## Facts

- Anthony Pezza married Olga Pezza in 1973 after the death of his first wife, Flora.
- During the marriage, Anthony and Olga held certain assets jointly, including joint bank accounts and joint title to a Florida residence Anthony had inherited.
- On December 29, 1983, Anthony created an inter vivos trust naming himself trustee and his son Michael as successor trustee.
- Anthony transferred into the trust four parcels of Rhode Island real estate acquired before his marriage to Olga, along with stock in his garage-door corporation.
- Anthony stated the trust’s purpose was to ensure his children from the first marriage would own the property after his death, consistent with a promise to his first wife.
- After funding the trust, Anthony continued to live in one of the parcels as the marital home and continued collecting rents from the other parcels.
- The original trust instrument reserved to Anthony the power to revoke the trust and to demand payment of principal.
- A contemporaneous will contained a pour-over clause directing remaining assets to the trust at death.
- In 1986, after a disagreement with Olga, Anthony resigned as trustee and Michael became trustee pursuant to the trust’s terms.
- After Anthony’s death, Olga sought to treat the trust property as reachable to satisfy her statutory survivorship interest.

## Issues

1. Whether the inter vivos trust transfer was illusory or fraudulent such that it could be set aside to preserve the surviving spouse’s statutory life estate under R.I. Gen. Laws § 33-25-2.
2. What legal test governs whether an inter vivos transfer to a trust may be disregarded when it diminishes a surviving spouse’s statutory real-property interest.

## Decision

- The Rhode Island Supreme Court affirmed the Superior Court’s judgment.
- The Court held the trust was a valid, completed inter vivos transfer by the time of Anthony’s death.
- The Court held the transfer was not illusory or fraudulent and therefore could not be invalidated to satisfy Olga’s statutory survivorship interest.
- The Court confirmed the illusory-transfer test as the governing standard for evaluating such transfers against a surviving spouse’s statutory life estate claim.

## Legal Principles

- A surviving spouse’s statutory life estate under R.I. Gen. Laws § 33-25-2 generally reaches real property owned by the decedent at death, but does not automatically reach property validly transferred during life.
- Under the illusory-transfer test, the controlling question is whether the transferor truly divested ownership or merely created an apparent transfer while retaining the substance of ownership.
- A transfer will be respected if supported by present donative intent and effective divestment; retention of some powers or benefits does not alone make a transfer illusory when overall control and ownership are genuinely surrendered by the time relevant to the claim.
- A transfer that disadvantages a spouse is not invalid solely for that reason; the spouse must show the transfer was illusory or fraudulent.

## Conclusion

The court upheld an inter vivos trust transferring premarital real estate to children from a prior marriage and rejected the surviving spouse’s attempt to set it aside, concluding that the transfer was not illusory because the decedent effectively divested ownership under the illusory-transfer test.


Pezza v. Pezza, 690 A.2d 345 (R.I. 1997)