## Facts

- David Carniol died on March 2, 2005, leaving a will dated August 26, 1998; letters testamentary issued to Rhonda Carniol, the executor.
- The will’s Article Fourth attempted to transfer David’s cooperative apartment (shares and proprietary lease) to his wife, Diane, or, if she did not survive him, to a trustee in trust for his granddaughter, Aimee Robin Carniol.
- Article Fourth directed that the trustee retain the apartment for Aimee’s use “if and for as long as she wishes to reside there,” and that Aimee pay expenses connected with the property, including maintenance, taxes, insurance, repairs, mortgage payments, and capital improvements.
- Article Fourth also allowed the trustee, with Aimee’s consent, to sell the apartment and invest some or all proceeds in another residence held in trust on the same terms; any excess proceeds were to be added to the Article Fifth trust. Upon Aimee’s death, any residence held under Article Fourth was to be sold and the proceeds paid to the Article Fifth trust.
- Diane predeceased David, making the Article Fourth trust structure operative.
- Article Fifth created a separate trust intended to benefit Aimee and David’s other grandchild, Steven Carniol, through lifetime income payments and discretionary principal distributions for health, support, or maintenance, with remainder provisions over.
- After David’s death, the executor notified the cooperative board that the shares and proprietary lease were to be transferred to a trust for Aimee’s benefit; the board responded that it would not transfer ownership to a trust and that Aimee would need board approval to reside in the apartment.
- Aimee and her father did not complete the cooperative’s application paperwork. The executor believed that, even if submitted, the board might deny Aimee based on her financial situation and background.
- While the apartment sat unused, carrying charges accrued. Those expenses were being paid from funds associated with the Article Fifth trust, reducing assets meant to benefit both Aimee and Steven (and future remainder beneficiaries).
- The executor asked Aimee for permission to sell the apartment, but Aimee did not give a definite response.
- In the executor’s first and final accounting proceeding in Surrogate’s Court, the executor petitioned for authority to (i) sell the co-op and purchase a replacement residence for Aimee under comparable trust terms despite the will’s consent language, and (ii) require Aimee to pay the apartment’s related expenses while the proceeding was pending.

## Issues

1. Whether the Surrogate’s Court could authorize a modification of the Article Fourth residential trust, including sale of the cooperative apartment and purchase of a substitute residence, where the co-op board would not recognize a trust as owner and the plan in the will could not be carried out as written.
2. Whether the court could permit a sale and reinvestment without obtaining Aimee’s consent as required by Article Fourth, to prevent frustration of the will’s dominant purpose.
3. Whether the court should require Aimee to bear the cooperative apartment’s carrying costs, rather than allowing those costs to continue to be paid from the Article Fifth trust or other estate/trust assets.

## Decision

- The court authorized a deviation from the literal administration of Article Fourth to allow the executor/trustee to sell the cooperative apartment and arrange for a substitute residence for Aimee to be held on terms tracking the will’s residential-benefit scheme.
- The court treated the co-op board’s position as making the Article Fourth plan impracticable in its stated form, justifying court-ordered changes to carry out the testator’s main objective: providing Aimee a residence while preserving the Article Fifth trust structure.
- The court permitted the executor/trustee to proceed with sale and reinvestment despite the stalemate over Aimee’s consent, because insisting on strict compliance would leave the estate with an unworkable asset and ongoing expenses that would impair the testamentary plan.
- The court enforced the will’s direction that Aimee was responsible for expenses tied to the residence, and rejected shifting those charges onto the Article Fifth trust on an ongoing basis.
- The court settled the executor’s account with directions consistent with these rulings, including treatment of past and prospective expenses in line with the will’s allocation and the court’s authorized plan.

## Legal Principles

- The primary aim in construing a will and supervising testamentary trusts is to carry out the testator’s intent as shown by the instrument read as a whole.
- A court exercising equitable authority over trusts may permit deviation from trust terms when compliance becomes impossible or impracticable, or when compliance would defeat or substantially impair the trust’s purposes.
- When an external restriction (such as cooperative board rules governing transfers and occupancy) prevents a testamentary plan from functioning as drafted, the court may authorize a functionally similar substitute arrangement to preserve the intended beneficial interests.
- Where a will clearly assigns property-related expenses to the beneficiary as a condition of enjoying a residential benefit, the court may enforce that allocation and prevent depletion of other trust funds intended for different beneficiaries.

## Conclusion

In *Matter of Carniol*, the Nassau County Surrogate’s Court approved a court-directed change to the Article Fourth residential trust after a co-op board refused to recognize a trust as owner and Aimee did not complete the approval process, leaving the apartment unused while expenses drained funds associated with the Article Fifth trust. To carry out the will’s plan of providing Aimee a residence without eroding the separate trust for Aimee and Steven, the court allowed sale of the co-op and purchase of a replacement residence on similar terms, and required that residence-related expenses be borne by Aimee as the will directed.


Matter of Carniol, 861 N.Y.S.2d 587 (2008)