“INITIALLY” IT SEEMED IMPORTANT: DUE EXECUTION OF WILL DEMONSTRATED EVEN WHEN “INITIALS” AND SIGNATURE DID NOT MATCH
In this contested probate proceeding, Westchester County Surrogate, Hon. Anthony A. Scarpino, found that in executing her Last Will and Testament, the fact that the testatrix initialed each page of the instrument with her three initials, and signed her name without her middle initial, did not raise an issue on due execution.
The proponent of the Will set forth a prima facie case on due execution. The objectant emphasized that while the Testatrix initialed each page of the instrument with her three initials, her signature did not contain her middle initial.
The Court held that the mismatched initials and signature did not raise an issue on due execution and granted summary judgment for the proponent. In Re Taylor, N.Y.L.J. Feb. 6, 2006 at 46 (Sur. Ct. Westchester County).
TRUSTEE’S LETTERS REVOKED PURSUANT TO SCPA 711 BECAUSE OF “BITTER” DIVORCE
In this proceeding to revoke Letters of Trusteeship, the decedent’s Will contained a testamentary trust naming the decedent’s son as the beneficiary. Article Seventh of the decedent’s Will directed that the son’s spouse was to serve as trustee, “so long as she is married to my son and living with him as husband and wife. In the event that my daughter-in-law, Eileen B. Bitter, predeceases me or for any reason cannot or fails to act as Trustee, or in the event that she is no longer married to my son and living with him as husband and wife, then in that event, I hereby nominate, constitute and appoint my daughter, Robin Goldberg, as substitute Trustee.” IN RE BITTER, 11 Misc.3d 1032, 1034, 811 N.Y.S.2d. 907, 909 (Sur. Ct. Nassau County 2006). (Emphasis added).
The beneficiary petitioned the court to revoke the Letters of Trusteeship issued to his wife pursuant to SCPA § 711 (1), (5), (8), and (10), as he had commenced a divorce proceeding and they were no longer living together. The petitioner additionally alleged that his former wife took property which belonged to the two of them, denied him access to the funds of the trust, and that she inefficiently paid principal from the trust.
The Nassau County Surrogate’s Court held that the Application to Revoke the Letters of Trusteeship falls directly within subdivision 5 of SCPA § 711, which states that letters may be revoked “when by the terms of a will, deed or order, his office was to cease upon a contingency which has happened.” As the contingency in the instant case occurred, the Letters of Trusteeship issued to petitioner’s spouse were revoked.
The Court further noted that pursuant to SCPA § 711(10), letters issued to a testamentary trustee may be revoked where the trustee “is for any other cause deemed an unsuitable person to execute the trust.” “Where friction between the trustee and the beneficiary. . . interferes with the proper administration of the trust. . . or if the trustee’s continuing to act as such would be detrimental to the interests of the beneficiary, such trustee may be removed by the court.” Matter of Tissot, N.Y.L.J. Aug. 27, 1997 at 24.
Here, the beneficiary and the Trustee were involved in a divorce proceeding that was not amicable. The Court held that this was clearly a situation which would deem a trustee an unsuitable person to execute the trust. In Re Bitter, 11 Misc.3d at 1034, 811 N.Y.S.2d. at 909.
RIGHT OF ELECTION NEED NOT BE EXERCISED BY SPOUSE PERSONALLY, MAY BE EXERCISED BY ATTORNEY-IN-FACT UNDER A DURABLE POWER OF ATTORNEY
In this proceeding to determine the validity of a right of election, the Executrix of the estate, brought a motion for summary judgment claiming that the exercise of the right of election against decedent's Will by the attorney-in-fact of decedent's wife, is ineffective.
The decedent’s wife executed a durable power of attorney in favor of her daughter. At the time of the decedent’s death, the wife lacked mental capacity and a guardian ad litem was appointed to represent her in the probate proceeding. Before the wife died, the daughter, as attorney-in-fact, filed a notice of election against the decedent’s estate.
The Executrix of the decedent’s estate claimed that the election made by the attorney-in-fact was invalid because the election must be exercised by a decedent’s surviving spouse, personally, or by a duly authorized fiduciary. The Executrix argued that an attorney-in-fact is not one of the authorized fiduciaries identified in EPTL 5-1.1-A(c)(3).
Additionally, the Executrix argued that the respondents needed to request that the guardian ad litem seek permission from the Court to serve the notice of election.
Respondents opposed the motion and asked the court to dismiss the petition, and to declare that the agent duly exercised her right of election, and that she is entitled to her outright share of the estate.
The Court held that the Petitioner Executrix’s arguments are without merit. “A durable general power of attorney is not enumerated in EPTL 5-1.1-A(c)(3) because to do so would be redundant.” In Re Lando, 11 Misc.3d 866, 867, 809 N.Y.S.2d 901, 902 (Sur. Ct. Rockland County 2006). The court reasoned that the “statute does not state that the right, which is personal to the surviving spouse, may be made by the committee of an incompetent, the conservator of a conservatee, the guardian ad litem for the surviving spouse, or a guardian authorized under Article 81 of the Mental Hygiene Law, only if authorized by the court having authority over those individuals. However, a durable general power of attorney grants the attorney-in-fact full authority to act in the place and stead of the principal, which is not the case with court appointed guardians.” Id.
General Obligations Law Section 5-1502G, specifically states that the language conferring general authority with respect to estate transactions must be interpreted to mean the authority to “execute, to acknowledge, to verify, to seal, to file and to deliver any consent, designation, pleading, notice, demand, election, conveyance, release...” The Court held that the language of the General Obligations Law makes it clear that an agent can do precisely what the agent in this case did, i.e., serve and file a notice of election.
Additionally, the Court noted that the guardianship was not necessary to allow the attorney-in-fact to serve and file the notice of election on behalf of the principal.
The service of the notice of election by the attorney-in-fact was clearly within the agent’s powers. In Re Lando, 11 Misc.3d at 868, 809 N.Y.S.2d at 903.
TREATMENT FOR DEMENTIA DOES NOT NECESSARILY DESTROY TESTAMENTARY CAPACITY
Decedent died in January 2003, leaving a Last Will and Testament dated June 6, 1994.
Following his death, the Co-Executors of decedent's estate offered the Will for probate. Respondents, decedent's three children from his previous marriages, filed objections contending that the signature on the Will was not decedent's, the Will was not properly executed, decedent was not of sound mind at the time he executed the Will and the Will was procured by fraud and undue influence.
In this contested probate proceeding, the proponent of the Will moved for summary judgment dismissing the respondent’s claim that the testator lacked capacity to execute the will.
The Court held that is well established that the burden of proving that the decedent possessed the requisite testamentary capacity rests with the proponent of the Will (see Matter of Williams, 13 A.D.3d 954, 955, 787 N.Y.S.2d 444 (2004), lv. denied 5 N.Y.3d 705, 801 N.Y.S.2d 2, 834 N.E.2d 781 (2005)), and the proponent must demonstrate that the decedent understood the consequences of executing the Will, knew the nature and extent of the property being disposed of and knew the persons who were the natural objects of his or her bounty and his or her relationship to them. Matter of Brower, 4 A.D.3d 586, 588, 772 N.Y.S.2d 112 (2004).
Here, the proponents of the Will offered the testimony of the drafting attorney who had numerous meetings with the decedent discussing the Will, and on the day that the decedent executed the Will, asked him a number of questions to be sure that he was competent to do so. Also, the two witnesses to the Will executed an affidavit as subscribing witnesses indicating their belief that the testator appeared to be of sound mind and memory to make a Will.
The Court held that such affidavit creates a presumption of testamentary capacity. See Matter of Leach, 3 A.D.3d 763, 764-765, 772 N.Y.S.2d 100 (2004).
Additionally, the drafting attorney, in anticipation of a will contest, requested an opinion of a licensed psychologist, as to decedent’s competency to execute a Will. The psychologist opined that based on recent evaluation, the decedent was capable of understanding what assets he possessed and deciding how to allocate those assets.
A board certified neurologist had treated the decedent for approximately three and a half years for progressive dementia. However, the neurologist’s opinion as of the year the decedent signed the Will, was that decedent was competent to execute a Will.
The Court noted that proof that a decedent suffered from progressive dementia when a Will was executed is not necessarily inconsistent with testamentary capacity and does not alone preclude a finding thereof. Matter of Williams, 13 A.D.3d at 956.
Here, two professionals opined that the decedent was competent to sign his Will, and the attesting witnesses swore that decedent appeared competent at the time he executed his Will. Thus, the Court held that no material question of fact exists as to decedent’s testamentary capacity. In re Friedman, 26 A.D.3d 723, 809 N.Y.S.2d 667 (2006).
ADMINISTRATOR, C.T.A.’S MOTION TO DISPENSE WITH A BOND GRANTED BECAUSE ORIGINAL FIDUCIARY HAD DEFAULTED BY MOVING ESTATE ASSETS OUT OF THE COUNTRY
In this proceeding, the Petitioner moved for an order dispensing with the necessity of a bond for his service as Administrator c.t.a. The petitioner tried to obtain a bond, but was unable to do so because the prior fiduciary defaulted by removing the estate assets outside the country.
The original fiduciary twice failed to appear in response to citations on a compulsory accounting and his Letters Testamentary were suspended and then subsequently revoked.
The sole beneficiary of the estate, who is adult and competent, and a non-resident of the United States, consented to the relief sought. The court noted that the original fiduciary had not returned the estate’s funds as promised, despite the passage of a considerable amount of time and the revocation of his letters.
The Court granted Petitioner’s motion allowing him to serve as Administrator c.t.a. without bond, and the letters contained the limitation that no distributions shall be made without prior court approval. In Re Escarous, N.Y.L.J. 30 Jan. 25, 2006 at 30 (Sur. Ct. Westchester County).
TRUSTEES AND BENEFICIARIES OF TRUST’S REMAINDER MADE APPROPRIATE UNITRUST ELECTION DESPITE COURT’S SCRUTINY : A TRUSTEE’S UNITRUST ELECTION MUST BE REVIEWED FOR FAIRNESS BY APPLYING THE FACTORS SET FORTH IN EPTL 11-2.4(e)(5)(A)
The trustees of a testamentary trust, who were the decedent’s sons and the beneficiaries of 40% of the remainder, elected pursuant to EPTL § 11-2.4 to administer the trust as a unitrust. They also sought to elect unitrust treatment retroactive to January 1, 2002, the effective date of the statute. Notice of the election was provided to the income beneficiary, the decedent’s second wife, as required by the statute.
As a result of the election, the income beneficiary would see a decline in her annual income from the trust from approximately $190,000 a year to approximately $70,000 a year. She then commenced a proceeding to annul the unitrust election and revoke the trustees’ letters.
A unitrust election from which the trustee benefits personally will be scrutinized by the courts. Determining whether the trustees’ unitrust election is appropriate in a given circumstance, requires the Surrogate to review the process and assure the fairness of the election by applying all factors set forth in EPTL § 11-2.4(e)(5)(A).
These factors are include; the nature, purpose, and expected duration of the trust; the intent of the creator of the trust; the identity and circumstances of the beneficiaries; the needs for liquidity, regularity of payment, and preservation and appreciation of capital; the assets held in the trust; the extent to which they consist of financial assets, interests in closely held enterprises, tangible and intangible personal property, or real property; the extent to which an asset is used by a beneficiary; and whether an asset was purchased by the trustee or received from the creator of the trust.
Here, the Court of Appeals held that the statute may be applied retroactively. The trustees were not precluded from opting for unitrust treatment simply because they were also trust remaindermen. The Court held that the application of these factors in the instant case presented questions of fact which precluded a grant of summary judgment. In Re Heller, 2006 N.Y. LEXIS 1178, 2006 NY Slip Op 3469 (Ct. Appeals 2006).
ATTORNEY SUES FOR LEGAL FEES: COURT FINDS RETAINER AGREEMENT ENTERED INTO AFTER EMPLOYMENT BEGUN TO BE UNFAIR AND UNREASONABLE
The Defendant in this case retained the Plaintiff in 1999 to vacate a divorce her husband had obtained from her without her knowledge in 1991. If the Defendant’s case was successful, she would be entitled to the value of the decedent’s entire estate of approximately $400,000, otherwise the decedent’s sister would be the sole beneficiary. A settlement was reached between the Defendant and the decedent’s sister.
Prior to reaching the settlement, the Plaintiff and Defendant entered into a fee agreement. This agreement authorized the Plaintiff to negotiate and settle the claim for a maximum of $200,000 of assets from the estate. The agreement provided that if the settlement amount was less than $200,000, then Defendant “freely and willingly pays the difference between the settled amount and the $200,000 to Plaintiff Attorney as fair and reasonable compensation. For example, if a settlement was reached for $10,000, Plaintiff would be entitled to a fee of $190,000. The Defendant, who was Chinese, had limited knowledge of English.
A settlement was reached where decedent’s sister would be paid $150,000 of the estate’s assets. The Plaintiff Attorney sued his former client, claiming he was owed the sum of $75,000 for legal fees. This claim was premised on three causes of action: 1) contract 2) quantum meruit; and 3) unjust enrichment.
The Court found that because Plaintiff failed to submit a bill of particulars and it was unclear how the plaintiff arrived at the sum of $75,000 in addition to the fact that the retainer was entered into “subsequent to employment which is beneficial to the attorney,” Plaintiff failed to show that the terms of the fee agreement were fair and reasonable.
The Court stated that “an attorney has the burden of showing that a fee contract is fair, reasonable, and fully known and understood by the client. Jacobson v. Sassower, 66 N.Y.2d 991, 993 (1985).
The Court held that without determining whether the amount demanded by the Plaintiff is fair and reasonable, the unusual fee provisions of the agreement are unenforceable. The fact that the fee amount could vary so greatly cannot be deemed fair, reasonable or enforceable. Mann v. Saland, 816 N.Y.S. 2d 697, 2006 WL 1023927, 2006 N.Y. Slip Op. 50650(U).