Estate, Powers and Trusts, § 3-1.3: Who May Receive Testamentary Dispositions of Property

Under New York estate law a testator may leave property in a will only to people or entities that have the legal capacity to acquire and own property. Generally speaking only people who are at least age 18 have the capacity to acquire and own property. Those who suffer from a mental incapacity would not be eligible to acquire and own property. In addition, according to § 3-1.3 of New York’s Estate, Powers and Trusts law, unincorporated associations do not have the legal capacity to acquire and own property. This means if you make a gift in your last will and testament to an unincorporated association, that particular testamentary gift would fail. If you have questions related to who may receive testamentary dispositions of property, contact a New York will attorney at the Law Offices of Stephen Bilkis & Associates to discuss your concerns.

Who may receive testamentary dispositions of property

Under New York law, unincorporated associations cannot receive testamentary gifts. An unincorporated association is a group of individuals working for a common objective, such as charitable goal. However, the group has no formal, legal structure. On the other hand, incorporated associations are legally able to acquire and hold property. However, unincorporated associations can become incorporated associations if the proper paperwork is filed with the state. Thus, there is an exception to the general rule that testamentary dispositions to unincorporated associations will fail. The exception gives an unincorporated association 3 years after probate, to incorporate and become an incorporated association with the legal capacity to receive a testamentary gift.

Consequences of a failed testamentary gift

As a will attorney serving New York will explain, if a testamentary gift is void because the recipient was ineligible to receive the gift, the property will become a part of the testator’s residuary estate and will go other beneficiaries according to the residuary clause of the will. If the will does not have a residuary clause, then the property becomes part of the intestate estate and will pass to the testator’s legal heirs under the statutory rules of intestate succession. This generally is an unwanted result which can be avoided by careful advance planning with the help of a skilled attorney.

Under the rules of intestate succession, your property that is not disposed of through your will goes to relatives that are your legal heirs. That means that your property will go to your surviving spouse and children. In the absence of either a surviving spouse or children, the statute lists the categories of relatives who would receive your property in an order for priority, including your parents, grandparents, siblings and other blood relatives.

Example

In the case of Estate of Brown, Matter of, 486 N.Y.S.2d 446, 109 A.D.2d 955 (N.Y.A.D. 3 Dept., 1985), the decedent, Ellis Brown, created a charitable remainder unitrust for the lifetime benefit of his widow with the remainder going to the Ithaca, New York office of the Salvation Army. At the time the Ithaca, New York office of the Salvation Army was an unincorporated branch of the Salvation. Under EPTL § 3-1.3 because it was unincorporated, it would be ineligible to take the charitable remainder despite Ellis Brown’s wishes. However, with the help of a will attorney in New York, the unincorporated beneficiary could have become eligible by incorporating within the 3 year timeframe.

Related Statutory Provisions

1. Who may make wills of, and exercise testamentary powers of: Estates, Powers and Trust, § 3-1.1
2. What property may be disposed of by will: Estates, Powers and Trust, § 3-1.2

Estate, Powers and Trusts, § 3-1.3- Who may receive testamentary dispositions of property

Testamentary dispositions to unincorporated associations

1. A testamentary disposition of property may be made to any person having capacity to acquire and hold such property.
2. When a will disposes of property to an association which lacks capacity to receive such property by will because it is unincorporated and the association may become incorporated under the law of this state or of the jurisdiction in which it has its principal office, such disposition is valid despite the lack of capacity of the beneficiary if within three years after probate of the will such beneficiary becomes incorporated with capacity to take such disposition, subject to the following: (1) This § does not limit the power of the court to give effect to the intention of the testator and to preserve dispositions for the use and benefit of unincorporated associations. (2) In the case of a testamentary disposition of property to an unincorporated association in such manner that the estate may lawfully vest in such association, as provided in paragraph (b), at a future time, the estate shall be treated as immediately vested either in the trustee in whom any estate preceding such disposition is vested or, if there is no such precedent trust, in the personal representative of the decedent’s estate as trustee, subject to any intermediate estate created by the will. The trust herein created is subject to the direction and control of the surrogate’s court as if it had been created by express provision in the will. If the association is incorporated and empowered to receive the disposition, the trustee shall transfer the property disposed of to the corporation so formed, but if the association is not incorporated, the trustee shall transfer the property to such persons as are entitled thereto. (3) If a testamentary disposition to an association is made in such manner as to take effect upon the incorporation of such association, as provided in paragraph (b), and no disposition is made of the rents, profits or other income accruing prior to such incorporation, the will shall be construed as directing the trustee described in subparagraph (2) to receive the rents, profits or other income and to hold them for the benefit of the corporation when formed or, if such corporation is not formed within the time prescribed by paragraph (b), for the benefit of the persons entitled to the property upon the failure of such disposition. (4) Notwithstanding any other law of this state governing (A) the purposes for which trusts may be created, (B) the rule against perpetuities or (C) the accumulation of income, a trust as provided in subparagraph (2) is valid. (5) During the continuance of any trust authorized by subparagraph (2), the unincorporated association to which the disposition is made may enforce such trust, and any such association has capacity as such, despite the fact that it is not incorporated, to exercise such right and to take such proceedings as may be appropriate for the exercise or waiver of such right or, in the manner permitted by law for renunciation by a testamentary beneficiary, to renounce the disposition. In the event of any such renunciation, the trust provided for in subparagraph (2) shall terminate and the property, including accumulations, shall vest in the persons otherwise entitled thereto as if no such disposition had been made. (6) This § does not limit the effectiveness of 8-1.1 with respect to a disposition to which that § applies.

Contact the Law Offices of Stephen Bilkis & Associates

Creating a will is complex. It is requires a deep understanding of New York probate law. Failure to understand the requirements of the law may result in testamentary gifts that you would like make being declared void. In order to ensure that your property ends up in the hands of those who you want to receive it, it is important that you work with an experienced New York will attorney. The attorneys at the Law Offices of Stephen Bilkis & Associates have years of experience representing clients in matters related to drafting wills and other estate documents, as well as matters related to will challenges, estate litigation, and estate administration. Contact us at 800-696-9529 to schedule a free, no obligation consultation regarding your case. We represent clients in the following locations: the Bronx, Brooklyn, Long Island, Manhattan, Nassau County, Queens, Staten Island, Suffolk County and Westchester County.