In the Matter of Reuben Hoppenstein, No. 2015-2918/A (N.Y. Sur. Mar. 31, 2017) the New York County Surrogate ruled as appropriate the distribution of a life insurance policy to a new trust which eliminated certain beneficiaries of the distributing trust. This distribution was made by a trustee vested with absolute discretionary power by the terms of the trust. The beneficiaries who were excluded brought suit against the trustee . The Surrogate deferred to the trust instrument even though it was not in strict compliance with the Estate Powers and Trusts Law.
The law always seeks to determine the intent of the creator of an instrument. Here the creator of the trust wished that his trustee have absolute discretion to make certain distributions. That provision inherently has the potential to disappoint some beneficiaries who were expecting to receive distributions from the trust but “absolute discretion” means just that.