Reformation Proceeding – Brigati Irrevocable Insurance Trust
August 29, 2013
In Matter of Brigati, Surrogate Czygier of Suffolk County addressed an application to reform the decedent’s life insurance trust, which contained a significant amount of insurance. The instrument contained a number of terms which could cause inclusion in the decedent’s gross estate. Among other things, it provided that upon the death of the Grantor, the life insurance policy proceeds should be distributed to the Grantor’s executor “so he may pay any estate, inheritance, transfer, succession or death taxes.”
The court had before it an affidavit from the Trust draftsman indicating that he knew the Grantor for a number of years and the purpose of the Trust was to exclude assets from his taxable estate. On top of that, the instrument itself had an article entitled “Overriding Tax Purpose,” which specifically stated that the purpose of the Trust was to exclude the life insurance proceeds from the Grantor’s gross estate for federal estate tax purposes.
The court, reciting the general law allowing it to correct mistakes, and relying heavily on the clearly stated purpose of the Trust instrument, allowed reformation to replace the erroneous language with substitute language which would carry out the purpose of the Trust.