PRACTICE AND PROCEDURE

In the Matter of Reuben Hoppenstein, No. 2015-2918/A (N.Y. Sur. Mar. 31, 2017) the New York County Surrogate ruled as appropriate the distribution of a life insurance policy to a new trust which eliminated certain beneficiaries of the distributing trust. This distribution was made by a trustee vested with absolute discretionary power  by the terms of the trust. The beneficiaries who were excluded brought suit against the trustee . The Surrogate deferred to the trust instrument even though it was not in strict compliance with the Estate Powers and Trusts Law.

The law always seeks to determine the intent of the creator of an instrument. Here the creator of the trust wished that his trustee have absolute discretion to make certain distributions. That provision inherently has the potential to disappoint some beneficiaries who were expecting to receive distributions from the trust but “absolute discretion” means just that.

Prior to the commencement of a probate proceeding or an administration proceeding, the attorney for the estate will normally send a waiver consenting to the admission of the will to probate or to the appointment of an administrator to all interested parties who are members of the closest class of kinship to the decedent or who are mentioned in a will. This is a legal document and, once signed, it is difficult if not impossible to retract.

Surrogate Diana Johnson of Kings County recently denied a motion seeking to retract a waiver in the Estate of Miles. The movant who had given the waiver was represented by counsel and had signed the waiver as a result of misconceptions she had about the meaning of the document. The court ruled that in the absence of some proof of fraud or deception, the waiver was binding and could not be retracted.

It cannot be emphasized enough that there is generally a finality about signing a waiver. Your lawblogger frankly does not understand how counsel may have failed to impart this importance   to the person executing the waiver  even though I must confess that I was not a fly on the wall and was  not privy to their conversations on this matter. Suffice to say that if you have any doubts whatsoever about whether or not to sign a waiver, there is generally no harm to you in simply not signing. In such a case, you will eventually be served with a citation and will have the opportunity to appear in court and explain your concerns to the Surrogate and probably one of the court attorneys. If you realize that you will need legal representation, you will be given the opportunity to hire a lawyer to protect your interests.

As an additional afterthought, I would point out that there is no need to fear service of a citation. Like a summons, it is a jurisdictional device. It merely confers jurisdiction on the Surrogate to hear and determine the issues raised in the estate proceeding.

Revisions to New York’s Estate Powers and Trusts Law (EPTL) enacted in 2008 were intended to correct inadvertent failures of a spouse to correct provisions to eliminate ex spouses as beneficiaries. The Matter of Suggs  involves just this type of situation. When the decedent and his spouse divorced, the court made provisions concerning the disposition of a life insurance policy which was to be split 60/40 in favor of the decedent. However, taking into account a debt owed by Mrs. Suggs to her husband, court further found that she no longer had a marital interest in the policy.

In a classic example of carelessness, the decedent neglected to remove his ex wife as beneficiary from the policy and she naturally applied to Prudential for payment of the death benefit upon her ex husband’s death years later.  Surrogate Barbara Howe noted that “under the prior statute, when a couple divorced, the divorce automatically revoked dispositions under the will and, more recently, transfers under Article 13-4.1 (securities held in transfer-on-death form). L.2005, ch. 325, §3. It did not, however, affect the ex-spouse’s rights to in-trust-for bank accounts (Totten Trusts), life insurance policies, lifetime revocable trusts, or joint tenancies with right of survivorship. The statute now terminates the ex-spouse’s interest in all such assets.

The statute readopts several provisions of its predecessor. The ex-spouse is treated as having predeceased the decedent for purposes of her dispositions. If the spouses remarry, the gift is revived if its revocation happened solely because of the divorce. Property held jointly with right of survivorship transforms upon the divorce into a tenancy in common” (Margaret Valentine Turano, Supp Practice Commentaries, id., 2014 Supp Pamph at 66-67, emphasis added).

these revocation-by-divorce statutory provisions were enacted, at least in part, to prevent “inadvertent” dispositions to former spouses:

“Revocation-by-divorce statutes adopt the presumption that in the vast majority of cases the testator’s failure to revoke his will subsequent to divorce is due to neglect.”

Your lawblogger would like to add some additional thoughts to Surrogate Howe’s logical and useful decision. Yes, the revised EPTL did save the estate from the carelessness of the decedent and prevented his ex spouse from reaping undeserved insurance benefits which the judgment of divorce clearly precluded her from receiving. But consider that long periods of time will often pass from the date of a divorce to the date that one of the spouses dies. Consider also that records may be lost or destroyed during this time and that death often comes at a time of great confusion and emotional distress.

It is not such a good idea to rely on the law to save you in situations such as this where your estate may be confronted by an avaricious former spouse and an insurance company that may or may not be aware of who is entitled to what [ as an aside, consider how many former girlfriends of World War II GIs have reaped the benefits of a GI life insurance policy issued to a young soldier who passed away three generations later having forgotten that the policy ever existed!]. It is a much better idea to periodically review the beneficiary provisions of your life insurance policies, retirement plans , etc to make sure that nothing has slipped through the cracks. Remember also that sometimes when insurance companies and retirement plan administrators merge, data on beneficiaries is accidentally and irretrievably purged. You need to keep on top of these policies yourself while you are healthy and sharp!

 

Undue influence has always been one of the most difficult claims to prove in an estate contest. New York County Surrogate Nora Anderson has determined in The Matter of Wechsler ,2015 Slip Op 3100 U, that sufficient issues of fact have been raised by the Petitioner to warrant a trial on the question of whether or not Lewis Wechsler  was the victim of undue influence when his second wife of 32 years advised his executor that there was no need to probate his Will since she had already transferred his assets to her. This totally frustrated a long-standing testamentary scheme which had been memorialized by no less than four very similar Wills which provided for the children of the decedent’s first marriage as well as his wife. As a result of her actions, more than eight hundred thousand dollars in brokerage accounts together with a Park Avenue Coop apartment were siphoned out of Mr. Wechsler’s estate!

Surrogate Anderson’s decision is a veritable clinic for those who wish to understand and deal with situations where undue influence may be an issue.  Rarely do any of us make a decision which is not the product of one form of influence or another. In fact, most things which influence decisions might best be classified as “due influence”. The exercise of undue influence involves literally taking over the ability of another person to make his or her own decisions; a substitution of one’s own will for the free will of another.

This is your lawblogger’s case. Much of the evidence used to demonstrate the argument that undue influence led to the improper transfer of the assets of the decedent came from the medical records and especially the nurses’ notes in his hospital records. The Petitioner was the attorney for the decedent for many years and had drawn all of his Wills, none of which provided for his children to be disinherited. He also testified that the decedent’s sister and neice had called him to try to convince him to draft a new will favoring Mrs. Wechsler. What the record reveals –but the decision does not specify– is that both of these women are experienced psychiatrists, thereby raising an inference that they may have used their professional skills to influence the decedent to sign documents transferring his assets to his wife when he was hospitalized. The record revealed a man in a seriously weakened condition having suffered from a myriad of debilitating conditions, leaving him open to pressure to abandon his long-standing and well constructed testamentary scheme.

It is important to consider that Mr. Wechsler died in February 2006, a full nine years ago and this middling – sized estate is still in litigation. It may be that the court’s decision on this motion  — which was filed in March 2013— will be appealed, thereby adding at least another twelve to eighteen months to the process. If the decision is affirmed –or if no appeal is taken– there will be a trial. The case will go on for at least a total of ten years. Hopefully, we will be able to report on the conclusion of this matter before then.

 

The Estate of Robyn Lewis reported in the Watertown Daily Times  presents a state of facts perfect for a bar examination question.  When Robyn Lewis and her husband James Simmons divorced in Texas in 1966, Robyn retained ownership of a home in upstate New York. Even though the couple had executed “mirror” wills   (in which each left his or her entire estate to the other)  prior to their divorce, it is well-established that the each was effectively disinherited by the divorce. Robyn’s will provided that if she was predeceased by her husband, her father in law James R Simmons would be her executor and sole heir.

In 2007, Robyn made a new will leaving her two brothers as her beneficiaries. Evidently the will was in a large clearly marked envelope which was given to a neighbor for safekeeping. Unfortunately, Robyn passed away at the young age of 43 and when no one in her family found her will, her brothers applied for and received Letters of Administration.  The plot thickened when her ex Googled her by chance, only t0 learn that she had died. Although he could no l0nger take the inheritance provided for in Robyn’s will, there was no such restriction on his father who then produced the original document and applied for letters Testamentary in New York.

Robyn’s brothers objected to this and , although the will she executed in 2007 was apparently lost, the neighbor gave what the court described as credible testimony to support the existence of the will and that it had disappeared in her safekeeping and her friend had not herself revoked it. Nonetheless the Surrogate ultimately revoked the Letters of Administration granted to the Lewis brothers and admitted the earlier Texas will to probate, naming James R Simmons (Robyn’s former father in law) as executor. The Surrogate, as well as the Appellate Division also noted that there were issues arising out of the fact that Texas law might also have applied here.

So now this rather twisted set of facts will be decided by the Court of Appeals. On one hand, your lawblogger finds it hard to believe that given that two teams of lawyers will be locked in combat over a relatively small  -$200,000- estate  without somebody realizing that there should be an agreeable number out there to serve as a base for a settlement. On the other hand, I cannot help but look at the myriad of interesting issues in this “lost will” case and wonder how the highest court will resolve them. For sure there will be some precedents set here.

Stay tuned!

 

 

The Appellate Division of the Second Department has recently denied a motion to immediately suspend Letters Testamentary in the Matter of Mercer (2014 NY Slip Op 05186). SCPA 711 and 719 provide that the Surrogate may suspend or revoke letters where there is proof of a serious breach of fiduciary duty. This involved the improper conversion of tangible property held by the executor. The appellate court opined that:
"[w]hile the Surrogate is clearly granted the exceptional authority to summarily remove executors without the formality of commencing a separate proceeding, the authority to exercise the ultimate sanction summarily is not absolute. The Surrogate may remove without a hearing only where the misconduct is established by undisputed facts or concessions, where the fiduciary’s in-court conduct causes such facts to be within the court’s knowledge, or where facts warranting amendment of letters are presented to the court during a related evidentiary proceeding" (Matter of Duke, 87 NY2d at 472-473 [internal citations omitted; emphasis added])."

Continue Reading Appellate Division Rules On Application To Revoke Letters Testamentary

The Second Department of the Appellate Division has reversed the Brooklyn Surrogate in the Matter of Sylvester(2013 Slip Op 04613) , granting a widow the right to file a late notice of election against her husband’s estate.  A surviving spouse must give notice of her intent to exercise his or her statutory right of election against the estate of a deceased spouse within six months of the issuance of letters testamentary to an executor of the estate. In New York, the Estates, Powers and Trusts Law (EPTL) provides that if a surviving spouse is dissatisfied with the legacy left by his or her spouse’s will, it is possible to elect to receive an "elective share" of the estate amounting to the first $50,000 of the estate plus the next third rather than accept a presumably lesser legacy, thereby thwarting a testamentary scheme aimed at cutting one’s wife (or husband) out of a will. 

Continue Reading Appellate Division Grants Surviving Spouse Right To File Late Notice Of Election

The New York Law Journal has reported a decision of Nassau County Surrogate Edward McCarty III in the matter of the Will of Barboni, 2013-373014(April 25) which upheld the nomination of an executor whose two children both contested the choice, claiming that he had unduly influenced their father.

The court pointed out that the aggrieved children had attacked their father’s selection "in very broad strokes without any documentation or supporting evidence". Mere conclusory allegations in the absence of a showing of "good cause" or serious wrongdoing would not be sufficient to disqualify the nominee.

It is important to realize that the law is going to give a testator every opportunity to have the final say in the disposition of his or her worldly possessions, a job  made all the more difficult by the absence of the one person who could have been called upon to explain it all. It is therefore necessary to come up with substantial proof if one is to challenge a decision made from the grave. Simple bare bones allegations will not allow one to do this successfully.

Richmond County Surrogate Robert J. Gigante has ruled that a trust executed by an 88 year old decedent 61 days before her death was void for lack of mental capacity in the Matter of the Estate of Muriel Donaldson reported at 956 NYS2d 840. In this matter, the court granted summary judgment based upon the testimony of the decedent’s physician and the drafting attorney.The court takes pains in its decision to differentiate between fraud, lack of capacity and undue influence, dwelling particularly on the difference between testamentary capacity and the level of capacity needed to understand a contract.

Continue Reading Summary Judgment Granted To Void Trust For Lack Of Capacity

The Supreme Court’s Appellate Division has affirmed an order issued by Nassau County Surrogate Edward McCarty in the Matter of Palma A. Pascale 102 AD 3rd 796 which granted objectant’s motion to compel production of certain documents prior to the completion of SCPA 1404 examinations. SCPA 1404 provides that objections must be filed within ten days of the completion of examinations. Here, however, objectant sought to leave the examinations open and incomplete subject to the production of the demanded documents. The appellate court ruled that the Surrogate providently exercised his discretion in directing the production of the material and providing that the objections would not have to be filed until materials were produced and the examinations completed.