purporting to assign or sell his remainder interest in the trust principal to several assignees/creditors, for sums substantially less than the stated face amounts.
- Chance died before Edna; Edna died about eighteen months later, making the trust principal distributable.
- The trustee sought judicial settlement and instructions on whether to honor Chance’s purported assignments or distribute his share through his estate to his widow and children.
- The Surrogate’s Court held the assignments invalid under the will’s anti-alienation clause; the Appellate Division affirmed.

## Issues

1. Whether New York law permits a testator to restrain a beneficiary from assigning a vested remainder interest in trust principal while the property remains held by the trustee.
2. Whether the will’s anti-alienation language applied to the sons’ remainder interests, not merely the life beneficiary’s income interest.
3. Whether, if the restraint is valid, Chance’s pre-distribution assignments are ineffective so that his remainder passes through his estate rather than to assignees/creditors.

## Decision

- The New York Court of Appeals affirmed.
- The Court construed the will to prohibit assignment of the trust principal while it remained in the trustees’ hands, applying that restraint to the sons’ remainder interests.
- The Court held the restraint valid under New York spendthrift trust doctrine because it limited alienation during the trust’s continuance rather than imposing a perpetual restraint after distribution.
- The Court concluded Chance’s purported assignments transferred no enforceable interest in the trust principal before distribution.
- Chance’s share of principal, when distributable after Edna’s death, passed through Chance’s estate to his widow and children, not to the assignees.

## Legal Principles

- A testator’s clearly expressed intent in a will controls construction of testamentary trust provisions unless it violates law or public policy.
- Under New York law, a spendthrift-type restraint may bar both voluntary assignment and creditors’ process against a beneficiary’s equitable interest in a trust, including a vested remainder, while the trust property remains held by the trustee.
- A restriction limited to the period “while in the hands of the trustees” is generally treated as a valid spendthrift restraint during administration, not an unlawful restraint on alienation after the trust terminates.
- Where a valid no-assignment clause applies, a beneficiary’s attempted transfer of the protected interest before distribution is ineffective, and the interest remains with the beneficiary (and then the beneficiary’s estate) until the trust becomes distributable.

## Conclusion

The court enforced a testamentary spendthrift restriction barring assignment of trust principal while held by the trustees, invalidated a remainderman’s pre-distribution assignments of his vested remainder, and directed distribution through the remainderman’s estate upon termination of the life estate.


In re Estate of Vought, 24 N.Y.2d 163, 249 N.E.2d 356 (N.Y. 1969)