Opinion
2011-365773/A.
Decided November 15, 2011.
Farrell, Fritz, P.C., Uniondale, NY, (attorney for petitioner).
Attorney General of the State of New York, New York, NY.
Before the court are two petitions for the application of cy pres (EPTL 8-1.1) to a revocable inter vivos trust.
Petitioners are the co-trustees of the "DR. ROBERT VON TAUBER AND OLGA VON TAUBER, M.D., REVOCABLE TRUST" dated October 28, 1993 and amended February 3, 1994.
The court has jurisdiction to entertain a petition under EPTL 8-1.1 in connection with an inter vivos trust, pursuant to SCPA 209 subdivision [6] and Article VI § 12 [d] of the Constitution of the State of New York ( Matter of Kramer, 20 Misc 3d 383 [Sur Ct, Nassau County 2008]; In re Fleet Nat'l Bank;20 Misc 3d 879 [Sup Ct, Albany County 2008]).
Venue is predicated upon the location of the assets of the trust in financial institutions in Nassau County (SCPA 207).
The first petition seeks the application of cy pres to Article "FIRST" section 8 subsection B of the trust which provides:
The sum of Two Hundred Thousand ($200,000) Dollars to be held by my Trustee, in further trust, to create and fund the DR. ROBERT AND OLGA VON TAUBER FOUNDATION and the annual income thereof shall be distributed to a needy minor individual or individuals that reside in the Town of Huntington and who by letter and other proof shows his or her need for monetary support for continuing their education and who is selected by my Trustee for such annual distribution.
The sum available to fund the trust is $200,000.00. The trustees contend that this is inadequate to fund and administer a foundation over any substantial period of time. They propose to distribute the funds to Long Island Community Foundation, Division of Community Funds, Inc., to establish a fund entitled "Dr. Robert and Olga Von Tauber Funds." The fund would be administered as an institutional endowment fund for college scholarships. The recipients would be high school students residing in the Town of Huntington who demonstrate financial need. It is anticipated that the trustees will work with the existing scholarship committees at high schools in Huntington. The Attorney General has appeared in this proceeding and raises no objection to the proposed plan.
When literal compliance with the terms of a charitable gift are impracticable, the court can direct the application of the funds in a manner which will most effectively carry out the charitable purpose ( Sherman v Richmond Hose Co. No. 2, 230 NY 462; Trustees of Sailors' Snug Harbor in the City of New York v Carmody, 211 NY 286).
The requirements for the application of cy pres are that (l) the trust is charitable in nature, (2) the language of the instrument when read in light of all attendant circumstances must indicate a general charitable intent, and (3) the particular purpose for which the trust was created has failed or become impracticable ( Matter of Othmer, 185 Misc 2d 122 [Sur Ct, Kings County 2000]). A trust for the advancement of education is charitable in nature ( Russell v Allen, 107 US 163; Matter of Post , 2 AD3d 1091 [3d Dept 2003]). The terms of the gift and the fact that there are several charitable gifts indicates a charitable intent ( Matter of Othmer , 12 Misc 3d 414 [Sur Ct, Kings County 2006]).
The court is satisfied that the expense of administering an independent foundation would significantly reduce the funds available for scholarships, thereby frustrating the intent of the grantors. Where the funds are not sufficient to accomplish the precise directions of the grantor, the application of cy pres is appropriate ( Matter of MacDowell, 217 NY 454).
Where the purpose of a charitable gift has several components, the proposed plan under cy pres must satisfy each of them, if practicable ( Matter of Scott, 8 NY2d 419; Matter of Mary Holbrook Russell Mem. Scholarship Fund, 189 Misc 2d 198 [Sur Ct, Nassau County 2001]). Here, the plan of the trustees satisfies the grantor's requirements that the gift be applied (l) to provide scholarships, (2) for high school students, (3) residing in the Town of Huntington, (4) who require financial assistance to attend college.
The court therefore approves distribution of the trust funds allocated to this trust provision in accordance with the plan presented by the trustees.
The second petition is for the application of cy pres to Article "FIRST" subsection (10) (iii) of the trust which provides that 25% of the remainder is to be held in further trust as follows:
". . . to establish, in perpetuity, an endowment and to use the annual net income thereof to fund a fellowship for the advanced study of Psychiatry in the Department of Psychiatry and Behavioral Science, School of Medicine, SUNY, Stony Brook. The Trustee shall determine the amount of the annual net income that shall be distributed to the fellow; and, income not distributed shall be accumulated and added to principal.
A fellowship search committee shall be appointed by the department chair; such committee to consist of not less than three (3) members. The committee will select a new fellow annually and such fellow will hold the fellowship for a period of one (1) year.
A fellowship candidate shall have completed at least three (3) years of basic psychiatric residency training and shall demonstrate a desire, in the judgment of the search committee, to make a contribution to a better understanding of psychiatric illness and treatment. The fellow shall be memorialized in perpetuity and shall be known as "the Dr. Robert von Tauber and Olga von Tauber, M.D., Fellow in Psychiatric Medicine."
The Health and Sciences Center at Stony Brook has informed the trustees that the funds available (approximately $266,000.00) are insufficient to establish a fellowship. In addition, the rules of the University prohibit the Department from offering an unaccredited fellowship. The fact that the gift is in conflict with the medical school's guidelines warrants a modification of the terms of the trust ( In re Trustees of Columbia University in City of New York, 27 Misc 3d 1205[A] [Sur Ct, Nassau County 2010]).
After consultation with the University, the trustees propose to establish a fund entitled "The Robert Von Tauber and Olga Von Tauber Fund." The fund is to be administered by the Department of Psychiatry and Behavioral Sciences at the Stony Brook University School of Medicine for the benefit of fourth year medical students and fellows. The Attorney General appears in this proceeding and does not oppose the plan.
The plan of the trustees does not effect a change of the charitable institution nor does it significantly alter the classification of the recipients. Therefore, it more closely resembles an administrative change, which can be effectuated under the doctrine of equitable deviation (EPTL 8-1.1, see Matter of Wilson, 59 NY2d 461). The plan meets the higher standards imposed under the doctrine of cy pres, as well ( see In re Trustees of Columbia University in City of New York, 27 Misc 3d 1205[A] [Sur Ct, Nassau County 2010]).
The Court approves distribution of the funds applicable to the gift of part of the residuary estate to Stony Brook University in accordance with the proposed plan of the trustees.
Settle decree.