In re MATTER OF HELLER 849 N.E.2d 262 (2007) CASE BRIEF

In re MATTER OF HELLER

849 N.E.2d 262 (2007)

NATURE OF THE CASE: This was a dispute over whether a trustee may elect unitrust status retroactively.

FACTS: Jacob Heller created a trust to benefit his wife Bertha Heller and his children. Jacob's entire residuary estate was to be held in trust during Bertha's life. Frank, his brother, was appointed as trustee and his sons Herbert and Alan Heller as trustees on Frank's death. Bertha was to receive the greater of $40,000 or the total income of the trust. Heller named his daughters (Suzanne and Faith Willinger, each with a 30% share) and his sons and prospective trustees (Herbert and Alan, each with a 20% share) as remainder beneficiaries. Jacob died in 1986, and his wife Bertha survives him. Frank died in 1997 and Herbert and Alan became trustees. From that year until 2001, Bertha received an average annual income from the trust of approximately $190,000. In March 2003, the trustees elected to have the unitrust provision apply, pursuant to EPTL 11-2.4(e)(1)(B)(I). They notified trust beneficiaries Bertha, Suzanne and Faith. The trustees sought to have unitrust treatment applied retroactively to January 1, 2002, the effective date of EPTL 11-2.4. Bertha's annual income was reduced to approximately $70,000. Davis commenced this proceeding, as attorney-in-fact for her mother Bertha and on August 1, 2003 seeking an order annulling the unitrust election and revoking the letters of trusteeship issued to Herbert and Alan. She sought a determination that the election could not be made retroactive to January 1, 2002. The court ruled against a retroactive application of the unitrust election, but refused to annul the unitrust election. Davis appealed and Herbert and Alan Heller cross-appealed. The Appellate Division affirmed the order to the extent that it denied Davis's summary judgment motion and reversed so much of the order as annulled the retroactive application of the unitrust election.

ISSUE:

RULE OF LAW:

HOLDING AND DECISION:

LEGAL ANALYSIS:

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