299 N.Y. 351, 87 N.E.2d 293 (1949)
Prior to 1949, settlors in two separate matters executed trust agreements conveying property to trustees.1 The agreements directed payment of income to the settlor during her lifetime, with the principal to pass upon death either to appointees under the settlor's will or to next of kin in default of appointment.2
In the Burchell trust, additional terms required the settlor to join in conveyances, mortgages, long-term leases, and successor trustee appointments, while granting trustees powers to sell, convey, mortgage, and reinvest.3 The Worm trust required paternal approval for management actions during the father's life but otherwise gave the trustee broad powers.4
No revocation powers or principal withdrawal rights were included in either document.5 The Burchell dispute emerged during administration of the deceased settlor's estate, while in Worm the settlor alone executed a revocation notice pursuant to Personal Property Law section 23, leading to litigation in both instances that reached the Court of Appeals.6
Whether a limitation over to the heirs of the grantor in an inter vivos conveyance created a remainder in the heirs or left a reversionary interest in the grantor?7
The nature of the future interest where an estate is limited to heirs of the grantor is dependent upon the intention of the settlor as expressed in the trust agreement. To transform into a remainder what would ordinarily be a reversion, the intention to work the transformation must be clearly expressed, though the presumption favoring reversion has lost much of its force and additional factors such as reservation of only a testamentary power of appointment may suffice to show intent for a remainder.8
Yes. The Burchell and Worm trust agreements directed payment of income to the settlor during her lifetime.9 The principal was to pass upon death either to appointees under the settlor's will or to next of kin in default of appointment.10
The reservation of only a testamentary power of appointment together with the trustees' broad powers to sell, convey, mortgage, and reinvest the trust property supplies the additional indications of intent required to create remainders rather than leaving reversions in the settlors.11 The settlor's limited approval rights over conveyances, mortgages, leases for more than three years, and appointments of successor trustees in the Burchell trust did not retain sufficient control over the principal to indicate a reversionary interest.12
The limitations over to the heirs created valid remainder interests in both cases.13
Related opinions on this issue
Justice Fuld dissented.14 He concluded that the retention of a testamentary power of appointment does not supply the clearly expressed intention essential to transform a reversion into a remainder.15 This is because the property would pass by will or intestacy even without such a reservation.16
He determined that the language employed in the agreements plainly points to a reversion.17 The majority decision carries form too far without the required clear expression of intent to create a remainder.18 Fuld further observed that the volume of litigation and diversity of opinion on the subject point to the advisability of clarifying legislation.19