Surrogate John Czygier Jr.
Petitioners, nominated executors, sought reformation of various language in the trust to allegedly fulfill the stated purpose of the grantor’s intent. The trust terms provided that upon the grantor’s death, trust funds, consisting of the proceeds of a life insurance policy, would be distributed to the executor to pay any estate inheritance, transfer, succession or death taxes. Petitioners sought to reform the trust to insulate the insurance proceeds from inclusion in the grantor’s estate. It was argued such inclusion would subject the proceeds to estate taxes in contravention of the grantor’s stated intent. Petitioners claimed the proposed reformation would satisfy the technical requirement of the Internal Revenue Code, allegedly misunderstood and misapplied by the attorney-draftsman. The court stated that based upon the trust’s language in Article VIII, the trust’s unambiguously stated purpose was to exclude the life insurance proceeds from the grantor’s taxable estate. It ruled where such intention was clear, the draftsman’s mistakes should be corrected. Therefore, the court concluded it was satisfied the proposed reformation was consistent with the grantor’s intentions, and granted petitioners’ application.