New York Trusts & Estates Litigation Blog

Trustee Permitted to Amend Accounting to Provide for Commissions

John (Jack) Barnosky — Wed, 10 Feb 2010 10:24:58 -0500

In Estate of Homelsky, 1/20/2010 NYLJ 27 (col 1), a Nassau County Surrogate's Court case, the Trustee, an attorney, moved to amend his final accounting to include Trustee commissions claimed to be due him.

The Trustee’s proposed amendment sought only that portion of annual Trustee’s commissions allocable to principal, not the income portion. The amount claimed was in excess of $183,000. A Trust beneficiary objected to the proposed amendment, asserting that in a Receipt and Release Agreement circulated prior to the judicial accounting, the Trustee had stated that he was waiving all Executor and Trustee commissions. The beneficiary further asserted that the Trustee was not entitled to commissions because he failed to provide the beneficiaries with the annual statement required under SCPA §2309(4).

The Court granted the motion. It found that a statement in the proposed Receipt and Release Agreement waiving commissions clearly indicated that it was made to settle the Account without the need for a judicial accounting proceeding. Since not all of the interested parties signed the agreement, the Trustees had to commence a judicial proceeding, which indeed became contested. The Court stated that “under these circumstances . . . the Trustee should not be held to the terms of the agreement.” As to the argument concerning failure to provide an annual statement, such an annual statement under the statute is to be provided to a person receiving income from the Trust. The Court found that since the Trustee was not seeking the commissions chargeable to income, this argument provided no basis upon which to estop the Trustee from seeking commissions.

The Court decided, but did not pass on the assertion made by Petitioner’s counsel that even if the Trustee were deemed to have waived commission, such a waiver may be withdrawn, citing a number of cases such as Matter of Grace, 61 Misc 2d 51 (Sur Ct, Nassau County 1970); Matter of Grace Candis Parris, 5/17/2005 NYLJ 32 (col 2) (Sur Ct. Kings County).

No "Wiggle Room" In After-Born Statute

Eric Penzer — Mon, 25 Jan 2010 09:27:08 -0500

In Matter of Gilmore, 1/19/2010 NYLJ 21 (col 1), Nassau County Surrogate John B. Riordan declined to expand the reach of EPTL 5-3.2 (the so-called “after-born statute”) to non-marital children known to, or acknowledged by, the decedent after execution of his will.

In Gilmore, a probate proceeding, two non-marital children sought to have their status as beneficiaries determined as a preliminary matter. The parties consented to have the Court assume the truth of the claimants’ allegations for a determination of whether as a matter of law those allegations stated a cause of action entitling the claimants to after-born status.

The decedent died in January, 2007, survived by eleven children, including three from a first marriage, four from a second marriage, and four alleged non-marital children. The propounded will, however, benefited only one child from the first marriage. That child, also the petitioner and named executor, was to inherit the several-million-dollar estate. The claimants were two non-marital children born prior to the decedent’s execution of the will, but allegedly became known to and were acknowledged by the decedent only subsequent to the will’s execution.

The court explained that EPTL 5-3.2 creates a rule of presumed intent for a testator who may have inadvertently omitted as a beneficiary a child born after he executed his will -- “If he gave something to existing children and the after-born is neither provided for nor mentioned in the will and unprovided for by some settlement, the after-born shares in the gift to existing children.” Pursuant to an amendment to the statute (which merely codified existing case law), non-marital after-born children who can duly establish their inheritance rights are entitled to the same benefits under the statute as marital children.

The claimants in Gilmore alleged -- and it was accepted as true for purposes of the motion -- that nearly a decade after the decedent executed his will he underwent DNA tests which revealed to him for the first time that he was their biological father. Although the claimants were born long before the execution of decedent’s will, they claimed that as they were only known or acknowledged by their father after execution of his will, they should be accorded the same presumption of inadvertent disinheritance as after-born children.

The Court rejected the claimants’ argument, however, noting that pursuant to the clear and unambiguous language of the statute, a child is entitled to after-born rights only if born after execution of the will. The only reported exception to this rule -- for a child adopted after the execution of a will, even though born previously -- had no application to the case at bar.

Because the language of the statute was clear, speaking only of a “child born after the execution of a last will” (EPTL 5-3.2 [a]), the Court refused to extend the scope of the statute to a non-marital child who is known or acknowledged by a decedent only after execution of his will. “To engraft exceptions where none exist,” according to the Court, “are trespasses by a court upon the legislative domain”

Summary Judgment Granted, Dismissing Objections and Admitting Will to Probate

Jaclene D'Agostino — Mon, 11 Jan 2010 18:46:42 -0500

In recent years, Surrogate’s Courts have become increasingly inclined to grant motions for summary judgment in contested probate proceedings when warranted. A decision issued last week in Monroe County is yet another example of this trend. While the evidence presented by the objectants in this particular case appears to be exceptionally weak, the following analysis provides a cohesive illustration of the considerations and standards that Surrogates routinely utilize in analyzing typical objections.

In Matter of Feller, 2010 NY Slip Op 50001(U), eight of the decedent’s eleven known distributees filed objections to probate, alleging the customary lack of due execution, lack of testamentary capacity and undue influence. The decedent executed a last will and testament nine months prior to her death, leaving her estate to ten charities and four individuals in equal shares, and naming the attorney-draftsman as executor. The New York State Attorney General’s Office filed a motion for summary judgment, seeking to dismiss the objections.

Due Execution

The objectants contended that the will was not duly executed within the requirements of EPTL 3-2.1 because the attorney-draftsman/proponent, not the testator, requested that that the witnesses act. But the testimony of the attorney-draftsman demonstrated that the testatrix responded in the affirmative when questioned as to whether she wanted those present to witness the execution of the instrument. The Court opined that this conduct coupled with the circumstances surrounding the execution ceremony satisfied the due execution requirements of EPTL 3-2.1. Indeed, “[a]ttorneys routinely lead their clients through the will execution formalities in order to ensure that the requirements of EPTL 3-2.1 are satisfied . . . and . . . publication and instruction . . . is not required to be in any ‘ironclad ceremonial or ritualistic language’” (Matter of Feller, supra, citing In re Douglas’ Will 193 Misc 623, 631-632 [Sur Ct, Broome County 1948]).

Testamentary Capacity

With respect to testamentary capacity, the Court noted the presumption in favor of capacity when a will is drafted by, and the execution supervised by, an attorney. In this case, the Court held that the proponent established a prima facie case of the requisite capacity based upon the following facts:

· The decedent herself sought the services of the attorney-draftsman;

· The decedent personally met with the attorney-draftsman and brought detailed notes as to her desired estate plan;

· The decedent told the attorney-draftsman about her familial situation;

· The witnesses were aware of the decedent’s involvement in her estate planning, and testified that she appeared to have no visual, auditory or cognitive difficulties; and

· The decedent made specific and accurate changes to the draft of the will.

In fact, the only basis for the allegation of lack of capacity was one of the objectant’s observations that the decedent had appeared preoccupied, reserved and distracted during a visit that occurred around the time that the will had been executed. Citing holdings of the Appellate Division that evidence of sadness or confusion alone is insufficient to prove lack of capacity, the Court rejected this contention. The Court further explained that a diagnosis of dementia, Alzheimer’s, or simply old age, without more, would also be insufficient to override a prima facie showing of capacity (id., citing Matter of Nofal, 35 AD3d 1132 [3d Dept 2006]; Matter of Castiglione, 40 AD3d 1227 [3d Dept 2007]; Matter of Minasian, 149 AD2d 511 [2d Dept 1989]; Matter of Hedges, 100 AD2d 586 [2d Dept 1984]).

Undue Influence

Addressing the claims of undue influence, the court reiterated that it is an objectant’s burden to demonstrate by a preponderance of the evidence, (1) motive, (2) opportunity, and (3) actual undue influence. Undue influence must amount to “a moral coercion, which restrained independent action and destroyed free agency or which . . . constrained the testator to do that which was against his free will and desire . . .” (id.,quoting Children’s Aid Society of NY v Loveridge, 70 NY 387, 394 [1877])., The Court further noted that undue influence may proved by circumstantial evidence, “but the circumstances must lead to it not only by a fair inference but as a necessary conclusion” (id., quoting In re Will of Henderson, 253 AD 140 [4th Dept 1937]).

The objectants’ claim of undue influence alleged that the proponent persuaded the testator to change her funeral home of choice to one that was a client of the proponent. However, the proponent testified that he made no recommendations regarding the decedent’s testamentary plan, but tried to persuade her to choose another executor. In addition, the record demonstrated that every time the decedent met with the proponent regarding her estate plan, she was not accompanied by anyone. In view of these facts, the Court held that the Objectants failed to meet their burden in connection with their allegations of undue influence (see Matter of Feller, supra).

Interestingly enough, there was no discussion of a confidential relationship between the decedent and proponent in this case, and thus, the burden of proof did not shift. After all, an attorney-client relationship often gives rise to a confidential relationship, and a consequential presumption of undue influence (see e.g., Weber v Burman, 22 Misc 3d 1104[A] [Sup Ct, Nassau County 2008]; Estate of Olson, 5/16/2006 NYLJ 33 [col 4] [Sur Ct, Richmond County]). Perhaps this was not considered because the attorney-draftsman was not a beneficiary, but I would submit that such a relationship is arguably relevant here, in light of the allegations.

Court of Appeals: Extra Deposition Did Not Violate In Terrorem Clause

Jaclene D'Agostino — Wed, 23 Dec 2009 10:21:15 -0500

In a rare venture into the world of trusts and estates and its most significant recent ruling regarding in terrorem clauses, the Court of Appeals in Matter of Singer, 2009 NY Slip Op 09265, reversed both the Surrogate’s Court and the Appellate Division, holding that a beneficiary’s conduct in deposing the testator’s former attorney regarding drafts of prior wills did not violate the in terrorem clauses in the propounded will. Specifically, the Court held that the safe harbor provisions of SCPA 1404 and EPTL 3-3.5 are not exclusive, and must be applied on a case-by-case basis. The decision has essentially set forth a two-prong analysis to determine whether a beneficiary’s conduct triggers an in terrorem clause, consisting of the following inquiries: (1) whether the conduct falls within the statutory safe harbor provisions, and if not (2) whether it violated the testator’s intent.

In Singer, the decedent had executed a last will and testament approximately one year prior to his death, in which he appointed his daughter, Vivien, as executor. He also created a corresponding revocable trust through which he bequeathed to Vivien his home, most of his tangible personal property, and the sum of $200,000. In the trust instrument, the decedent stated that Vivien’s inheritance was in recognition and gratitude for her extreme dedication and constant care. The decedent’s son, Alexander, received one-half of the remainder of the estate, to be split with Vivien, and each of Alexander’s sons was given a $15,000 bequest.

The will contained a typical, broad in terrorem clause, which stated, “if any beneficiary, shall, in any manner, directly or indirectly, contest, object to or oppose, or attempt to contest, object to or oppose the probate or validity of [the] will or revocable trust created by [the decedent], or any part of [his] estate plan, or any gifts made by [him], . . .” that beneficiary’s share of the estate would be forfeited (id. at *2). The decedent also included a second in terrorem clause that was explicitly directed at Alexander. That clause directed that Alexander “not take [decedent’s] daughter . . . to a . . . (religious court) or to any other court for any reason whatsoever . . . ,” and stated that if he did, the result would be the forfeiture of his and his sons’ inheritance (id.).

Immediately after Viven submitted the will for probate, Alexander served a notice for discovery and inspection pursuant to SCPA 1404 and Article 31 of the CPLR. He sought documents and the deposition of certain individuals, including the decedent’s previous attorney, Mr. Katz. Alexander pursued this particular deposition despite a warning from Vivien’s attorney that this examination was outside of the scope of SCPA 1404 exams and would result in a violation of the in terrorem clause.

At his examination, Mr. Katz testified that he had drafted seven prior wills for the decedent, and stated that he did not believe the decedent lacked testamentary capacity or was unduly influenced by Vivien. In light of this information, Alexander decided not to contest his father’s testamentary plan. The will was subsequently admitted to probate by a decree that explicitly stated that it had not been contested. Notwithstanding this fact, Vivien commenced a construction proceeding seeking a determination that Alexander’s deposition of Mr. Katz resulted in a violation of the in terrorem clauses, as he was the decedent's prior attorney, not the attorney-draftsman of the propounded instrument. The Surrogate agreed, holding that the deposition of anyone aside from those specified in SCPA 1404 triggered the clauses. The Appellate Division affirmed, and further opined that the deposition of Mr. Katz was not protected by any of the safe harbor provisions in EPTL 3-3.5 or SCPA 1404.

EPTL 3-3.5 enumerates specific conduct of a beneficiary that will not trigger an in terrorem clause. Relevant to Singer is the statute’s provision that protects a beneficiary from forfeiting his or her bequest as a result of examining the following individuals (see EPTL 3-3.5[b][3][D]):

· The nominated executor(s) and proponent of the will

· Witnesses to the will

· The attorney-draftsman or other individual who prepared the propounded instrument

Although the statutory safe harbor provisions limit permissible depositions to the above-listed individuals, the Court of Appeals recognized that there might be circumstances that render it permissible to examine individuals outside of the foregoing parameters without an in terrorem clause violation. In so concluding, it was held that the safe harbors of EPTL 3-3.5 are not exclusive, and that if a beneficiary exceeds these parameters, a court must then inquire as to whether there has been a violation of the testator’s intent. This is an analysis that must occur on a case-by-case basis, looking to the language of the clause in issue. As always, such language must be strictly construed.

Applying this rule to the facts in Singer, the Court of Appeals noted that the language of the subject in terrorem clauses demonstrated that the decedent sought to prevent Alexander from commencing any type of court proceeding against, or attempting to contest, the estate plan. Construing the clauses narrowly, the Court held that the deposition of Mr. Katz, an attorney who had a long history of representing the decedent in connection with his testamentary plans, was simply a method of information gathering, not disputing the estate plan.

Indeed, because Alexander decided not to object to the instrument, the Court explained that the purpose of the in terrorem clauses, as well as the general public policy in favor of permitting broad investigation to allow a beneficiary to weigh the risk involved in contesting a will, was actually satisfied by the additional deposition. According to the Court, “[a] broader construction of these clauses as manifesting testator’s intent to preclude the examination of this witness would essentially cut off all other persons from being asked for information, no matter the potential value or relevance . . .” (Singer at *5).

In a concurring opinion, Judge Graffeo noted that the decision has implied that a testator may draft his will to explicitly limit the scope of permissible inquiries to the statutory safe harbor provisions. Thus, he interpreted this decision as granting further latitude to the testator to determine exactly how strict he really intends his in terrorem clause to be (id. at *5-*6).

While this case permits more relevant inquiries into an estate plan when the language of an in terrorem clause allows, it is also likely to result in many more construction proceedings at the Surrogate’s Court level. Notwithstanding this potentially inconvenient consequence, Singer is a landmark decision that implements and emphasizes the concept that testamentary intent must be the paramount consideration in any will construction proceeding.

Potential Court Approval of Religious Divorce Is Irrelevant to Right of Election

Jaclene D'Agostino — Fri, 04 Dec 2009 11:04:17 -0500

A recent decision emanating from the Kings County Surrogate’s Court provides another interesting application of the rules on entitlement to an elective share. In Matter of Atiram, 2009 NY Slip Op 52356(U), the petitioner sought a determination as to her right of election under EPTL 5-1.1A. She had married the decedent in 1952, but thirty-eight years later, the couple participated in a Jewish religious divorce under the supervision of the Rabbinical Alliance of America in New York. The Ministry of Religion of the State of Israel allegedly recognizes this type of divorce. New York, however, does not.

Pursuant to EPTL 5-1.2, a divorce disqualifies an individual from obtaining an elective share when “a final decree or judgment of divorce . . . recognized as valid under the laws of this state [that] was in effect when the deceased spouse died.” New York does not recognize a rabbinical divorce as a valid termination of a marriage because the laws of this state require divorce by “due judicial proceedings.” In light of this rule, the objectant in Atiram sought a stay of the petitioner’s application pending an Israeli court’s determination of the validity of the divorce by the laws of that jurisdiction which, she argued, would qualify as the requisite “judicial proceeding” for New York. The Court disagreed, and opined that the outcome of the Israeli proceeding was irrelevant to the petitioner’s right of election.

Specifically, the Court held that even if the Israeli court were to ultimately recognize that the decedent and the petitioner had been divorced under the laws of that country, such a determination would not have been in effect upon the decedent’s death. Therefore, because the marriage existed on the date of the decedent’s death, petitioner remained entitled to her elective share (see Matter of Atiram, citing Bennett v Thomas, 38 AD2d 682 [1st Dept 1971]; Matter of Berk, 20 Misc 3d 691 [Sur Ct, Kings County 2008]).

Posthumously Voided Marriage Negates Right of Election

Jaclene D'Agostino — Mon, 16 Nov 2009 10:39:58 -0500

Last year, we posted an entry on Matter of Berk, 20 Misc 3d 691 (Sur Ct, Kings County 2008), a decision in which the court granted an elective share to a surviving spouse notwithstanding evidence that the marriage to the decedent, who was 99 years old at the time, occurred under highly questionable circumstances. The court’s rationale was that the marriage was voidable, not void. The Surrogate held that because the marriage was not invalidated prior to the decedent’s death, the right of election could not be disturbed.

In Matter of Kaminester, 2009 NY Slip Op 29429 (Sur Ct, New York County), the court addressed a similar set of facts, but with one distinguishing factor: prior to his death, the decedent had been adjudicated incapacitated in an Article 81 proceeding. This fact allowed for an entirely different result than that reached in Berk.

In Kaminester, the decedent’s estate sought a determination as to the validity of the elective share pursuant to SCPA §1421. As in Berk, the marriage remained a secret until the decedent’s death, and occurred mere months prior thereto. But in this case, the marriage also occurred two and a half months after a Texas court appointed a temporary guardian for the decedent, and during the pendency of an Article 81 proceeding in New York. Within the context of the Article 81, a temporary restraining order had been imposed with respect to removing the decedent from the State, among other things. The Article 81 proceeding resulted in the appointment of a temporary guardian, and a stipulation on the record that the decedent lacked capacity to marry. The decedent’s new “wife” was in the courtroom with her attorney at the time of the stipulation, but neither one revealed the existence of the couple’s recent marriage.

Notably, during this time period, the beneficiary designation on the decedent’s life insurance policy, worth over $1 million, was changed to favor his new “wife.” In addition, a deed was executed transferring the decedent’s Westhampton property to the couple as joint tenants with right of survivorship.

The “wife” filed a notice of election within weeks of the decedent’s death. Thereafter, the executor of his estate sought an order from the Article 81 court to hold her in contempt for violating its TRO. In response, the court invoked Section 81.29(d) of the Mental Hygiene Law, and “revoked and voided” the marriage, the designation of the “wife” as beneficiary on the decedent’s life insurance, and the deed that transferred to her a joint tenancy interest in his Westhampton property. The First Department affirmed these portions of the Article 81 court’s decision, accepting the posthumous voidance of the decedent’s marriage.

Surrogate Glen of New York County subsequently addressed the issue of the elective share, and thus the validity of the marriage, in light of these events. She discussed Section 7 of the Domestic Relations Law (“DRL”), the statute that had been relied upon in Berk, and compared it to Section 81.29(d) of the Mental Hygiene Law (“MHL”). DRL §7 provides that a marriage involving an individual “incapable of consenting to a marriage for want of understanding” is voidable, and becomes a nullity as of the date it is annulled. In contrast, Section 81.29(d) of the MHL “permits the court that appoints an article 81 guardian for an incapacitated person to “’revoke any previously executed . . . contract. . . . made by the incapacitated person prior to the appointment of the guardian if the court finds that the previously executed . . . contract. . . was made by the person was incapacitated’” (Matter of Kaminester, 2009 NY Slip Op 29429 at *5). Thus, the Article 81 adjudication was the lynchpin of the Kaminester decision.

In her decision, the Surrogate questioned whether the legislature had intended MHL §81.29(d) to override DRL §7. She also recognized that while she was bound by the First Department’s determination, the Second Department had previously taken the position that it had inherent power to override DRL § 7 by posthumously voiding a marriage due to the decedent’s mental incapacity (see Campbell v Thomas,36 AD3d 576 [2d Dept 2007]). Nonetheless, because of the First Department’s determination that the decedent’s marriage had been void ab initio as a result of his incapacity, the Surrogate opined that there existed no right to an elective share.

Notably, the result in Kaminester rendered the marriage in issue void, as opposed to voidable, which was the characterization in Berk. A voidable marriage is a nullity upon the court’s declaration, whereas a void marriage is deemed to never have existed. This distinction was based upon the fact that there had been an Article 81 adjudication in Kaminester, allowing for the application of MHL §81.29(d) after the decedent’s death.

Adoption Records Unsealed to Determine Distributee Status

Jaclene D'Agostino — Thu, 29 Oct 2009 16:24:24 -0500

A couple of months ago, we posted an entry discussing the unsealing of adoption records in New York State, and the manner in which courts must weigh the State’s interests of confidentiality and maintenance of the adoptive parent-child bond against an applicant’s interests in unsealing his or her records. Prompting that discussion was Matter of Victor M.I., 23 Misc 3d 1103A (Sur Ct, Nassau County 2009), a case in which the Nassau County Surrogate’s Court permitted the unsealing of adoption records for purposes of proving the petitioner’s Hungarian lineage to establish Hungarian citizenship.

More recently, in Matter of B.F., 674, an application was brought before the Nassau County Surrogate’s Court to unseal an adoption file and obtain a certified copy of the order of adoption to determine whether the adoptive child was distributee of an estate. Specifically, in a proceeding for letters of administration in a Queens County estate, the petitioner sought to demonstrate that a sibling of the decedent had been adopted out of the family in the late 1930’s or early 1940’s.

In its decision, the Court discussed its discretionary power to unseal records upon a showing of “good cause”. Although it recognized that “good cause” has no particular definition, it noted that section 114(4) of the Domestic Relations Law provides a statutory basis for the unsealing of adoption records for obtaining medical history when serious health issues arise. In non-medical situations, it appears that an applicant has a higher burden to prove that his or her interest outweighs that of the State, as applications are granted only on rare occasions (Matter of B.F., 674).

The Surrogate granted the application after an analysis of the State’s interest in confidentiality for purposes of maintaining anonymity for the natural parents, protecting the bond between the adoptive parents and child, and shielding the adoptive child from potentially unsettling information. It was noted that these factors were largely irrelevant in this case (id.).

The adoptive child was born in 1927, so the Court opined that both the natural and adoptive parents were likely deceased. In addition, confidentiality was not an issue inasmuch as the applicant already possessed all information in the one document requested from the file. The court distinguished between the more typical cases, in which an applicant seeks identifying information, and the circumstances presented; the petitioner was aware of the adoptive child’s identity but simply sought a document to legally determine the decedent's heirs at law (id.).

As Surrogate Riordan recited, “[w]hether [good cause] exists, and the extent of disclosure that is appropriate, must remain for the courts to decide on the facts of each case” (Matter of B.F., quoting Matter of Linda F. M.,52 NY2d 236, 240 [1981]). In view of this rule, it would be interesting to see how a court handled a petition with the same cause, i.e., a determination of a decedent's heirs at law, if the adoptive child were younger and some of the confidentiality concerns remained. But then again, if the applicant had enough information to pursue the inquiry, it is probable the he or she, like the applicant in Matter of B.F., already possessed identifying information.

Action Dismissed For Failure to Join Beneficiaries

Jaclene D'Agostino — Fri, 09 Oct 2009 09:27:51 -0500

A notable decision has been rendered by the Second Department, dismissing a trust rescission action as a result of Plaintiff's failure to join certain remainderpersons and charitable beneficiaries as parties.

In Estate of Nowitz v. Nowtiz, 2009 NY Slip Op 06660 (2d Dept 2009), the Decedent had commenced an action during his lifetime to rescind an irrevocable trust agreement without the consent of the trustee. After a jury trial entering a judgment in favor of the Plaintiff’s Decedent, the Defendant appealed seeking a dismissal for failure to join necessary parties and the expiration of the statute of limitations. The Second Department remitted the case to the Supreme Court for a determination (see Estate of Nowitz v. Nowtiz, 37 AD3d 788 [2d Dept 2007]).

According to the lower court, one of the remainderpersons and two of the charitable beneficiaries had waived any appearance on the matter. It further opined that plaintiff’s failure to join the remaining four beneficiaries was excusable due to their notice of the action before it proceeded to trial, and failure to intervene (Estate of Nowitz v. Nowtiz, 2009 NY Slip Op 066600 [2d Dept 2009]).

Relying on CPLR 1001(b), the Appellate Division reversed. It explained that according to statute, courts may excuse failure to join a necessary party upon consideration of five factors:

· Whether there exists another remedy for the petitioner if the action is dismissed due to nonjoinder;

· The prejudice to the party who has not been joined;

· Whether and by whom prejudice may have been, or may in the future be, avoided;

· Whether a protective provision in the judgment is feasible; and

· Whether an effective judgment may be rendered in the absence of the party that was not joined (see CPLR 1001[b]).

Although the Court recognized that the first factor was in favor of excusing the nonjoinder because the plaintiff had no other effective remedy, it determined that a consideration of the remaining factors weighed against proceeding in the absence of the beneficiaries that had not been joined (Estate of Nowitz v. Nowtiz, 2009 NY Slip Op 066600).

Specifically, in light of the second and third factors, the Court held that the beneficiaries would be greatly prejudiced if the trust were rescinded without their participation in the action, and that the plaintiff could have avoided prejudice to the beneficiaries by timely joining them as defendants. The Appellate Division rejected the Supreme Court’s conclusion that the nonjoinder was excusable because the beneficiaries could have avoided any prejudice by seeking to interve; instead holding that this fact was outweighed by the absence of a reasonable excuse for failure to join (id .).

In contemplating the forth CPLR 1001(b) factor, the Court opined that the facts were not in favor of proceeding in the absence of beneficiaries; a protective provision in an ultimate judgment was not feasible because rescission of the trust would directly affect their economic interests. Finally, the Court held that the efficacy of a judgment would be questionable without the participation of the beneficiaries who had not been joined, thus rendering the fifth factor against nonjoinder as well (id.).

Because four of the five CPLR 1001(b) factors weighed against proceeding without those who had not been joined in the action, the Appellate Division held that these beneficiaries were indispensible parties. Coupling this with the fact that the applicable statute of limitations had expired, the Court dismissed the action (id.).

The foregoing serves as a caveat to trust and estate litigators, emphasizing the importance of joining all beneficiaries in a proceeding. Although dismissal is never desirable for the petitioner or plaintiff, a dismissal predicated on failure to join an indispensible party is especially unpleasant considering the ease of avoiding such a result. Indeed, where the CPLR 1001(b) factors render a party to be necessary, a beneficiary’s failure to intervene upon notice of the proceeding is no excuse. Inclusion of all indispensable parties is the responsibility of the party commencing the action.

Court Cites Flaws in Article 17-A in Denying Guardianship Application

Jaclene D'Agostino — Fri, 25 Sep 2009 09:40:37 -0500

A recent decision from New York County in which Surrogate Glen denied an Article 17-A guardianship petition, Matter of Chaim, A.K., 8/26/2009 NYLJ 41 (col 1) (Sur Ct, New York County), has clarified the proper use of the proceeding.

The Court began its analysis by distinguishing the characteristics of guardianship proceedings brought pursuant to Article 17-A of the Surrogate's Court Procedure Act, and those brought under Article 81 of the Mental Hygiene Law. Specifically, the Court held that the Article 17-A proceeding is not necessarily appropriate in all circumstances where an individual has been diagnosed as developmentally disabled or mentally retarded.

Chaim presented facts typical of Article 17-A cases. Parents were petitioning for guardianship of their son who had reached majority and had been diagnosed by two physicians as developmentally disabled. He was unable to make medical decisions for himself. Indeed, both diagnosing physicians submitted affidavits supporting his parents’ application. However, the additional information before the Court, including psychiatric reports demonstrating psychological and emotional problems, led the Surrogate to question whether an Article 17-A guardianship was appropriate.

In her decision, Surrogate Glen explained the many factors that distinguish Article 17-A proceedings from those commenced under Article 81. She noted the following:

Article 17-A was originally intended as a vehicle for parents of mentally retarded children to continue to exercise control after the child reached an age of majority, while Article 81 is directed at adults who have lost or diminished capacity;

Article 81 grants no more power to the guardian than is necessary, while Article 17-A does not allow for the court to grant the guardian a particular degree of control over the ward;

No hearing is required under Article 17-A, while a hearing is necessary under Article 81, providing the opportunity for cross-examination and independent counsel for the AIP;

Article 17-A allows for the discretionary appointment of a guardian ad litem, while Article 81 mandates the appointment of an independent court evaluator;

Article 17-A is silent as to burden of proof, whereas Article 81 requires clear and convincing evidence;

Article 17-A is largely driven by forms, often providing the court with conclusory statements about the ward’s condition but resulting in ease for applicants who frequently petition pro se, while Article 81 is more complex and thus more likely to require the services of an attorney; and

Article 17-A guardians are not required to report to the court with any updates after the appointment, whereas Article 81 guardians must file detailed reports ninety days later and subsequently on an annual basis (id.).

Considering Chaim’s particular situation in light of the “all or nothing” nature of an Article 17-A guardianship, Surrogate Glen denied the Petition and suggested that Article 81 may be more appropriate. Her rationale was that the evidence demonstrated that Chaim’s difficulties were attributable more to mental illness than mental retardation, and thus were likely treatable. As a result, the Court opined that it would be unnecessary and inappropriate to give a guardian complete power over Chaim’s affairs pursuant to Article 17-A. Instead, the Court held that “changes in his circumstances . . . may require altered powers in the guardian or perhaps even, someday, no guardian at all” (id.).

This decision has the potential to significantly change the landscape of guardianship proceedings in Surrogate's Courts. It is presently unknown whether Chaim will be the subject of an appeal, but we will keep you informed of any developments.

Triggering In Terrorem Clauses With Out-Of-State Will And Trust Contests

Robert Harper — Fri, 11 Sep 2009 09:08:08 -0500

In terrorem provisions, which are more commonly known as “no contest” clauses, generally state that beneficiaries forfeit their interests in estates and trusts by contesting the validity of the governing instruments (see Matter of Kalikow, 23 Misc3d 1107[A], at *2 [Sur Ct, Nassau County 2009] [discussing in terrorem clauses]). While strictly construed, such clauses are enforceable in New York (Matter of Ellis, 252 AD2d 118, 127-28 [2d Dept 1998]). They serve several important purposes, such as preventing challenges to wills which might result in trials, jeopardize the testator or grantor’s testamentary or inter vivos plans, or harass other beneficiaries (Matter of Singer, 17 Misc3d 365, 370 [Sur Ct, Kings County], aff’d, 52 AD3d 612 [2d Dept 2008], leave granted, 11 NY3d 716 [2009]; Tumminello v Bolten, 59 AD3d 727, 728 [2d Dept 2009]).

In Shamash v Stark, Surrogate Kristin Booth Glen of the Surrogate’s Court, New York County, recently addressed an issue of first impression in New York (Shamash v Stark, NYLJ, 6/16/2009, at 38, col. 2 [Sur Ct, New York County]). The issue was whether will and trust contests in Florida, where no contest clauses are void as against public policy (F.S.A. § 732.517), triggered an in terrorem clause contained in a New York trust instrument (Shamash, supra).[1]

In Shamash, the decedent’s revocable trust, which was governed by New York law, provided that any beneficiary who contested his will or trust would forfeit his or her interest in the trust (id.). After contesting the will and trust in Florida, the petitioner commenced an accounting and removal proceeding with respect to the trust in the New York Surrogate’s Court (id.). The respondents moved to dismiss the Surrogate’s Court proceeding, arguing that the petitioner was not a beneficiary of the trust estate, and therefore lacked standing to maintain the proceeding, because he had triggered the trust’s in terrorem clause by contesting the will and trust in Florida (id.). In opposition, the petitioner asserted, among other things, that he did not trigger the in terrorem clause because no contest clauses are void under Florida law (id.).

The Surrogate’s Court dismissed the petition, holding that the petitioner lacked standing to seek an accounting or removal with respect to the trust (id.). The court reasoned that: (1) the trust is governed by New York law; (2) in terrorem clauses are enforceable in New York; and (3) the petitioner triggered the trust’s in terrorem clause by contesting the decedent’s will and trust in Florida (id.). The fact that no contest clauses are void as against public policy in Florida was immaterial (id.).

The lesson to take away from Shamash is that the contest of a will or trust in another state, where in terrorem clauses are not enforceable, may trigger such a clause in a New York instrument and result in the forfeiture of a beneficiary’s interest in the subject estate or trust.

[1] This firm represented the respondents in the Surrogate’s Court proceeding.

Trusts: Legally Protecting Assets from the Settlor's Creditors

Jaclene D'Agostino — Thu, 27 Aug 2009 17:19:49 -0500

New York law allows individuals to limit their liability to creditors by arranging their affairs in a manner that legally protects their assets. One of the ways this is accomplished is by “making irrevocable transfers of their assets, outright or in trust, as long as such transfers are not in fraud of existing creditors . . .” (Matter of the Joseph Heller Inter Vivos Trust, 613 Misc 2d 369 [Sur Ct, 1994]). The circumstances under which a trust’s assets will be validly protected are limited to the existence of specific parameters in the trust instrument.

According to EPTL §7-3.1, “[a] disposition in trust for the use of the creator is void as against the existing or subsequent creditors of the creator.” In other words, an individual cannot transfer his or her assets to a trust and continue to retain control or enjoy the benefits of that trust, while simultaneously enjoying protection from creditors. Instead, transfers to irrevocable trusts will only be deemed valid for purposes of sheltering the assets from creditors where the grantor does not reserve a power to revoke the trusts or to dispose of the property during his lifetime, and where the transfers to the trust did not make the grantor insolvent (see Matter of Granwell, 20 NY2d 91 [1967]; Debtor Creditor Law §273).

A transfer resulting in the grantor’s insolvency or one that is made while the grantor is already insolvent may be deemed a fraudulent conveyance (see Debtor Creditor Law §273). In such cases, the creditors may set aside conveyances and reach the assets. But if trust assets remain available for the grantor’s benefit, creditors need not establish fraud to invalidate the transfer (see Vanderbilt Credit Corp. v Chase Manhattan Bank, N.A., 100 AD2d 544 [2d Dept 1984]; Colgate v Guaranty Trust Co. of New York, 159 Misc 664, 666 [Sup Ct, New York County 1936]). For example, in Vanderbilt Credit Corp. v Chase Manhattan Bank, N.A., 100 AD2d 544 (2d Dept 1984), the Appellate Division held that trust assets are not protected from creditors if the trustee has discretion to make payments to the grantor (see Vanderbilt Credit Corp. v Chase Manhattan Bank, N.A., 100 AD2d 544 [2d Dept 1984]).

Not surprisingly, this concept extends beyond the life of the trust settlor and remains applicable to his or her estate. Indeed, courts recognize that where an individual reserves the power to dispose of trust property during his or her lifetime, “he or she must be regarded as the absolute owner of the funds until death and those funds would be therefore available to pay estate debts” (Estate of Hughes, 3/20/2003 NYLJ 23 [col 2] [Sur Ct, Kings County], citing Matter of Granwell, 20 NY2d 91 [1967]; Matter of Batiste, 5/4/99 NYLJ 30 [col 6]). Also notable is the fact that, "any property covered by a general power of appointment which is presently exercisable, or a postponed power which has become exercisable, is subject to creditors' claims" (Estate of Chappell, 7/24/09 NYLJ 26 [col 1] [Sur Ct, New York County], citing EPTL §10-7.2).

In light of the foregoing, it is clear that individuals may legally protect their assets from the claims of creditors, provided they are willing to forego the control and benefits of the funds and of course, do not transfer their assets fraudulently.

Court Examines Beneficiary's Right to Sell Real Property

Ilene Cooper — Mon, 10 Aug 2009 09:28:37 -0500

The issue of ownership of real property has frequently arisen in Surrogate’s Court proceedings, most particularly, in the context of applications by a testamentary beneficiary to sell or dispose of realty devised pursuant to the terms of the decedent’s Will. As discussed in my article in the New York Law Journal several years ago, often-times the outcome of such a application hinges upon a determination of whether the beneficiary holds a life estate in the premises or simply a right of occupancy or other lesser interest (see Ilene Sherwyn Cooper, The Meaning of a Life Estate and Other Decisions of Interest, NYLJ, Nov. 10, 2005, at p.3).

Recently, this issue was again before the court in In re Gullo, 7/6/2009 NYLJ. 37 (col 1) (Sur Ct, Suffolk County). In Gullo, the threshold issue before the court was whether the provisions of the decedent’s will provided the petitioner with a life estate in the decedent’s residence. The petitioner requested leave of court to purchase the premises, and to credit herself with the value of her life estate in the property and improvements she made to the premises subsequent to the decedent’s death. The application was opposed by the trustee under the decedent’s will, on the grounds that the petitioner did not receive a life estate in the realty, but rather a fee on limitation. Petitioner claimed the contrary, maintaining that the language in the decedent’s Will provided her with a life estate, and that a sale of the property was both expedient and in the best interests of the estate.

Pursuant to the pertinent provisions of his Will, the decedent devised and bequeathed the subject property to the petitioner, his daughter, as a “life estate”, and authorized her to reside and remain in the premises for as long as she wished, so long as it remained her principal residence. If for any reason the decedent’s daughter declined the life estate, or decided to vacate the property, the Will directed that the property be sold and the net proceeds be distributed pursuant to the provisions of the residuary clause.

In analyzing the issue as to the nature of the petitioner’s interest in the subject premises, the court held that a life estate in property conveys exclusive ownership of the land during the lifetime of the life tenant, subject only to certain well-defined limitations or duties. Moreover, the holder of a life estate may, under certain circumstances, be able to force the sale of the property and collect the value thereof, assuming it is demonstrated that the sale is expedient. The court opined that in comparison to a life estate, a right of occupancy or a lesser interest to a life tenancy is a personal privilege that does not confer the benefits of a life estate.

Although the language of the decedent’s Will utilized the words “life estate” in referring to the petitioner’s interest, the court did not consider that fact dispositive of the issue raised. Further, the Court found that the conditions expressed in the Will requiring the petitioner to pay taxes and maintenance on the property were inconsequential to the result, and insufficient to elevate petitioner’s ownership from a right of occupancy to a life tenancy. Rather, the Court held that the language employed in the instrument was significant of a “fee on limitation”, as defined in EPTL 6-1.1(a)(3). That being the case, the court concluded that petitioner’s interest did not lend itself to computation or application of a credit for a life estate.

Accordingly, the court determined that the petitioner held a fee on limitation in the property and was not entitled to a credit for a life estate. The court further opined that the expediency of the sale was unclear from the record inasmuch as the circumstances which usually give rise to such a conclusion usually involves sales to third parties, and not necessarily parties in possession of the property.

Tales from the Crypt: Disposing of Human Remains in New York

Robert Harper — Thu, 30 Jul 2009 14:10:55 -0500

Trusts and estates litigators often see families at their very worst, fighting over everything from money to decision-making authority, and virtually anything else imaginable. So, it should come as no surprise that there have been disputes over the disposition of human remains, which necessitated legislative action to resolve these conflicts.

New York Public Health Law section 4201 “sets forth a prioritized list of [individuals] who shall presumptively have the right to direct the disposition of a decedent’s remains” (Maurer v Thibeault, 20 Misc 3d 631, 632 [Sup Ct, Cortland County 2008]). An agent appointed in a written instrument executed in accordance with section 4201 shall have first priority (Public Health Law § 4201 [requiring, among other things, that the principal and agent sign the instrument]). Absent a written instrument, the following individuals shall have priority to control the disposition of a decedent’s remains, in descending order:

(1) “the decedent’s surviving spouse;”

(2) “the decedent’s surviving domestic partner;”

(3) “any of the decedent’s surviving children eighteen years of age or older;”

(4) “either of the decedent’s surviving parents;”

(5) “any of the decedent’s surviving siblings eighteen years of age or older;”

(6) “a guardian appointed pursuant to article seventeen or seventeen-A of the surrogate’s court procedure act or article eighty-one of the mental hygiene law;”

(7) “any person eighteen years of age or older who would be entitled to share in the estate of the decedent as specified in section 4-1.1 of the estates, powers and trusts law, with the person closest in relationship having the highest priority;”

(8) “a duly appointed fiduciary of the estate of the decedent;”

(9) “a close friend or relative who is reasonably familiar with the decedent’s wishes, including the decedent’s religious or moral beliefs, when no one either on this list is reasonable available, willing, or competent to act, provided that such person has executed a written statement pursuant to subdivision seven of this section [stating that he or she has no knowledge that the decedent executed a written instrument containing directions for the disposition of his or her remains]; or”

(10) “a chief fiscal officer of a county or a public administrator appointed pursuant to article twelve or thirteen of the surrogate’s court procedure act, or any other person acting on behalf of the decedent, provided that such person has executed a written statement pursuant to subdivision seven of this section” (id.).

The person with priority must faithfully carry out the decedent’s directions to the extent permitted by the law and the circumstances (id.).

In Maurer v Thibeault, the petitioner did something that no parent should have to do, she requested permission to determine the disposition of her deceased daughter’s remains after the daughter died under suspicious circumstances (20 Misc3d at 632-37). Although the respondent, the decedent’s husband, asserted that he should decide how his wife was laid to rest, the petitioner argued that the respondent should not be given priority because he was estranged from the decedent and, therefore, did not qualify as her “surviving spouse” under the statute (id.).

Noting that the decedent never executed a written instrument in accordance with section 4201, the court then addressed whether the respondent had priority over the petitioner as the decedent’s surviving spouse (id.). The court concluded that he did not (id.). In doing so, the court relied on evidence that established the decedent’s hatred, loathing and fear for the respondent immediately before her death (id.). The court also referenced the police report she filed against the respondent just one month prior to her death, accusing him of attacking and strangling her “to the point of unconsciousness” (id.).

Based upon those facts and the line of cases precluding a separated or estranged person from qualifying as a “surviving spouse,” the court rejected the respondent’s claim of priority (id.). The court also granted the petitioner’s request for permission to control the disposition of the decedent’s remains (id.). As the decedent’s surviving parent, the petitioner had priority to do so, since there was no written instrument, the respondent did not qualify as a surviving spouse, and the decedent had no domestic partner or child age 18 or older (id.).

In New York, the disposition of remains is presumptively governed by section 4201. Absent a valid written instrument appointing an agent for that purpose, section 4201 sets forth which individuals shall have priority to make decisions concerning the disposition of remains.

Widow Barred from Bringing Legal Malpractice Action against Husband's Estate Planning Attorneys

Jaclene D'Agostino — Fri, 17 Jul 2009 09:26:26 -0500

Trusts and estates practitioners often provide joint representation to married couples as they create their estate plans. Questions as to the existence of joint representation may arise if husband and wife retain the same estate planning attorney, but do not meet or communicate with counsel together; instead, creating their own separate estate plans. These were the circumstances in the recent case of Leff v Fulbright & Jaworski, LLP, et. al. (Sup Ct, New York County 2009), in which a widow brought a legal malpractice action against her estate planning attorneys in the context of their actions as counsel to her late husband. The result is food for thought, and perhaps may encourage attorneys and their married clients to assume more clearly defined roles.

Joel B. Leff (“Decedent”) died in 2002 with an estate valued at approximately $90 million. In 1974, the Decedent entered into a Separation Agreement as part of a divorce settlement with his first wife, with whom he had a son. Said Agreement provided that the Decedent would bequeath to his son by Will no less than one-half of his probate estate, assuming his first wife remarried. Years later, the Decedent retained an estate planning attorney, who had no involvement in the drafting of the Separation Agreement. A copy of the Separation Agreement was given to the attorney, and remained in his file throughout his representation of the Decedent.

In 1998, the Decedent married Plaintiff. Prior to their marriage, they entered into a prenuptial agreement providing that each spouse “would have the right to dispose of his or her property . . . as each party sees fit,” but further stated that the Decedent would bequeath the marital residence and devise a specific amount to Plaintiff (id. at 2). Thereafter, the Decedent, represented by Defendants, executed a number of Wills and Codicils. At no time in the drafting of these instruments were the terms of the Separation Agreement considered by Decedent or his attorneys.

The Decedent’s testamentary instruments were drafted without his wife’s knowledge or involvement, with the exception of two instruments: (1) a codicil in anticipation of the couple’s trip to Cambodia, which, by its terms, expired upon their return; and (2) an unsigned Will bequeathing to Plaintiff one-half of his adjusted gross estate, which the Decedent gave to Plaintiff as an anniversary present. At the time of this gift, the Decedent reassured Plaintiff, by letter, that she would be informed if he were to execute a new Will that reduced her interest in his estate. Throughout this period, Plaintiff was also represented by Defendants in connection with her own estate plans, and jointly with her husband in connection with the purchase of an apartment.

It was only after the Decedent’s death that the Separation Agreement surfaced in Defendants’ file, in response to a claim by his son for one-half of the probate estate. The estate settled with the Decedent’s son, as a creditor of the estate, for approximately $20 million. Plaintiff subsequently sued Defendants for legal malpractice, claiming a loss of approximately $9 million due to their failure to inform Decedent about the existence of the Separation Agreement; she alleged that the Agreement should have been considered, resulting in alternative planning options to allow the Decedent to fulfill his intent as expressed in his Will. Defendants moved to dismiss, contending that they owed no duty to Plaintiff with regard to Decedent’s estate planning, as they never represented the couple jointly in this capacity. The Court agreed.

Despite Plaintiff’s contentions that she and the Decedent were represented jointly by Defendants, the Court explained that “[a] party’s ‘subjective belief as to the existence of an attorney-client relationship is not dispositive’” (id., quoting Weadick v Herlihy, 16 AD3d 223, 224 [1st Dept 2005]). Moreover, the Court rejected Plaintiff’s reliance on Prudential Ins. Co. of America v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377 (1992), in which it was recognized that the concept of privity was expanded to encompass the relationship between an attorney and a third party. In distinguishing Prudential, the Court explained that Plaintiff could not overcome the law that “a beneficiary has no cause of action against the attorney who negligently drafted a will” (Leff v Fulbright & Jaworski, LLP, et. al., citing Spivey v Pulley, 138 AD2d 563 [2d Dept 1988]).

In its decision, the Court relied upon Mali v De Forest & Duer, 160 AD2d 297 (1st Dept 1990). There, it was held that estate planning attorneys had no duty to a decedent’s son, a beneficiary of his father’s Will, despite the fact that the attorneys advised the son as to his own estate planning and were longtime advisors to the family (id., citing Mali v De Forest & Duer, 160 AD2d 297, 298). The Court also rejected Plaintiff’s arguments that “near privity” was created between her and Defendants with respect to the Decedent’s estate planning because the Defendants explained to her the import of one of the Decedent’s Wills, and occasionally updated her about the amount of her legacy upon her husband’s death. This relationship with respect to the Decedent’s estate plan was interpreted by the Court to be merely “fleeting contacts” (Leff v Fulbright & Jaworski, LLP, et. al. at 15).

Additionally noteworthy is that, in a footnote, the Court refused to embrace the discussions by the American College of Trust and Estate Counsel and the American Bar Association that “in the absence of an agreement to the contrary’ a husband and wife represented by the same counsel be presumed as joint clients” (id. at 15, fn 2). Thus, it was held that Defendants could not be liable to Plaintiff for any mistakes that they may have committed in their representation of the Decedent.

Notwithstanding the lack of privity, the Court further determined that “[Plaintiff’s] case falters inexorably on the issue of causation, simply because Plaintiff cannot prove that she would have received more money from [Decedent] ‘but for’ Defendants’ failure to inform [Decedent] of the existence and import of the Separation Agreement” (id. at 16)

Query, if the Court had determined that an attorney-client relationship had existed, permitting Plaintiff’s claim of legal malpractice, should the Court have so quickly dismissed her case on the issue of causation? Perhaps a hearing would have been beneficial prior to making such a determination. Plaintiff may have had adequate evidence to demonstrate alternative actions that could have been taken by Defendants, i.e., writings demonstrating that lifetime gifts to the Decedent’s son were advancements, or maybe the creation of trusts. It is a moot point here, but something to be considered for future cases.

Unsealing Adoption Records

Robert Harper — Fri, 10 Jul 2009 13:12:39 -0500

Adoption records are generally confidential in New York, but at times they are unsealed for medical purposes. While it is rare for these records to be unsealed for other reasons, courts will at times determine that it is proper to do so in a particular case.

Under New York law, adoption records are sealed “to protect and insure [the] confidentiality [that] is ‘vital to the adoption process’” (Matter of Victor M.I. I., 23 Misc3d 1103[A], at *1 [Sur Ct Nassau County 2009]; DRL § 114[2]). The confidentiality serves several important purposes (Matter of Linda F. M., 52 NY2d 236, 239 [1981]). First, it “shields the child from possibly disturbing facts surrounding his or her birth and parentage” (id.). Second, “it permits the adoptive parents to develop a close relationship with the child free from interference or distraction” (id.). Third, “it provides the natural parents with an anonymity that they may consider vital” (id.).

Notwithstanding the preference for confidentiality, there are circumstances in which it may be appropriate to unseal adoption records (DRL § 114[2]). Indeed, “adoption records may be unsealed upon a showing of good cause” and “due notice to the adoptive parents” (Victor M.I. I., 23 Misc3d 1103[A], at *1 [internal quotation marks omitted]). “Good cause” typically arises for medical reasons, such as a serious health issue (id.). Further, while adoption records may be unsealed for non-medical reasons, exceptions to the rule for non-medical reasons are “rare” (Matter of Lewis, NYLJ, 4/20/2007, at 32 [Sur Ct Kings County]).

Matter of Victor M.I. I. involves one of those rare exceptions (23 Misc3d 1103[A], at *1-3 [Sur Ct, Nassau County 2009]). There, the petitioner sought to unseal adoption records for the purpose of obtaining certified copies of his pre-adoption birth certificate (id. at *1). The petitioner did so “in order to establish his Hungarian lineage [and] become a citizen of Hungary, based upon the status of his biological mother [as] a Hungarian citizen” (id.). In support of his application, the petitioner asserted that he “would benefit from Hungarian citizenship because he frequently travels to Hungary for business and personal reasons and resides there on a part-time basis” (id.). He also submitted an affidavit from his then-deceased biological mother, which evidenced her consent to the requested relief (id.).

Nassau County Surrogate John B. Riordan granted the petitioner’s application, noting that the policies favoring confidentiality did not weigh against the petitioner’s prayer to obtain copies of his pre-adoption birth certificate (id. at *2). As Surrogate Riordan explained, the petitioner’s adoptive parents were deceased, his biological mother had consented to unsealing the records, and the petitioner could not obtain his original birth certificate from any other source (id.). Those factors, when taken in conjunction with the “substantive benefit” the petitioner would enjoy if afforded the opportunity to secure copies of his original birth certificate, constituted “good cause” (id.). Accordingly, the court granted the application to unseal the adoption records to permit the petitioner to obtain copies of his pre-adoption birth certificate (id. at *2-3).

Although the confidentiality of adoption records is favored, there are circumstances in which such documents may be unsealed. Those circumstances generally stem from health-related reasons, but may occasionally arise for non-medical reasons as well. The Victor M.I. I. case makes that much clear.

Ask not what your Trustees can do for you...

Eric Penzer — Fri, 26 Jun 2009 11:29:10 -0500

One of the great things about contributing to a legal blog is that you get to write about court decisions that, although not particularly noteworthy for the legal ground they break, are really entertaining to read. One such decision recently emanated from the United States District Court for the Southern District of New York.

In Kennedy v. Trustees, Will of President John F. Kennedy, 08 Civ. 8889 (S.D.N.Y. June 19, 2009), Judge William H. Pauley III dismissed an action in which the plaintiff, John Fitzgerald Kennedy, alleged that he was the illegitimate son of the late President John F. Kennedy and Marilyn Monroe. Although not the basis for its dismissal of the action, the court noted that the plaintiff had no documentary evidence of his kinship claim, despite the fact that he attached a photograph of himself to his complaint, showing his resemblance to President Kennedy. And, in case you were wondering, the plaintiff’s name at birth was John Ruben Burton; he changed it in 1994. You really can’t make this stuff up.

The plaintiff’s initial complaint sought an order directing genetic testing of two members of the Kennedy family (Robert Fitzgerald Kennedy, Jr. and Congressman Patrick Joseph Kennedy) and, upon confirmation of his claim through such genetic testing, an order compelling the Trustees of the testamentary trust created under President Kennedy’s Last Will and Testament to “honor their fiduciary duties.” The Trustees moved to dismiss the action, for lack of subject-matter jurisdiction and for failure to state a claim upon which relief can be granted. The plaintiff’s amended complaint, filed after the motion to dismiss was briefed and argued, dropped the claim for genetic testing, instead requested an order compelling the Trustees to investigate his claim of kinship and his entitlement to an inheritance.

The court dismissed the action because plaintiff’s claim, for breach of fiduciary duty, was legally insufficient. The court first considered whether the Trustees would owe the plaintiff a fiduciary duty if he were successful in establishing that he was in fact President Kennedy’s son. In doing so, the court applied Massachusetts law, as President Kennedy was domiciled in Massachusetts at the time of his death, and section 3-5.1 of the New York Estates, Powers & Trusts Law provides that “[i]nterpretation of a testamentary disposition of personal property shall be made in accordance with the local law of the jurisdiction in which the testator was domiciled at the time the will was executed.”

The court explained that prior to 1987, Massachusetts law provided that words as such as issue, children, and the like meant only children born of a lawful marriage, absent anything indicating a contrary intent (see Decision at 7 [quoting and citing Massachusetts authority]). And the will at issue (executed long prior to 1987) contained nothing to suggest that President Kennedy intended to include non-marital children as beneficiaries. Therefore, the court concluded, the plaintiff would not be entitled to inherit under the will even if he were able to prove that he was President Kennedy’s son. As the Trustees could not owe the plaintiff a fiduciary duty, the claim for a breach thereof was legally insufficient and subject to dismissal.

From the perspective of the trust and estate litigator, the court’s analysis of the probate exception to federal diversity jurisdiction warrants some discussion. The probate exception was once described as “one of the most mysterious and esoteric branches of the law of federal jurisdiction” (Dragan v. Miller, 679 F.2d 712, 713 [7th Cir. 1982]). A full discussion of the probate exception is beyond the scope of this blog entry, although you can click here for an article providing more information. Suffice it to say that the exception prohibits federal courts from “interfering with [a] probate proceedings or assum[ing] general jurisdiction of the probate or control of the property in the custody of the state court”(Marshall v. Marshall, 547 U.S. 293, 126 S. Ct. 1735, 1747 [2006]).

Judge Pauley analyzed the scope of the probate exception, determining that the plaintiff’s request for an order compelling the Trustees to investigate his kinship claim was not barred by the probate exception because it neither sought to have the court interference with a probate matter nor exercise control over a res in the custody of a state court (see Decision at 6). If such investigation ultimately established that that the plaintiff was President Kennedy’s son, however, the court would not be permitted to determine the plaintiff’s claim to his inheritance under the President’s will, as to do so would be to exercise control of a res in the custody of a state court (see id.).

While this case may not break any new legal ground, it is worth reading for the court’s analysis of the probate exception to federal diversity jurisdiction -- always an interesting read for the estate litigator -- and for pure entertainment value. Whoever said that life is stranger than fiction was right on the money.

Amendments to Simultaneous Death Statute, EPTL 2-1.6

Jaclene D'Agostino — Thu, 11 Jun 2009 10:13:41 -0500

Legislative amendments to EPTL 2-1.6, the statute pertaining to disposition of assets under circumstances of apparent simultaneous deaths, are forthcoming. The new legislation has been approved by the New York State Senate and Assembly, and awaits Governor Paterson's signature.

The current version of EPTL 2-1.6 addresses the disposition of property where there is no evidence that individuals died other than simultaneously. Under these circumstances, absent a clause in the decedents' wills stating otherwise, the statute presumes that each individual predeceased the other. Thus, property is generally distributed as if each individual survived the other, with some exceptions.

The new EPTL 2-1.6 will repeal the former statute, and essentially provides that absent clear and convincing evidence that one individual survived the other by one hundred and twenty hours, that individual is treated as if he or she predeceased. In effect, this statute enacts the 1993 version of the Uniform Simultaneous Death Act.

Probate of a Lost Will

Jaclene D'Agostino — Fri, 29 May 2009 10:03:26 -0500

Every effort should be made to preserve an original will, assuming it is expected that the will may be offered for probate. If an original will is lost, however, the testator’s plan will not necessarily be frustrated.

Pursuant to SCPA 1407, a lost will may be admitted to probate when three conditions are met: “(1) it is established that the will has not been revoked, (2) execution of the will is proved in the manner required for the probate of an existing will, and (3) all provisions of the will are clearly and distinctly proved by each of at least two credible witnesses or by a copy or draft of the will proved to be true and complete.” The third requirement is often met by the production of a photocopy of the original will (see Estate of Tendler, 4/9/2009 NYLJ 42 [col 5] [Sur Ct, New York County]; Estate of Koontz, 4/8/2009 NYLJ 35 [col 5] [Sur Ct, New York County])

A will that is “shown to have existed” and was in the testator’s possession at the time of his or her death is presumed destroyed and thus revoked (see In re Evans, 264 AD2d 482 [2d Dept 1999]). This presumption is rebuttable, however, by satisfaction of the aforementioned statutory requirements (In re Demetriou, 48 AD3d 463 [2d Dept 2008]). In the event that the will were not in the testator’s possession at the time of his or her death, no presumption of revocation exists. Thus, if the attorney-draftsman retains the original will and it is ultimately lost or destroyed, the proponent may more easily prove that there was no revocation.

Consider the facts in Estate of Raymond, 3/25/2009 NYLJ 35 (col 3) (Sur Ct, Bronx County). There, the decedent’s original will had been maintained in the office of the attorney-draftsman. The attorney’s office was damaged following the July 2007 Manhattan steam pipe explosion, and the City of New York Department of Health ordered the destruction of all documents that had been stored there. The testator never executed another will, and upon his death, a conformed copy of the destroyed will was offered for probate. Noting that no rebuttable presumption of revocation existed because the original will was not in the testator’s possession, the court was satisfied that all three prongs of SCPA 1407 were met. It was held that the will would be admitted to probate.

Similar circumstances were presented in Estate of Castiglione, 40 AD3d 1227 (3d Dept 2007). The attorney-draftsman submitted an affidavit in support of probating a photocopy of the will, stating that the original had been kept with him, but that it had been lost when his office relocated. The attorney-draftsman of the decedent’s codicil corroborated this evidence, and further confirmed that the decedent had believed his will was still in existence upon executing his codicil. The Appellate Division was satisfied that the evidence presented satisfied SCPA 1407, and dismissed allegations that the will was invalid due to lack of testamentary capacity and undue influence. The Surrogate’s Order directing the probate of the will was therefore affirmed.

For a more in depth discussion of probating lost wills, see Necessary Requirements to Successfully Probate a Lost Will, Nassau Lawyer, November 1, 2008.

The Due Execution of Wills

Ilene Cooper — Fri, 15 May 2009 09:28:07 -0500

The due execution of a will requires that the elements of EPTL 3-2.1 be complied with before the instrument is admitted to probate. However, only substantial compliance with the provisions of the statute need be shown in order for due execution to be found. The meaning and scope of this provision has been the subject of judicial decision in recent years as evidenced by the following opinions:

Signature at the End of the Document

The provisions of EPTL 3-2.1 require that the decedent sign a will at “the end” thereof. The meaning of this provision was discussed by the court in In re Mobley, N.Y.L.J. Mar. 20, 2009, at 35 (Sur. Ct. New York County), in which the court was presented with the issue of whether the propounded instrument should be denied probate due to the irregular order of the signatures of the testatrix and witnesses.

Specifically, after the dispositive provisions of the Will, and the appointment of the executrix, there appeared preprinted two lines intended for the date and the signature of the testatrix. Those lines, however, were blank. Below these two lines was a pre-printed attestation clause, to which the date and signature of attesting witnesses was appended. Following the attestation clause there appeared a preprinted affidavit of attesting witnesses containing the names, but not the signatures of the attesting witnesses. Rather, on one of the lines for a witness, there appeared the signature of the testatrix.

In finding that the Will had been duly executed, the court opined that a testamentary instrument can be admitted to probate even if the procedure for execution and attestation do not take place in the precise order established by statute. In this regard, the fact that the signatures of the witnesses appear before the testatrix’s signature does not invalidate a will. Further, the court held that although the testatrix did not affix her signature immediately after the dispositive provisions of the instrument, but instead after the attestation clause and the preprinted affidavit of attesting witnesses, the signature of the testatrix nevertheless appeared “at the end” of the instrument as required by the provisions of EPTL 3-2.1. Indeed, the court noted that all dispositive provisions appeared before the testatrix’s signature.

Accordingly, probate of the instrument was granted.

Post-Death Signature of Witnesses Invalidates Will

In re Estate of Lederman, N.Y.L.J., May 22, 2002, p. 19, col. 5 (Sur. Ct., New York County), two of the residuary beneficiaries moved for summary judgment denying probate to a codicil that contained a substantial pre-residuary bequest. A Will and four codicils of the decedent were offered for probate. Under the Will and three of the codicils, the decedent made some minor pre-residuary bequests and bequeathed 90% of her residuary estate to her niece and nephew, and a charitable institution. These instruments were prepared by an attorney who supervised their execution.

The contested codicil was executed approximately 10 weeks before the decedent died, and was a one -page typewritten instrument, labeled “Codicil.” Pursuant to its terms, the sum of $300,000 was left to the decedent’s caretaker. Although the decedent signed the instrument, it was witnessed by only one person, who was designated as the executrix under a provision of the penultimate codicil. The witness stated that she prepared the codicil pursuant to the decedent’s instructions, and that the decedent had informed her that the bequest was to be a bonus to her caretaker.

The individual residuary beneficiaries moved for summary judgment on the ground that the codicil had not been properly executed in accordance with the provisions of EPTL 3-2.1, since only one witness had signed the instrument. The proponent acknowledged the deficiency in the instrument, but nevertheless maintained that it could be cured by her husband, who was present in the room at the time the codicil was executed. The proponent requested that her husband sign the instrument as a witness, albeit after the decedent’s death.

The court denied the application, and granted summary judgment in the movants’ favor, finding that a witness cannot effectively subscribe a Will after the testator has died. This principle is designed to prevent fraud. Furthermore, the court found that the second attestation proposed would be unavailing since it would not occur within the thirty day period prescribed by statute.

Witness/Beneficiaries

The due execution of a Will requires that the testator affix his name or acknowledge his signature to at least two attesting witnesses. The provisions of SCPA 1404 require that at least two of the attesting witnesses to the Will be produced before the court and examined before a Will is admitted to probate. When an attesting witness is also a beneficiary under a propounded Will the question arises as to whether the Will can nevertheless be admitted to probate, given the financial interest of the beneficiary in the instrument. Under such circumstances, the law provides that a Will may be admitted to probate, but the disposition to the witness/beneficiary shall be void, if the witness’ testimony is necessary to admit the Will to probate.

The foregoing principles were recently applied in a case of apparent first impression decided by the Surrogate’s Court, New York County, in In re Estate of Wu, NYLJ, April 27, 2009, p.19. Before the court was an application by the executor of the decedent’s estate for an order directing the decedent’s brother to pay his proportionate share of estate taxes. The brother opposed the application arguing that the tax apportionment clause in the Will exonerated him from liability.

The decedent’s brother was the beneficiary of two life insurance policies on the decedent’s life, but also was one of the two attesting witnesses to the instrument. Under the circumstances, the court found that his testimony was necessary to the probate of the Will, and pursuant to the provisions of EPTL 3-3.2, declared the tax exoneration clause of the Will ineffective as to him. Specifically, the court reasoned that the provision, to the extent that it discharged an obligation of the decedent’s brother, was tantamount to a beneficial disposition to him, within the scope of the statutory dictates pertaining to witness/beneficiaries.

The court opined that while the result of its opinion was ostensibly harsh, it was not so harsh as to deprive the decedent’s brother of his inheritance, i.e. the insurance proceeds, albeit net of estate taxes. Indeed, the court noted that in most instances in which the statute is applied, the witness/beneficiary under the propounded Will is denied his entire bequest. Nevertheless, the court cautioned attorney-draftspersons utilizing a tax exoneration clause to be fully informed of the recipients of the testator’s non-probate assets in order to avoid unintended consequences.

Discovery in Probate Contests

Robert Harper — Thu, 07 May 2009 09:39:55 -0500

Discovery in a contested probate proceeding is generally governed by what Surrogate’s Court practitioners call the “three/two” rule (22 NYCRR 207.27). This rule limits discovery to the “three-year period prior to the date of the propounded instrument and two years thereafter, or to the date of the decedent’s death, whichever is the shorter period” (id.). It is a “pragmatic rule" intended to prevent the abuses associated with a “runaway inquisition” or “wild goose chase” (Estate of Das, NYLJ, 5/1/2009, at 31 [Sur Ct Nassau County]).

Notwithstanding that general rule, however, the time period for discovery may be extended by the Surrogate’s Court when “special circumstances” exist, such as when “a scheme of fraud or a continuing course of conduct of undue influence” is alleged (id.). For example, in Matter of Kaufman, the objectants sought discovery with respect to the entire period of cohabitation between the proponent of the decedent’s will and the decedent, which lasted from September 1948 until the decedent’s death in April 1959 (11 AD2d 759, 759-60 [1st Dept 1960]). The objectants argued that the departure from the three/two rule was warranted because the proponent’s long relationship with the decedent gave rise to testamentary capacity and undue influence concerns (id.). Although the Surrogate’s Court denied the objectants’ motion, the Appellate Division reversed, reasoning that a full examination of the decedent’s relationship with the proponent was warranted (id.).

However, conclusory allegations of “special circumstances” will not suffice. In Estate of Das, the Surrogate’s Court recently denied the objectant’s motion to depart from the three/two rule (Das, supra). There, the decedent died in July 2002, but the petitioner, the decedent’s son, did not offer the decedent’s will for probate until September 2006 (id.). The petitioner attempted to explain the delay by filing an affidavit of lateness stating that he had trouble locating the deed to real property the decedent owned in India (id.). Nevertheless, the objectant, another one of the decedent’s sons, filed objections to probate, alleging that the will was the product of fraud, duress, and undue influence, among other grounds (id.).

The objectant moved to expand the three/two rule for discovery, while the petitioner cross-moved for an order appointing him to act as Executor of the decedent’s estate (id.). In support of his motion, the objectant argued that “special circumstances” existed, justifying the requested departure from the three/two rule (id.). Specifically, the objectant asserted that: (1) “the petitioner and his wife sold property owned by the decedent during the decedent’s lifetime;” (2) “there was a delay in offering the will for probate;” (3) “the petitioner exercised a health care proxy ‘resulting in the decedent’s death’;” (4) “the petitioner failed to investigate injuries sustained by the decedent as the result of a fall in the hospital and did not bring a wrongful death action;” (5) “the purported will reflects a ‘fatal disregard for forced heirship laws of India’;” (6) “the proposed executor[] and his counsel ‘displayed conduct during the probate proceedings including but not limited to initial non-responsiveness followed by less than adequate disclosure’;” and (7) the “fact that [the] proposed executor’s wife has and continues to wield undue influence over the estate is further highlighted by her recent communiqué with an Indian attorney on the forced heirship laws of India” (id.).

Upon considering the objectant’s contentions, the court concluded that there were no special circumstances to justify departing from the three/two rule (id.). The court reasoned that there were “no allegations of a ‘scheme to defraud’ or a ‘continuing course of conduct of undue influence” (id.). As a result, the court denied the objectant’s motion to expand the three/two rule for discovery (id.).

While the three/two rule governs discovery in probate contests, it should not serve as an absolute bar to obtaining discovery of activities that occur outside of the permissible period when special circumstances exist.