Holzbach v. United Virginia Bank

Arthur Hall’s will established a marital trust for his wife, Julia Hall, taking advantage of the federal marital estate-tax deduction. The trust paid Julia the income for life and gave her a testamentary power of appointment over the corpus. Arthur’s will specifically gave Julia a general power of appointment “by specific reference to the powers granted herein, in her will,” to direct distribution to her estate or any other party. If Julia failed to exercise the power of appointment, then the corpus would go to a residual trust under Arthur’s will. Arthur’s will appointed United Virginia Bank (plaintiff) executor of Arthur’s estate and trustee of Julia’s marital trust. Julia’s will gave her sister, Hazel Holzbach (defendant), “all of my estate, be it real, personal, or mixed, or in which I may have a power of appointment of whatsoever, nature, kind or description, and wheresoever the same may be located.” The bank petitioned the court to decide whether Julia’s will effectively exercised her power of appointment, naming Holzbach as a party in interest. The person who wrote Julia’s will submitted an affidavit stating that Julia knew she had a power of appointment under Arthur’s will and discussed it with the drafter when her will was prepared. The judge nonetheless found that Julia’s will did not exercise her power of appointment and ordered the corpus of the marital trust distributed as part of Arthur’s residuary estate. Holzbach appealed, arguing Julia intended to and did appoint the corpus to Holzbach.