By: Gary E. Bashian & James G. Yastion
AN UNFILED RENUNCIATION MAY BE RETRACTED,
EVEN IF RELIED UPON BY THE PARTY WHOSE
INTEREST WAS ACCELERATED
In what the Court described as a case of first impression, the Petitioner sought permission to file a late renunciation. Estate of William Overgard, III, N.Y.L.J., October 12, 2004, p. 29 (Surr. Ct., New York Co.). The Petitioner was not the renouncing party, but the person whose interest would be accelerated by the renunciation. The Respondent, the renouncing party, sought to retract her renunciation and opposed the relief requested.
The Respondent, who was the Decedent’s wife, was a beneficiary of the Decedent’s 1/3 interest in a parcel of real property. Several days after the Decedent’s death, the Respondent signed a renunciation of her interest in the Estate which was prepared by the Petitioner’s attorney. The Petitioner retained the renunciation, but failed to file it within the 9 month statutory period. Ten months after the Decedent’s death, the Respondent sought letters of administration to claim her interest and thereby sought to retract her renunciation.
The Court held that the unfiled renunciation could be retracted. The Court rejected the Petitioner’s claim that the delivery of the renunciation to him was tantamount to filing and that the filing was only a ministerial act. The Court refused to liken the renunciation to a gift which is valid upon delivery. The statute specifically provides that the renunciation “shall be effective as of the date of such filing.” (EPTL 2-1.11[b]). Nor did the Petitioner’s reliance on the renunciation estop the Petitioner from retracting it since the failure to file was in part due to the Petitioner’s own delay.
NO WAIVER OF ATTORNEY/CLIENT PRIVILEGE
WHERE CLIENT’S DAUGHTER AT
DEPOSITION PREPARATION MEETINGS
The Decedent had died on April 21, 2003 survived by his wife, the Petitioner, and four children. The Decedent’s Will bequeath all of his personal property and real estate to the Petitioner and the beneficiary for her life of a marital trust and the residuary trust and the children and/or their issue were the remainder beneficiaries. Estate of Antonio Nigro, N.Y.L.J., October 5, 2004, p. 20 (Surr. Ct., Nassau Co.).
Objections were filed by one of the children and the Petitioner was deposed under SCPA 1404. During the course of the deposition, the Petitioner’s attorney directed her not to answer certain questions based on the attorney/client privilege. The Objectant later filed a motion seeking to compel the Petitioner to answer questions posed to her during her examination. The Petitioner had admitted at the deposition that her daughter had been present during the deposition preparation meetings. The Objectant claimed that the attorney/client privilege had been waived by the daughter’s presence at the deposition.
The Court agreed with the Petitioner and held that the privilege had not been waived. The Court noted that the Petitioner’s daughter had been acting as an agent for her mother, driving her mother to the meetings and was clearly there for moral support. Under the these circumstances, the Court held, there was a obvious expectation of confidentiality by the client. The scope of the privilege was not defined by the third party’s function, but by whether the client had a reasonable expectation of privacy. A meeting to prepare a client for a deposition has all indicia of confidentiality, the Court held.
STIPULATION ENTERED INTO IN OPEN COURT
WILL NOT BE VACATED WHERE GROUNDS
AMOUNTED TO A CHANGE OF MIND
A Stipulation of Settlement was entered into in open court between two co-administrators of the Estate. After the Stipulation was finalized, the Petitioner moved to vacate for a myriad of reasons including coercion, mistake, that she was not advised of the binding effect of the Stipulation, that the Stipulation was unconscionable and that enforcing it would unjustly enrich the other co-administrator. Estate of Pearl Siegel, N.Y.L.J., November 30, 2004, p. 18 (Surr. Ct., Nassau Co.).
The Petitioner’s claim of coercion was denied. In support, she claimed her attorney forced her to accept the settlement when he advised her that her potential liability after trial could be $400,000. The Court held that even if the court accepted her claim that her attorney advised her that her potential liability was $400,000, this was merely her attorney’s opinion. She also claimed she was coerced insofar as she was first advised of a possible settlement at the court on the day of the settlement; however, the extensive negotiations during the week preceding the court date proved the Petitioner’s claims false.
The Petitioner’s claim of mistake was also denied. She claimed that the Stipulation should be set aside because of her attorney’s mistake regarding the calculation of her potential liability. The Court found the mistake, if anything, a unilateral mistake, and held that it could have been discovered by the Petitioner by the exercise of ordinary care and was not the product of fraud or deceptive conduct on the part of the opposing attorney or Respondent/co-administrator.
The Court ultimately held that the petitioner knowingly and voluntarily accepted the terms of the stipulation which was made in open court, that she was fully aware of the terms of the stipulation, and that her motion could only be explained as a change of mind, which was not a sufficient basis to vacate a stipulation.
DISTRIBUTEE EJECTED FROM DECEDENT’S
RESIDENCE TO CLEAR WAY FOR SALE AND
DISTRIBUTION TO ALL BENEFICIARIES
The fiduciary was allowed to bring an ejectment action against a distributee of the Estate who resided in the Decedent’s residence and refused to vacate the premises. Estate of Edith Taylor, N.Y.L.J., February 2, 2005, p. 22 (Surr. Ct., Kings Co.)
The Decedent died in 1980 possessed of her residence, which was the only asset of the Estate. She had no Will. One of the Decedent’s daughters and the daughter’s son continued to reside rent free at the premises for twenty years. The Decedent’s daughter died in 2000 but the daughter’s son continued to reside at the Premises. Another child of the Decedent had been appointed administrator of the Estate and brought an ejectment action against his nephew so that the property could be sold and proceeds distributed to the Estate distributees.
The Surrogate ultimately granted the ejectment action. Despite the rule that title is vested in estate distributees (of which the nephew was one by virtue of his receiving his pre-deceased mother’s intestate share) upon a decedent’s death, these rights are subject to the rights of the fiduciary to take possession, collect rents and preserve the asset and make it productive to those with the beneficial interest therein. The Court found the nephew’s continued residence at the premises prevented the fiduciary from selling the estate’s primary asset to the estate’s detriment. It also found that it would be in the best interests of all the beneficiaries for the premises to be sold immediately because no meaningful distribution could be made until then.
PURSUANT TO RECENT LEGISLATION, TRUST
TERMINATED BECAUSE ECONOMICALLY IMPRACTICAL
AND DISTRIBUTION TO PRIMARY BENEFICIARY GRANTED
This was a proceeding by the Decedent’s ex-wife, who was a beneficiary of a trust created by the Decedent, for termination of the trust as economically impracticable to administer and for the distribution of the proceeds to her, as primary beneficiary. Estate of John N. Bleinbtreu, N.Y.L.J., Nov. 18, 2004, p. 31 (Surr. Ct., New York Co.).
The trust was created with $150,000 in 1974 and provided that the Decedent’s ex-wife would receive $20,000 annually until her death or remarriage. The presumptive beneficiaries would receive the principal balance in the event the trust was terminated by the ex-wife’s death or remarriage. Instead of receiving $20,000 annually, she had been paid $15,000 annually through 2001 when the trustee died. No successor was appointed and no further distributions were made. The Petitioner has not remarried.
The ex-wife/Petitioner sought to be appointed successor trustee to terminate the trust and distribute the remaining balance to herself. In support of her application to terminate the trust, she cited the recently enacted EPTL 7-1.19 which permits a trust to be terminated where “continuation of the trust is economically impracticable” and where early termination is not barred by the trusts terms and is the best interest of the beneficiaries. Here, continuation of the trust would be economically impracticable since the remaining corpus is $85,000 which will be more than halved after the unpaid distributions are made. Also, the trust terms did not bar early termination.
As to her request to distribute the remaining principal to herself, EPTL 7-1.19(a)(2) permits a distribution in a manner and in the proportions and shares which will effectuate the grantor’s intent. The presumptive remaindermen of the trust consented to the distribution. In light of these consents and since that the central purpose of the trust was to provide for the ex-wife, the Court granted the ex-wife’s further application to distribute the remaining corpus to herself.
DNA TEST ORDERED TO ESTABLISH PATERNITY
IN INTERESTS OF FULL DISCLOSURE DESPITE WEAK
SHOWING OF OPEN AND NOTORIOUS ACKNOWLEDGMENT
This was a proceeding commenced by a non-marital child to establish paternity by DNA evidence. The Court directed the DNA evidence be tested to establish the Petitioner’s distributee status, notwithstanding the limited offer of proof. Estate of James E. Davis, N.Y.L.J., February 8, 2005, p. 20 (Surr. Ct., Kings Co.).
The Decedent/father was a city councilman who was killed in his chambers. The Decedent’s mother, the administratrix of his estate, claimed she was the only distributee. The Petitioner, a non-marital child, brought a motion directing the medical examiner to test the Decedent’s genetic material to challenge the mother’s claim and establish his distributee status.
To establish paternity, the Petitioner had to establish (1) clear and convincing evidence that the Decedent was his father and (2) clear and convincing evidence that the father “openly and notoriously” acknowledged the child as his own. DNA evidence can be used to establish the first requirement, but only after evidence of the second requirement is offered. The Petitioner submitted only one relevant affidavit by the Decedent’s friend stating that the Decedent mentioned he had a son whom he had not yet met.
The Court held that, while the affidavit is not clear and convincing proof of the second element of open and notorious acknowledgment, it was sufficient to grant the Petitioner’s motion to have the DNA evidence tested to establish the first element of paternity. The policy of liberal discovery of relevant and necessary evidence led the Court to grant the motion. Since the Petitioner’s mother had died, the genetic evidence was the only evidence available to provide clear and convincing proof of paternity. The Court held it should, therefore, be used.
FIDUCIARY’S PROPOSED SALE OF PROPERTY TO
HIMSELF DENIED: RIFE WITH SELF DEALING AND
NOT IN BEST INTERESTS OF BENEFICIARIES
The fiduciary in this estate sought to remove restrictions on his letters so he could sell a parcel of real property belonging to the estate to his own company. The application was denied because the proposed conveyance and the terms of the sale were tantamount to a breach of the fiduciary’s duty of loyalty to the beneficiaries. Estate of David C. Maitland, N.Y.L.J., February 25, 2005, p. 25 (Surr. Ct., Kings Co.).
The fiduciary’s letters had been restricted in a previous proceeding preventing him from selling any real property without prior court approval. The previous application resulting in the restriction was an application to revoke the fiduciary’s letters after he transferred another parcel over the beneficiaries’ objections. The fiduciary’s present application to remove restrictions was to enable him to transfer a brownstone in Brooklyn’s Bedford Stuyvesant area for $285,000 to his own company. This value was based on 2003 values for the premises. The beneficiaries had their own comparative appraisals done for 2004 giving a value of $475,000. The fiduciary rationalized the lower value because he was not using a realtor.
The Court denied the fiduciary’s request to remove restrictions. While the sale of property is usually in the business judgment of the fiduciary, the overriding principal is that the sale be in the best interests of the beneficiaries, and oversight will be necessary especially where there are restrictions on letters. The Court found the sale itself patently against the best interests of the beneficiaries. The proposed sale price was $190,000 below the 2004 appraised value and the absence of realtor’s commissions in no way made up for this difference in price. More importantly, the Court found the transaction rife with self-dealing and a breach of loyalty since the fiduciary clearly did not have the best interests of the beneficiaries foremost in his mind.