Frank W. Streng, Esq.
McCarthy Fingar LLP
11 Martine Avenue
White Plains, NY 10606-1934
914-946-3817 ext. 256 (voice)
Westchester County Bar Association – Trusts & Estates Section
Separation and Matrimonial Agreements and Implication in Estate Litigation `
April 18, 2005
i. Divorce revokes designation as beneficiary and appointment as executor or trustee;
ii. But, what if there is separation agreement but formal divorce had not yet been ordered. Then waiver of rights become a matter of contract law. Divorced spouse’s status as an interested party
i. divorce or judgment of separation;
ii. incestuous, bigamous or prohibited marriage;
iv. spouse failed or refused to support decedent, with spouse having means to provide such support, and such failure continued until testator’s death
i. Grounds to object to probate to propounded Will under EPTL 3-2.1 are exclusive
ii. Such third party agreements are strictly enforceable, but as a claim against estate [SCPA Article 18. See discussion below].
i. Intestate share more valuable than elective share right . . . unless Decedent made lifetime transfers that are testamentary substitutes
ii. To contest, or not to contest, that is the question . . . [apologies to W. Shakespeare]
i. the existence of a valid and binding contract between the contracting parties,
ii. that the contract was intended for its benefit, and
iii. that the benefit to the third party is sufficiently immediate, rather than incidental, to indicate an assumption by the contracting parties of a duty to compensate it if the benefit is lost.
iv. The burden of proof is on the party claiming rights as an intended third party beneficiary, to prove each of the elements of its status. See Strauss v. Belle Realty Co., 98 A.D.2d 424, 469 N.Y.S.2d 948, 950 (2d Dep't 1983), aff’d, 65 N.Y.2d 399, 492 N.Y.S.2d 555 (1984).
i. Rastetter v. Hoenninaer, 214 N.Y. 66, 73 (1915)
"Each was at liberty during his lifetime to use his own as he saw fit, short of making a different testamentary disposition or a gift to defeat the purpose of the agreement, which was that upon his death each was to leave the property of which he was then possessed in the manner agreed upon."
ii. Blackmon v. Battcock, 78 N.Y.2d 735, 739-740 (1991
discourages what it has termed "judicial alteration and addition to the settlement agreements of the parties"
"But an agreement that the survivor's entire estate will be left to certain beneficiaries does not necessarily prevent a survivor from making a lifetime gift, since such a gift would not necessarily defeat the purpose of the agreement." Id. at 741.
i. What is a creditor’s claim?
ii. Timing and form of Submission of Claim (SCPA 1803)
iii. Format of claim
iv. Personal liability for fiduciary (SCPA 1802; see also SCPA 1807)
v. Decision of Fiduciary to Reject or Accept Claim (SCPA 1806)
vi. Creditor’s Remedies on Rejection of Claim
vii. Proceeding/Action to Determine Claim (SCPA 1810)
viii. Proceeding to Compel Estate Accounting (SCPA 2205(a); SCPA 1808(5))
ix. Executor’s Remedies/Duties on Rejection of Claim
x. Proceeding to Disallow Claim (SCPA 1809)
xi. Disclosure of Rejection in Accounting and Process Issued to Creditor (SCPA 1808)
xii. Enforceability as to Nonprobate assets
i. before marriage
ii. during marriage
iii. after marriage
vi. with consideration
vii. without consideration
viii. conditional or absolute
i. Enforceability by courts as a contract depend upon
ii. Burden of proof:
i. Estoppel and laches. Lemle v. Dreifus, 30 A.D.2d 785 (1st Dep’t 1968);
ii. Six year [contract] statute of limitations under CPLR 213(2). E.g., Pacchiana v. Pacchiana, 94 A.D.2d 721 (2d Dep’t 1983); Rubin v. Rubin, 275 A.D.2d 404 (2d Dep’t 2000)
iii. But . . what if there’s
i. within 6 months of issuance of letters, but no later than 2 years after date of death
ii. written notice for service (by mail) upon fiduciary; file notice and proof of service with Surr. Ct. within same time period
iii. can get additional time from court; and can even get relief from court from default, upon showing of reasonable cause and if no accounting decree and less than 12 months since issuance of letters
iv. right to elect is personal, but can be authorized by court to be made by Article 81 guardian, GAL, committee, conservator, infant’s spouse’s guardian
v. decedent must have domicile in NY - what if NY Elective share is better than another State’s Elective share?
vi. be cautious as to distributions from estate; consider elective share claimant to be in same category as a creditor
i. greater of $50,000 or 1/3 of capital value of net estate less value of property passing to spouse through other Will dispositions or outside of probate
ii. pecuniary amount
iii. keep in mind that elective share is eligible for estate tax marital deduction and should, in the case of a valid election, be so claimed on Schedule M of estate tax return
i. broad definitions of “inter vivos” disposition that are covered:
ii. life insurance is not a testamentary substitute
iii. fiduciary’s diligence in marshaling assets and preparing estate tax returns will serve to identify testamentary substitutes
i. Election means spouse is deemed to predecease testator
ii. Old law: elective share could be satisfied in trust
iii. Elective share accelerates trust remainder
iv. Ethical considerations: representation of spouse, in individual capacity and in fiduciary capacity; sometimes spouse must have separate representation