## Facts

- In 1929, Joseph G. Shannon, domiciled in New Jersey, created an irrevocable inter vivos trust of intangible personal property naming Irving Trust Company, a New York corporation, as trustee.
- The beneficiaries were Shannon’s wife (Goewey F. Shannon) and son (John Shannon), both New Jersey residents.
- The trust paid Goewey a fixed annual income for life; after her death in 1933, income was payable to John with specified increases at certain ages.
- On John’s death, the principal and any accumulated income would pass to his issue, if any; otherwise, to The Hill School in Pennsylvania.
- The trust instrument contained a choice-of-law clause providing that New Jersey law governed the trust’s construction and interpretation, except that New York law governed the trustee’s compensation.
- A dispute arose in New York over whether the trust’s income accumulation provisions were invalid under New York statutory limits on accumulations.

## Issues

1. Whether New York or New Jersey law governed the validity of income accumulation provisions in an inter vivos trust of intangible personal property with a New Jersey settlor and a New York corporate trustee.
2. Whether honoring the instrument’s express selection of New Jersey law was barred by New York public policy concerning accumulations.

## Decision

- The New York Court of Appeals affirmed the Appellate Division’s judgment upholding the trust provisions.
- The court held that New Jersey law governed the trust’s validity and the challenged accumulation provisions because the settlor expressly selected New Jersey law.
- The court determined that applying New Jersey law did not violate New York public policy and that the accumulations were valid under New Jersey law.

## Legal Principles

- For inter vivos trusts of intangible personal property, no single connecting factor (such as the settlor’s domicile or the trustee’s location) is automatically controlling in determining governing law; the inquiry depends on the trust’s facts and circumstances.
- A settlor’s clearly expressed choice-of-law provision governing construction and validity will generally be enforced unless it conflicts with a strong public policy of the forum.
- New York will not disregard a chosen foreign law merely because New York has statutory restrictions on accumulations, where the forum’s policy is not materially offended and the trust is valid under the chosen law.

## Conclusion

The court enforced the trust’s express selection of New Jersey law to evaluate validity of the income accumulation provisions, found no forum public-policy bar, and sustained the trust and accumulations as valid under New Jersey law.


Shannon v. Irving Trust Co., 275 N.Y. 95, 9 N.E.2d 792 (N.Y. 1937)