Surrogate's Court Litigation - Charitable Gift Annuities - Defense Against an Executor's Claim to Decedent's Gift
Our Surrogate's Court Litigation lawyers sometime represent beneficiaries seeking to carry out a decedent’s intention as to gifts made to the client during the decedent’s lifetime. Here, Frank W. Streng successfully represented a client who was a successor beneficiary of a charitable gift annuity established by the decedent with Fordham University, against a claim brought against her by the executor of the decedent's estate. The issue in the case was that the decedent, while fully competent at the time that he met with Fordham representatives and in the transfer of assets to fund the annuity, was hospitalized shortly thereafter and died in the hospital. The estate argued that the gift should be set aside because the decedent did not personally sign an annuity agreement sent to him by Fordham during his hospitalization. The Surrogate’s Court agreed with Frank and Fordham’s counsel, who sought and obtained summary judgment to dismiss the estate’s efforts to set aside the charitable gift. They argued, and the Court agreed, that the agreement to establish the gift annuity was fully enforceable well before the decedent was presented with the formal written agreement.
In contested will proceedings, objections to probate must be grounded in admissible evidence to avoid dismissal. Here, Frank Streng and Dina Aversano successfully defended our client in a will contest between the decedent’s niece and nephew and our client, the decedent’s long-time, but unmarried, partner of over 40 years, by moving for summary judgment to dismiss objections to probate. A motion for summary judgment is appropriate where, like in this case, there are no issues of material fact to warrant a trial by a fact-finder. What made the case particularly unusual is that the executor named in the Will did not move for summary judgment, forcing McCarthy Fingar and its client, representing a beneficiary, to seek to uphold the will through the successful summary judgment motion.
Matter of Compulsory Interim Accounting Proceeding in the Estate of Jacob Heller, Surrogate’s Court, Westchester County (2011)
Sometimes, litigation in the Surrogate's Court involves actions taken in another estate or trust that harm our clients. Stephen Davis, representing the executors of a surviving spouse's estate, settled a dispute with the trustees of the estate of the first spouse to die, resulting from the requirement under the Internal Revenue Code (IRC) for inclusion in the taxable estate of a surviving spouse the testamentary trust created by her pre-deceased husband for her lifetime benefit (QTIP Trust). Although the IRC specifically apportions the increase in taxes solely to the QTIP Trust, the IRC nonetheless creates conflict between next generation beneficiaries when executors are called upon to make a tax election unfavorable to them personally, but resulting in a greater tax benefit to the QTIP Trust. Reaching back to past estate litigation experience, Steve, now chair of the firm’s Tax Certiorari & Condemnation group, in collaboration with Frank W. Streng, chair of the firm’s Surrogate's Court Litigation group, asserted at Surrogate’s Court and to the Trustee of the QTIP Trust, ancient and esoteric rules of fairness to achieve recoupment of the Estate’s $44,000 tax advantage (compared to a date of death valuation). In this instance, equitable adjustment, a form of implied contract, manifested itself as the duty of the QTIP Trust to make whole the beneficiaries of the surviving spouse's estate from a loss imposed to achieve the Trust’s greater $345,000 tax benefit. Although equitable adjustment had been applied to other types of tax elections made by fiduciaries, e.g., a Warms Adjustment (1041 deduction vs. 706 deduction), there exists no reported case in New York applying the concept to a surviving spouse's estate's conflict with a QTIP Trust.
Surrogate’s Court Litigation - Dispute on IRA Accounts
SCPA 2102 Information for Estate Beneficiaries & Injunctive Relief
One of the mostly commonly litigated matters in estate litigation is whether an estate or an individual will become the owner of of an insurance policy, qualified plan account or IRA account on the decedent's death. Representing a 50% beneficiary of the residuary estate, Dina M. Aversano and Frank W. Streng sought in the Surrogate's Court information from the estate’s co-executors as to information from the estate surrounding a substantial asset – two IRA accounts - of the decedent that was believed to be part of the estate. The Surrogate’s Court granted the beneficiary’s petition and enabled discovery, under SCPA 2102, to go forward as to the co-executors’ knowledge of this asset. The residuary beneficiary was further awarded injunctive relief in the form of a restraining order, preventing any transfers and disbursements to the beneficiaries of the IRA accounts during the pendency of litigation.
McCarthy Fingar often represents executors/administrators in SCPA 2103 proceedings. In these proceedings, an executor/administrator sometimes seeks to recover assets that were the subject of an alleged lifetime gift or a lifetime beneficiary designation. In this case, Frank W. Streng and Katherine Sohr Jedlicka represented family members, appointed as limited administrators, seeking to rescind a transfer of real estate on the grounds, amongst others, that the agent under a power of attorney form improperly gifted the property to himself. Here, the estate of the individual who received the alleged gift of real estate made a motion to dismiss our case, primarily citing the alleged failure of our clients to file their proceeding within the applicable three-year statute of limitations. The Surrogate's Court denied the motion, finding, among other things, that the statute of limitations never started, since our clients had no notification of the existence of the power of attorney, which power of attorney form was used to make the gift in question.
Matter of Zacharakis (Surr. Ct., Rockland County 3-12-2009)
Business and real estate assets are often a source of controversy in estates and trusts. Here, control of shopping centers in Rockland County was in controversy. The fiduciary of the estate had maintained legal control and management of the corporations that owned the shopping centers by voting the estate's shares in the corporations to continue that control. Representing a beneficiary desiring to end the fiduciary's control over such shopping centers, Frank W. Streng and Gail M. Boggio successfully moved in Surrogate's Court, Rockland County, to compel the distributions of shares of stock in the corporations in order to permit the majority of the beneficiaries (which included the firm's client) to control the management of the shopping centers.
Revocation of Letters Testamentary, Settlement Prior to Hearing
Clients often to choose to settle their cases. Here, Katherine Sohr Jedlicka and Frank W. Streng successfully settled a case in which the firm was retained to represent the decedent’s brother and sister in removing the current executor because of his failure to file a judicial account as ordered by the court. McCarthy Fingar’s client was immediately appointed as temporary fiduciary pending a hearing for the executor’s removal. The executor resigned voluntarily prior to a hearing for his removal, and our client was appointed fiduciary.
Many Will contests are won or lost by summary judgment motions. Often, but not always, after pre-trial discovery is concluded, the petitioner - the "proponent" seeking to probate a Will - makes a motion for summary judgment to dismiss the objections to probate. Here, Frank Streng and Dina M. Aversano, representing a beneficiary under a Will, successfully moved to dismiss the objections to probate, despite allegations that the beneficiary had acted improperly in the management of the decedent's assets when the beneficiary had acted as a guardian for the decedent during the decedent's lifetime. Holding that such allegations were wholly unrelated to the otherwise unsubstantiated proof submitted to set aside the Will, the Surrogate's Court, Westchester County, granted the joint motion for summary judgment made by our firm and the attorney representing the nominated executor under the Will, and dismissed the objections to probate.
In contested accounting proceedings, success or failure often depends upon identifying and then seeking surcharges on arcane accounting principles. In the Estate of Thomas Carvel, Tom's wife, Agnes, as income beneficiary of a trust under Tom's Will, had not received any distributions of income from the trust created for her benefit. After a lengthy trial, Robert M. Redis successfully obtained a decree in an accounting proceeding that Agnes was entitled to some $9 million in trust income (including interest) from the Estate of Thomas Carvel. Bob, assisted by his partner, Frank W. Streng, successfully argued in the lower court that the executors improperly wiped out Agnes' income share by attributing expenses to the income beneficiary’s account that should have been charged against the principal account under EPTL 11-1.3. Bob also persuaded the Appellate Division, Second Department, to uphold the decree on appeal.
"Will Contests" take different forms, and the lawyers in our Surrogate's Court Litigation group have experience in virtually every area. Trustees of a purported revocable inter vivos trust may claim title to property that would otherwise be disposed of under a Will or by intestacy (without a Will). In a relatively novel case, in Hoffman, the firm represented a client who was a beneficiary under her husband's Will of a membership in the New York Stock Exchange. However, even before the execution of his Will, the decedent allegedly created a revocable trust agreement for the benefit of a child of a prior marriage and allegedly transferred his NYSE seat to the trust. The NYSE seat had not been transferred to the trust through any assignment process but had been listed on a schedule of assets of the trust, with the following notation: "1. Membership in the New York Stock Exchange. The NY Stock Exchange does not permit registration of memberships in the name of trustees. Grantor and Trustees recognize this to be the case." Citing the provisions of a relatively new statute, EPTL 7-1.18, McCarthy Fingar lawyers, Frank W. Streng, Deborah Yurchuk McCarthy and Robert M. Redis, sought summary judgment against the trustees strictly on the question of the effectiveness of the transfer, arguing, among other things, that the recital of the NYSE seat as an asset of the trust in a schedule was not enough to consummate the transfer. The Court agreed and dismissed this portion of the trustees' case.
After a medical malpractice verdict or settlement, litigation sometimes takes place on who gets the money. Frank W. Streng successfully represented a surviving spouse in a Surrogate's Court Litigation matter on the allocation of a settlement award of over $3 million. The wife of the firm’s client had died in childbirth, survived by children of her first marriage and the only child of her marriage to our client. The executor of the estate, who was our client’s wife’s first husband, took the position that, for various reasons, no part of the settlement proceeds should be paid to our client.
Sometimes, inheritance rights depends upon proving kinship of family members through DNA testing. Here, Frank W. Streng represented children of the decedent who were born out of wedlock and were seeking their rightful share of their father's estate. As part of discovery, Frank sought a court order directing DNA testing of the post-humously produced blood serum of the decedent. In an evolving area of the law, the Surrogate's Court conditionally permitted such testing, provided that proof existed of the decedent's "open and notorious" acknowledgement by the decedent of his children. Later on, the case was settled and a DNA test was conducted. As a result of the DNA test, Frank's clients then received their fair share of their father's estate.
Settlement of Will Contest When Decedent had Lifetime Guardian Proceeding
Clients often choose to settle their cases. Here, Frank W. Streng successfully settled a case in which the firm was retained to represent the Decedent’s brother, nephews and nieces in a Will/Trust contest. In this case, the decedent executed a Will and Trust Agreement very close in time to the date when proceedings for the appointment of a guardian had been brought in the Supreme Court. The guardianship proceeding was based on grounds that the decedent was not able to manage his property.
Our lawyers often represent beneficiaries in contested accountings of executors and trustees. In one such case, Frank W. Streng and Robert M. Redis succeeded at the trial court level and obtained a surcharge against a former executor in excess of $1.6 million and an award of attorneys fees against that former fiduciary in the amount of $250,000. Bob and Frank then succeeded in upholding the Surrogate's Court's determinations on all appeals.
McCarthy Fingar often represents clients in Will & Trust Contests. Frank W. Streng, as counsel to the named executor, successfully defended against objections to the filing of a Codicil to the Decedent’s Will. At trial, a jury upheld the Codicil to the Decedent’s Will and threw out objections made to such Codicil by one family member. On appeal, we persuaded the Appellate Division, Second Depatment, to uphold the trial judge’s refusal to set aside the jury verdict.
Our lawyers often represent beneficiaries that suffer financial injury through improper actions of executors and trustees. Here, Frank W. Streng represented a beneficiary at a trial to obtain the removal of a preliminary executor who had acted improperly in the administration of the estate. The removed fiduciary appealed, and Frank and other McCarthy Fingar lawyers, Robert M. Redis and Deborah Yurchuck McCarthy, successfully persuaded the appellate court to affirm the trial court's decision to remove the fiduciary.
Often, there are issues on the interpretation of a Decedent's Will that can have large effect on the Decedent's testamentary plan. In this case, Frank W. Streng, and other lawyers at the firm represented children of a Decedent’s first marriage in litigation against the Decedent’s surviving spouse where the surviving spouse sought (unsuccessfully) to obtain an interpretation of her husband’s Will which would have effectively excluded the Decedent’s children as beneficiaries under the Will. The other side appealed, and the appelate court affirmed the lower court ruling.
Sometimes, the tax apportionment clause - an often overlooked clause in a will - has a huge impact on the actual distributions under a will. In this case, Frank W. Streng and others at the firm successfully represented a major health care institution in a contested accouting proceeding in which we challenged the executors’ interpretation of the decedent’s tax apportionment clause in her Will. The charitable beneficiary would have been deprived of hundreds of thousands of dollars of its proper share of a multi-million dollar estate had the executors' interpretation been adopted. The lower court opinion was affirmed by the appellate court.