Opinion ID: 1280005
Heading Depth: 2
Heading Rank: 3

Heading: Approximate Compliance.

Text: Whether a donee's defective appointment approximates the donor's required formality turns on the donor's purpose in imposing the formality. Draft Restatement § 18.3 comment c. Equity can grant relief from rigid enforcement only if such relief will not undermine the accomplishment of the donor's significant purpose. Id. To determine whether Willie Mae Strobel's attempted exercise approximated the required formality we must, therefore, establish (1) precisely what formality was required, (2) the donor's substantial purpose in imposing that formality, and finally (3) whether the defects in the attempted exercise would defeat that substantial purpose. Article First of the inter vivos trust agreement states the required formality as follows: (A) Upon the death of the wife, the entire amount remaining in Trust A (including net income accrued or collected but not distributed) shall be distributed to such person or persons, or to the estate of the wife, in such manner, including free of trust, and in such proportions as the wife may designate and appoint in her Last Will by specific reference to and exercise of this power. (B) Any part or all of Trust A which remains undistributed under the preceding provisions of this Article shall be added to Trust B and administered under the provisions hereof relating thereto. (Emphasis added.) By the above language the valid exercise of the general power of appointment requires Willie Mae Strobel to specifically refer to the power in her will and exercise it in that will. The requirement of specific reference to the donated power has been interpreted, depending on the facts of the case, as expressing one of two purposes. See First National Bank of McMinn County v. Walker, 607 S.W.2d 469 (Tenn. 1980). The presumptive purpose of the requirement is to ensure a considered and intentional, rather than an inadvertent exercise of the power. 5 AMERICAN LAW OF PROPERTY, supra, § 23.44; Matter of Estate of Smith, 41 Colo. App. 366, 585 P.2d 319, 321 (1978). In Shine v. Monahan, 354 Mass. 680, 241 N.E.2d 854 (1968), the donee made a general rather than a specific reference. The court nevertheless found the donee's language plainly not inadvertent, and concluded that it approximated the formality because it did not defeat the donor's purpose. Id. at 682, 241 N.E.2d at 855. The facts in other cases have lent themselves to the interpretation that the specific reference requirement expressed the donor's intent to restrict the wife's interest in the trust as much as possible, in order to gain benefit of the marital deduction and yet control who ultimately would receive the corpus after the wife's death. In this view, the donor hopes the spouse will fail to comply with the requirement, and the specific reference requirement is a means of foiling the spouse's exercise of the power. This was the case in First National Bank of McMinn County v. Walker, supra , where the facts showed the donor intended to limit his wife's access to the corpus. She apparently had no right to invade the corpus during her lifetime, and, more important, the donor had been advised when he executed his last will and testament that his wife's general reference in her existing will would be ineffective if he required a specific reference. The donor nevertheless required the specific reference. It has been said that when the donor's intent is unambiguous from the four corners, we will not go outside the instrument to determine the donor's intent. See Taylor v. Hutchinson, 17 Ariz. App. 301, 497 P.2d 527 (1972). In any event, the trust agreement as a whole provides at least strong evidence that Oscar Strobel's purpose in structuring the trusts as he did was to protect Willie Mae Strobel, and that the specific reference requirement was intended to prevent an inadvertent exercise of the power of appointment rather than to defeat the exercise and pass the principal to the residuary beneficiary, Oscar A. Strobel III. For example, if it had been the donor's intent to prevent his wife's use of trust A, it is highly unlikely that he would have given her the unlimited right to invade the corpus of trust A during her lifetime. Cf. Walker, supra . It might even be said he intended to encourage her to invade trust A because, if she completely depleted it, she would still receive the income from trust B. The only restriction on Willie Mae Strobel's lifetime access to the corpus of trust A  that her requests be in writing  lends support to a conclusion that the significant purpose served by the donor's imposition of formalities was merely to establish the donee's considered intent. Assuming, arguendo, that extrinsic evidence would be admissible on this question, there is no evidence in the record to support a contrary conclusion. Furthermore, Strobel's trust agreement made no indirect attempt to curtail Willie Mae Strobel's lifetime use of the corpus, such as by making his son the trustee, as did the donor in Estate of Smith, supra . Strobel generously provided for his son, Oscar A. Strobel III, in trust B, both by making a small gift to his son out of trust B upon his death and by making the son the remainderman of trust B. Unlike those cases where the wife has only a life estate in the income from the marital trust and the remaindermen were not otherwise provided for, we cannot agree that as a matter of law the trust agreement and the surrounding facts show Strobel intended all of trust A to pass eventually to his son. Cf. Walker, 607 S.W.2d at 475. On this record we conclude that the substantial purpose of the specific reference requirement was to ensure a considered appointment rather than to thwart its exercise. The final question is whether giving effect to Willie Mae Strobel's defective appointment would defeat the donor's substantial purpose. Paragraph Second of Willie Mae Strobel's will makes clear and insistent reference to her general power of appointment over trust A. Her attempted appointment contrasts starkly with the ineffective attempts to exercise a general power of appointment where the donor required specific reference in Matter of Estate of Smith, supra ; First National Bank of McMinn County v. Walker, supra ; Holzbach v. United Virginia Bank, 216 Va. 482, 219 S.E.2d 868 (1975); and Estate of Eddy, 134 Cal. App.3d 292, 184 Cal. Rptr. 521 (1982). In those cases the courts held that the donor's specific reference requirement was not satisfied by blanket residuary bequests by which the donee granted all her property, including any property over which she had any power of appointment. Such sweeping, non-specific language was not used here. The obvious purpose of Paragraph Second of Willie Mae Strobel's will was to exercise expressly and specifically the general power of appointment that she enjoyed over trust A. Furthermore, in Paragraph Second Willie Mae Strobel not only referred specifically to her general power of appointment over the marital trust, she also made specific and correct reference to the required formality (provided my Will makes specific reference to such general power of appointment) and to the trust account number (6588A). The only irregularity was the mistaken reference to the donative instrument  an error easily understood considering neither of the A trusts was to be established until Strobel's death, and the inter vivos trust made no payments to Willie Mae Strobel until after Strobel's death (Inter Vivos Trust Agreement, Paragraphs Second and Third). In light of the specific content of the paragraph, the specific references to the general power of appointment, the attempt at the required formality and the use of the proper account number, we conclude that there was ample evidence that the attempted appointment was neither casual nor inadvertent but deliberate and intentional, and therefore satisfied the donor's substantial purpose. Because Willie Mae Strobel clearly intended to appoint the only extant trust A to a beneficiary favored by equity and did so in a manner that approximated the donor's required formality, the mistaken reference to the donative instrument does not preclude a court of equity from giving effect to the defective exercise. We therefore conclude that the trial court erred in granting summary judgment in favor of Oscar A. Strobel III. The portion of the trial court's summary judgment declaring as a matter of law that the Will of Willie Mae Strobel dated December 6, 1974, did not exercise the power of appointment under the inter vivos trust of Oscar A. Strobel of December 30, 1966 is reversed, the court of appeals opinion is vacated and the matter is remanded for proceedings consistent with this decision. GORDON, V.C.J., and HAYS and CAMERON, JJ., concur.