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Surrogate's Court, New York County, July 13, 2009
APPEARANCES OF COUNSEL
Carter Ledyard & Milburn, LLP (Theodore Wagner of counsel), for petitioner. Asher H. Miller, guardian ad litem. McCanliss & Early, LLP, for Clayton C.C. Wheat and others, respondents. John P. James for Stamford Memorial Hospital, respondent. Gerard I. Carp for Estate of Clayton E. Wheat, Jr.
{**2009 N.Y. Slip Op. at 1} OPINION OF THE COURT
Kristin Booth Glen, S.
This is a contested proceeding by Bank of America, N.A., as trustee, for advice and direction regarding the distribution of the remainder of three inter vivos trusts created by Mary R. Chappell. The trustee asks the court to determine whether the powers of appointment granted in each of the trusts to the settlor's granddaughter, Mary Chappell Wheat, were validly exercised, and whether the trusts' assets are subject to claims of the granddaughter's creditors. Threshold questions presented here as to whether New York or Connecticut law controls raise important issues of conflict of laws rules as they apply in the trusts and estates context.
The settlor created three irrevocable trusts, one dated April 7, 1932 (the 1932 trust), and two dated December 27, 1935 (respectively, the 1935 William Chappell trust and the 1935 Mary Chappell Wheat trust). Although the settlor was domiciled in Connecticut, the assets of all the trusts consist of intangible personal property located in New York and each of the trusts has a New York trustee. All of the instruments state they shall be "construed and regulated by the laws of the State of New York." The settlor died in 1949.
Using nearly identical terms, each of the trusts granted a power of appointment to Mary Chappell Wheat (then known and named in the trust instruments as Mary Chappell). In the 1932 trust and also in the 1935 William Chappell trust, she was given a lifetime income interest following that of her father, William Chappell. Upon her death, the trustee is directed "to pay over the principal of said trust estate to such persons as the said MARY CHAPPELL [WHEAT] shall appoint by Will or by Instrument of Appointment executed like a Will and dated after the date of
the death of said WILLIAM R. CHAPPELL."[FN1] In the 1935 Mary Chappell Wheat trust, the trustee is directed upon the death of Mary Chappell Wheat "[to] transfer and pay over the principal of such trust fund to such person or persons as she shall appoint by her Will or by an instrument of
appointment executed like a Will."[FN2]
Mary Chappell Wheat died in 2007, also domiciled in Connecticut. She left a 2006 will which gives her residuary estate in equal shares to her son, daughter, and two grandsons. The will does not expressly refer to the powers of appointment. She also left a handwritten note dated October 22, 2002 which states, "I am leaving all 3 trusts to my husband Clayton E. Wheat." The note is signed "Mary C. Wheat" and "subscribed and sworn to" before a Connecticut notary public whose signature and stamp are affixed.
I. Application of New York Law
Turning first to the threshold choice of law issue, it is clear that New York will recognize the settlor's direction to apply New York law to determine issues regarding the trusts. The Court of Appeals considered an analogous case in Shannon v Irving Trust Co. (275 NY 95 [1937]), involving a trust created by a New Jersey domiciliary, the assets of which were held and administered in New York by a New York trustee. The instrument called for the application of New Jersey law for all questions except those relating to the trustee's commissions, as to which New York law was to apply. Honoring these instructions, the Court stated, "[t]he instrument should be construed and a
determination of its validity made according to the law chosen by the settlor."[FN3] (275 NY 95, 102 [1937]; see also In re Ash's Trust, 111 NYS2d 115 [Sup Ct, NY County 1952] [trust created by New Jersey domiciliary with New York trustee and assets in New York to be governed by New
York law where trust indenture so directed].)[FN4] It is therefore necessary to begin with an
examination of New York law.

A. New York Estates, Powers and Trusts Law
New York's Estates, Powers and Trusts Law generally applies only to those trusts created by persons living on or born after its effective date, September 1, 1967, but it also applies to "instruments making dispositions or appointments" of a person living on the law's effective date, as was Mary Chappell Wheat (EPTL 1-1.5). Therefore, the EPTL governs the question of whether the appointive property is subject to the claims of the creditors of Mary Chappell Wheat (see also Matter of McMurtry, 68 Misc 2d 553 [1971] [EPTL governed power granted under will of decedent who died in 1915, exercisable by will of donee who died in 1969]).
B. Classification of Powers
Interpretation of the applicable EPTL provision requires classification of the powers as either "general" or "special," and as either "presently exercisable," "postponed," or{**2009 N.Y. Slip Op. at 2}[*2]"testamentary." The Chappell powers are clearly "general" powers, defined in EPTL 10-3.2
(b) as those "exercisable wholly in favor of the donee, his estate, his creditors or the creditors of his estate." They are also "postponed" powers. A power is "postponed" if it is "exercisable by the donee only after the expiration of a stated time or after the occurrence or nonoccurrence of a specified
event" (EPTL 10-3.3 [d]).[FN5] The powers under the 1932 trust and under the 1935 William Chappell trust were exercisable only if the donee survived her father, and her power over the 1935 Mary Chappell Wheat trust could only be exercised after she reached age 18. These conditions
render the powers "postponed."[FN6]
II. Assets Subject to Creditors
EPTL 10-7.2 provides: "Property covered by a general power of appointment . . . which is presently exercisable, or of a postponed power which has become exercisable, is subject to payment of the claims of creditors of the donee, his estate and the expenses of administering his estate."
This section was derived from Real Property Law former

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