39 N.Y.2d 934 (1976)
Agreements for the installment purchase of stock and retirement benefits are not illusory transfers defeating a spousal right of election if the decedent relinquished control over the principal, even if the decedent retained the right to designate beneficiaries.
Summary
The case concerns the right of a surviving spouse (Helen Crystal) to elect against certain transfers made by her deceased husband (Max Crystal) before his death. Max had entered into agreements providing for the installment purchase of his stock in close corporations and for retirement benefits, designating beneficiaries other than Helen. The New York Court of Appeals held that these agreements were not illusory transfers designed to defeat Helen’s right of election because Max yielded control over the principal, and the retained right to designate beneficiaries did not create testamentary dispositions violating the Statute of Wills.
Facts
Max Crystal entered into four agreements to liquidate his holdings in close corporations, providing for deferred payments totaling $500,000 as retirement benefits. Each agreement allowed Max to designate beneficiaries to receive payments if he died before full payment. Max designated beneficiaries other than his wife, Helen. Max and Helen were married in 1955 but were separated for a period. Max obtained a Mexican divorce later declared invalid in New York, and purported to marry another woman. Max then commenced a divorce action in Florida, but died during the proceedings.
Procedural History
The executor of Max Crystal’s estate initiated an accounting proceeding. Helen Crystal filed objections, claiming the beneficiary designations were illusory transfers intended to circumvent her spousal right of election under EPTL 5-1.1. The Surrogate’s Court ruled against Helen, and the Appellate Division affirmed. Helen then appealed to the New York Court of Appeals.
Issue(s)
Whether agreements providing for installment payments of stock and retirement benefits, with the right to designate beneficiaries, constitute illusory transfers that improperly defeat a surviving spouse’s right of election under New York law.
Holding
No, because Max Crystal relinquished control over the principal of the funds to be paid, and the retained right to designate the beneficiary did not create a testamentary disposition that would violate the Statute of Wills.
Court’s Reasoning
The Court of Appeals distinguished the case from Newman v. Dore, which involved a trust where the decedent retained significant control. The court found that Max Crystal, by entering into the agreements, yielded control over the principal. The agreements conformed to prior precedents like Matter of Hillowitz and Matter of Gross, where similar arrangements were upheld. The court reasoned that the mere right to designate a beneficiary for remaining balances upon death did not transform the agreements into testamentary substitutes. The dissent argued that the court should focus on whether Max retained substantial control and enjoyment of the property during his lifetime, potentially rendering the dispositions illusory. The dissent emphasized the legislative policy of protecting the surviving spouse from inter vivos divestiture by the decedent and criticized the majority for not adequately applying the doctrine of illusory transfers to protect the widow’s elective rights. The dissent cited legislative intent to enlarge and protect the rights of surviving spouses, noting the abrogation of prior decisions by designating Totten trusts and joint accounts as testamentary substitutes. The court explicitly stated that “On any view decedent yielded control over the principal of the sums to be paid. The retained right to designate the beneficiary of the balances remaining upon decedent’s death did not, for the purposes of the Statute of Wills, create testamentary dispositions”.