Faith-Based Estate Planning
Can a testator use their Will to ensure that their children or issue will only inherit if they marry someone within the testator’s religious faith? That was the key issue in the controversial U.S. case of the Estate of Max Feinberg. Max Feinberg’s Will established a trust for the benefit of his wife Erla during her lifetime, with 50% of the trust to continue as separate lifetime trusts for the benefit of Max’s grandchildren, subject to the following clause:
"A descendant of mine other than a child of mine who marries outside the Jewish faith (unless the spouse of such descendant has converted or converts within one year of the marriage to the Jewish faith) and his or her descendants shall be deemed to be deceased for all purposes of this instrument as of the date of such marriage."
The lower Court held that this violated the public policy of the State of Illinois, and the appellate Court affirmed that decision. In 2009, the Illinois Supreme Court reversed the decision and held that the testamentary disposition was valid.
The Illinois Supreme Court based its decision on the fact that Max had given Erla a power of appointment over her trust, granting her the right to change the provisions of the trusts. In 1997, she exercised that power so that instead of lifetime trusts, any of her grandchildren who were not deemed deceased under Max’s original estate plan at the date of Erla’s death would receive $250,000.00. The Court stated that: "Erla did not impose a condition intended to control future decisions of their grandchildren regarding marriage or the practice of Judaism; rather, she made a bequest to reward, at the time of her death, those grandchildren whose lives most closely embraced the values she and Max cherished."
The author of an article discussing the Feinberg case states that had the Court been required to rule on the validity of the original terms of Max’s estate plan, it would probably have found it to be invalid.
In Canada, the Courts have also strictly interpreted conditions in a clause which would result in the forfeiture of a vested estate. In Canada Trust Co. v. Ontario Human Rights ("Canada Trust") the Court ruled that a trust which was based on discriminatory notions was invalid as against public policy. The subsequent case of Fox v. Fox Estate ("Fox") dealt with a Trustee’s ability to exercise her discretion to effectively cut out a beneficiary who had married outside the Jewish faith. The Ontario Court of Appeal in Fox compared the discriminatory terms of the trust in the Canada Trust case, to the Trustee's decision to pass over a beneficiary for marrying a non-Jewish woman:
“If a settlor cannot dispose of property in a fashion which discriminates upon racial or religious grounds, it seems to me to follow that public policy also prohibits a trustee from exercising her discretion for racial or religious reasons. I am of the view that in this case it would be contrary to public policy to permit a trustee effectively to disinherit the residual beneficiary because he dared to marry outside the religious faith of his mother.”
Thanks for reading.
Moira Visoiu - Click here for more information on Moira Visoiu.
