Relates to the disposition to issue or brothers or sisters of testator not to lapse and the application to class dispositions

This measure would clarify the application of EPTL 3-3.3, the anti-lapse statute, to multi-generation class gifts which under. EPTL 2-1.2 must be distributed by representation as defined in EPTL 1-2.16 and to clarify the application of statute to future interests created in testamentary trusts.

EPTL 3-3.3 (a) (3) applies the concept of the anti-lapse statute to class gifts by treating a class gift to issue of the testator or brothers or sisters of the testator as a series of gifts to the individual members of the class with one exception. In the words of the statute, "no benefit shall be conferred hereunder upon the surviving issue of an ancestor who died before the execution of the will" in which the gift was made. The application of this provision to single-generation classes is straightforward. Consider a disposition in the testator's will that says "I give $100,000 to my brothers and sisters." At the time of execution of the will one sibling is dead with two children living at that time and two other siblings of the testator are alive. By the time the testator dies one of the siblings has died and two children of that sibling survive the testator. The children of sibling dead when the will was executed receive nothing and the children of the sibling who died after execution of the will share their parent's share of the class gift (and they each receive $25,000).

The ambiguity arises when the gift in the will is to the testator's "issue." That is a class gift and literally subject to the rules of 3-3.3(a)(3). The resulting problems are illustrated by the following family tree:

Testator Child A Child B Child C G/C 1 G/C 2 G/C 3 G/C 4 G/C 5 G/C 6

Example 1. The testator's will disposes of the residuary estate to "my issue". At the time of the execution of the will Child A is deceased and all other persons are alive. The disposition is to a class gift to issue of the testator and a literal reading of EPTL 3-3.3(a)(3) would exclude grandchild 1 from sharing in the disposition at testator's death because Grandchild 1's ancestor, Child A, died before the execution of the will. This result is contrary to the rules of EPTL 2-1.2 and 1-2.16 which say that gifts to issue must be distributed by representation and then define representation.

Example 2. The second ambiguity can be illustrated by assuming that Grandchild 1 is indeed excluded from sharing in the disposition and that both Child B and Child C die after the execution of the will but before Testator. If EPTL 3-3.3(a)(3) applies to the disposition

because it is indeed a class gift, the issue of the beneficiary who dies before the testator take their ancestor's share. Therefore, Child B's children will each receive 1/6 of the residuary estate (1/3 of 1/2) and Child C's children will receive 1/4 each (1/2 of 1/2). Again, this is contrary to the provisions of EPTL 2-1.2 which says that a disposition to issue is to be distribution by representation as defined in EPTL 1-2.16 under which provision each of Grandchildren 2 through 6 receive 1/5 of the residuary estate.

The proposed amendment would clarify the application of the anti-lapse statute in this situation by first, making it clear that EPTL 3-3.3(a)(1) and (2) apply to dispositions to individuals and second, that 3-3.3(a)(3) does not apply to a disposition to the testator's issue or to a class described by words which are equivalent to issue. Under the amendment, in Example 1, Grandchild 1 would take 1/3 of the residuary estate and Child A and Child B would each take 1/3. In Example 2, where all three of the children predeceased Testator, the six grandchildren would each receive 1/6 of the residuary estate. In both cases the result is a distribution by representation to the Testator's issue who survive Testator and conforms to EPTL 2-1.2 and 1-2.16.

The second change makes clear that the anti-lapse statute applies to a gift of a future interest in a trust created by a will. For example, the testator's will creates a trust to pay the income to the testator's surviving spouse for life, remainder to the testator's children, A, B and C. If A dies after execution of the will and before the testator, there is a strong argument that the gift would fail and B and C would be the only remainder beneficiaries of the trust. Under the second proposed amendment, the gift to the children would be treated like any other testamentary disposition to a child, and A's remainder interest would belong to A's issue by representation.

This measure, which would have no fiscal impact upon the State, would take effect immediately; provided, however, that it would apply only to the estates of decedents who shall have died on or after such effective date.

2013 Legislative History: OCA 2013-43R Assembly 6555 (M. of A. Lavine) (reported)

2012 Legislative History: S.7463-A(Bonacic)(Rules) A.9478-A(Lavine)(passed Assembly);