Newman v. Dore

Three days before he died, Ferdinand Straus transferred all his property to a trust to prevent his second wife, Clara Dorner Straus (defendant), from inheriting anything. A New York statute allowed a disinherited widow to elect to take a one-third share of her husband’s estate unless a testamentary trust provided equivalent income for life. Because Ferdinand’s estate included only those assets he owned on the date he died, transferring everything to a different trust beforehand meant the testamentary trust for Clara would pay her one-third of nothing. The trust agreements purported to transfer title to Ferdinand’s property to a trust for the benefit of his first wife’s daughter, Emma Newman (plaintiff), and appointed Arthur Dore and others (defendants) as trustees. Ferdinand retained not only the power to revoke the trust and the right to income for life, but the right to control the trustees. Newman sued the trustees to enforce her trust. Clara challenged the trust as an illusory transfer effected solely to defraud her of her elective share of Ferdinand’s estate. The trial court found the transfers invalid because Ferdinand made them solely to evade New York’s estate laws and deprive Clara of her spousal inheritance rights. The appellate court reached the same conclusion and affirmed. Newman appealed to New York’s highest court.