## Facts

- Ferdinand Straus died July 1, 1934, leaving a will that created a testamentary trust for his wife, Clara, providing her life income in one-third of his real and personal property.
- New York’s Decedent Estate Law gave a surviving spouse a personal right of election to take an intestate share, subject to limits when a testamentary trust provided at least an equivalent value with life income payable to the spouse.
- Three days before his death, on June 28, 1934, Straus executed inter vivos trust agreements purporting to transfer substantially all of his real and personal property to trustees.
- Under the inter vivos trust, Straus reserved: (a) all income for life, (b) an unrestricted power to revoke, and (c) control over the trustees’ powers during his life.
- If the trust were treated as an effective lifetime transfer, Straus would have died with no estate subject to the widow’s statutory protections.
- The trial court found the trust was executed to evade the widow’s statutory rights and held it ineffective against her; the Appellate Division affirmed.
- Emma S. Newman, a named trust beneficiary, appealed to compel administration of the trust as written.

## Issues

1. Whether an inter vivos trust transferring substantially all property, while the settlor retains life income, unrestricted revocation, and control over trustees, is a valid lifetime divestiture that removes the property from the decedent’s estate for purposes of the surviving spouse’s statutory rights.
2. Whether such a transfer should be treated as illusory and ineffective against the surviving spouse’s expectant interest under the elective-share scheme.

## Decision

- The Court of Appeals affirmed the judgment for the widow.
- The court held the trust was not an effective good-faith divestiture of ownership, but an illusory transfer that could not defeat the surviving spouse’s statutory rights.
- The property was treated as remaining effectively within the decedent’s estate as against the widow, notwithstanding the trust’s inter vivos form.
- The court left open whether a lesser reservation (such as income or revocation alone, without control over trustees) would suffice to show a lack of good-faith transfer.

## Legal Principles

- The elective-share statute governs property belonging to the decedent at death; genuine inter vivos transfers are generally outside its scope.
- Courts may inquire whether a purported lifetime transfer was a good-faith divestiture of ownership or merely illusory in substance.
- An inter vivos trust is illusory, and ineffective against a surviving spouse’s statutory rights, when the settlor retains the substantial incidents of ownership—particularly life income, unrestricted revocation, and operative control over trustees—so that the transfer is largely formal.

## Conclusion

The court treated a last-minute inter vivos trust, coupled with retained income, revocation, and control, as an illusory conveyance and held it could not be used to nullify the widow’s statutory elective-share protections.


Newman v. Dore, 275 N.Y. 371, 9 N.E.2d 966 (N.Y. 1937)