Seidel v. Werner

Abraham L. Werner established a trust that made Steven L. Werner the life beneficiary of a one-half share of the trust principal, over which share Steven had a testamentary power of appointment. If Steven failed to exercise his power of appointment, a default provision in the trust provided for distribution of Steven’s share to Steven’s living children, and if none, to Abraham’s next of kin. When Steven obtained a Mexican consent judgment of divorce against his second wife, Harriet G. Werner (defendant), a separation agreement incorporated by reference contained Steven’s promise to make, and not revoke, a will in which he exercises his power of appointment over the trust assets in favor of Anna and Frank Werner (defendants), his children with Harriet. The agreement specified that the trustees pay the income to Harriet for Anna and Frank’s support and maintenance until they reach the age of twenty-one, at which time they would receive the principal, but if they failed to survive Steven, the property would revert to Steven’s estate. Steven, however, died with a will that exercised his power of appointment in favor of his third wife, Edith Fisch Werner (defendant). The trustees (plaintiffs) brought an action for a declaratory judgment to determine which party is entitled to receive Steven’s one-half share of the trust assets. Harriet, Anna and Frank filed counterclaims and cross-claims seeking a declaratory judgment in their favor and other relief. They argued that even if Steven’s promise to exercise his power in their favor was unenforceable, the agreement should be construed as a release of his power of appointment, in which case the trust assets must be divided among Steven’s children under the default provision. Edith filed a motion for summary judgment claiming that she is entitled to Steven’s share of the trust because he exercised his testamentary power of appointment in her favor.