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.
Reverse Turnover Proceeding Against Estate Fiduciary in Wrongful Possession of a Beneficiary’s Assets
Our Surrogate’s Court Litigation lawyers sometimes represent clients who seek to recover property from an estate fiduciary property that has been wrongfully withheld from the client by such fiduciary. In one such case, Dina M. Aversano represented a client, who was the surviving joint tenant on a bank account and the sole residuary beneficiary of the estate, petitioning the Surrogate’s Court under Surrogate’s Court Procedure Act § 2105 for relief against the estate fiduciary, in what has been considered a “reverse” Property Turnover Proceeding. Dina later on favorably settled the proceeding in the best interests of the client, thereby avoiding protracted litigation.
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.
Federal Court Litigation - Spousal Consent Provisions - Dispute on IRA Accounts - ERISA Disputes
Our lawyers sometimes represent clients in disputes on who is entitled to assets in qualified plans or IRA accounts on the death of a plan participant. Here, Phil Landrigan, working with Dina Aversano, obtained summary judgment dismissing claims made to an IRA on the death of the account holder by his second wife. The wife claimed that the spousal consent requirement of ERISA was not complied with in rolling over the husband’s former Keogh account into the IRA. Phil and Dina pursued discovery concerning the wife’s involvement in opening the IRA to fulfill requirements of the parties’ prenuptial agreement and, ultimately, obtained the wife’s acknowledgement, contrary to her pleadings and her lawyer’s contentions, that she actually consented to the transfer of the Keogh account. The lack of credibility of the wife’s claims, among other things, convinced Judge Joseph F. Bianco, sitting in the Federal Court for the Eastern District of New York, that the husband’s retirement accounts were not subject to ERISA’s spousal consent provisions, because the husband was self employed and the Keogh “plan” had no other participants. Judge Bianco also ruled that the claims were barred by ERISA’s three-year limitations period and that the wife had no private right of action under the parallel spousal consent provisions of the Internal Revenue Code.
Often, controversies in families arise as to gifts allegedly made by a decedent during his or her lifetime. Such controversies frequently result in a property turnover proceeding in the Surrogate's Court to deal with such alleged gifts. Here, McCarthy Fingar lawyers, Gail M. Boggio and Michelle L. Santoro, successfully opposed a summary judgment motion that sought dismissal of a property turnover proceeding brought by our client as Temporary Administrator of the decedent’s Estate and Co-Trustee of the decedent’s irrevocable trust. The turnover proceeding demanded that the Estate's Executor/Co-Trustee, who was also an estate and trust beneficiary, turn over property belonging to the estate and trust. In addition to summary judgment, the Executor/Co-Trustee also sought to have our client’s interest in the decedent’s trust forfeited due to a claimed violation of its “no contest” clause, and to have our client personally pay the executor’s legal fees. The court denied the motion in its entirety because the Executor/Co-Trustee failed to meet her burden that she was entitled to summary judgment as a matter of law and that issues of fact exist that would preclude summary judgment. In a related matter, the court similarly denied the movant’s (the Executor/Co-Trustee) request to vacate a temporary restraining order whereby the movant is precluded from utilizing funds and encumbering property whose sources are from the purported gift, requesting that our client post an undertaking and sought to surcharge our client.
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.
Matter of Bouton, Putnam County Surrogate’s Court (February 17, 2012; File No. 2009/235)
Often, controversies in families arise from a decedent's alleged decisions on gifts; and then a property turnover proceeding take place in the Surrogate's Court to deal with property that is the subject of a gift. Here, McCarthy Fingar lawyers, Katherine Sohr Jedlicka, Elizaveta S. Korotkova, and Joseph J. Brophy, successfully opposed a summary judgment motion by opposing counsel seeking dismissal of a "reverse" property turnover proceeding brought on by our client. The reverse turnover proceeding demanded that the Estate fiduciary turn over property belonging to McCarthy Fingar’s client under a family agreement made out of court regarding distribution of the assets of the Decedent’s Estate. The court denied the motion, refusing to rule that the family agreement was unenforceable as a matter of law and determining that issues of fact exist as to its validity. The court similarly denied the movant’s request for alternative relief of dismissing the reverse turnover proceeding as to the Administrator’s siblings (also distributees) as unnecessary parties, finding that the court’s determination as to how the Estate will be distributed affects all distributees’ rights; and, therefore, all distributees were interested parties in the proceeding.
Matter of Greene, unpublished decision of Westchester County Surrogate’s Court dated July 14, 2011 (File No. 2007-203/I)
As part of their work in complicated estates, sometimes lawyers have to seek permission of the Surrogate's Court to do things that were not contemplated by decedents when they made their wills. Here, Katherine Sohr Jedlicka successfully petitioned the Surrogate’s Court for permission for the fiduciary of an estate to sell specifically devised real property in order to pay estate expenses. That application was made in order to prevent foreclosure of the real property for unpaid real estate taxes. The Court granted the relief under SCPA 1904.
Matter of Sasso, unpublished decision of Westchester County Surrogate’s Court dtd. July 25, 2011 (File No. 2000-1938/E)
Litigation sometimes takes place when agreements are signed by clients and issues exist as to the enforceability and validity of such agreements. Here, Katherine Sohr Jedlicka and Gail M. Boggio successfully opposed a motion by the former attorney for an estate fiduciary and a cross motion by the estate fiduciary seeking, among other things, to dismiss objections to the fiduciary’s judicial accounting based on a Release and Discharge agreement signed by McCarthy Fingar's client, who was not represented by a lawyer at the time the agreement was signed. The Surrogate's Court denied the motions and set aside the agreement. The court ruled the movants had not proven that the objectant was given a copy of the fiduciary’s informal account on which the agreement was based, and that she was not given a sufficient amount of time to review the same. The court also denied the motion to dismiss on an alleged violation of the statute of limitations, finding the fiduciary had not openly repudiated her fiduciary duties.
In will & trust contests, success or failure in a case often depends upon the facts uncovered through pre-trial discovery. Here, Katherine Sohr Jedlicka and Gail M. Boggio successfully opposed a dismissal of their client’s objections that were made to the probate of the decedent’s purported Will on the grounds of lack of due execution, undue influence, and fraud. The Court denied the other side's motion for summary judgment, since the motion was made even before the completion of court-ordered discovery.
Settlement of Wrongful Death Cmpromise Proceedings in Bronx, Nassau & Sullivan Counties
As part of our experience in Medical Malpractice and Wrongful Death cases and otherwise, McCarthy Fingar's lawyers have much experience in dealing with such proceedings in the Surrogate's Court. Katherine Sohr Jedlicka represented the surviving spouses and children of decedents in compromising wrongful death proceedings in the Bronx, Nassau and Sullivan Counties. The cases involved allocating the proceeds of a wrongful death action between wrongful death and conscious pain and suffering, successfully settling the claims of the Department of Social Services against the proceeds, and establishing annuities for minor children entitled to a portion of the proceeds.
Matter of Greene, unpublished decision of Westchester County Surrogate’s Court dated February 2, 2010 (File No. 2007-203/D)
Creative legal counseling is often necessary in difficult estates to solve complex problems. Here, Katherine Sohr Jedlicka successfully petitioned the Surrogate’s Court for permission to set aside and vacate a deed transferring title to real property from the former executor of the estate to the specific devisees of the property and to permit the current fiduciary to sell the property in order to pay estate expenses, including estate taxes. The Court granted the relief under SCPA 1904 & 2107, but did not approve or disapprove of the specific real estate transaction proposed by the fiduciary. Rather, the fiduciary was required to use good business judgment in the sale of the property.
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.
Surrogate's Court Litigation - Revocation of Letters Testamentary Issued to One of Three Executors - Failure to Account
Matter of Heelan, unpublished decision of Queens County Surrogate’s Court (File No. 2001-3358/A)
A basic obliglation of a fiduciary is to provide an accounting to beneficiaries of estates and trusts. In this case, representing two of three co-executors of an estate, Katherine Sohr Jedlicka sought a court order revoking Letters Testamentary issued to the third co-executor of an estate for his failure to administer the estate. The Surrogate's Court, Queens County, revoked the letters of the executor and appointed McCarthy Fingar’s clients as sole co-executors.
Settlement of SCPA 2103 Turnover Claim Through Alternative Dispute Resolution Forum
Dina M. Aversano and Joseph J. Brophy represented the respondent under a SCPA 2103 Turnover proceeding as it concerned the claim brought by the Executor of an Estate for the return of two limited partnership ownership interests to the estate. Following successful motion practice in the Surrogate’s Court Westchester County, the Executor of the Estate and the respondent opted to engage in mediation, resulting in a beneficial outcome for each party.
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.
Our lawyers sometimes represent corporate and individual fiduciaries in contested accounting proceedings. In one such case, Robert M. Redis and the firm sought, through a summary judgment motion in the Surrogate’s Court, to dismiss objections asserted to an accounting of our client, a co-trustee, by the remaindermen of the trust. The remaindermen filed objections to the accounting, alleging violation of the diversification requirement of the Prudent Investor Act, even though they were aware of the challenged transactions and even though they later became co-trustees and continued to hold the same challenged investments. The Surrogate dismissed the objections as to the original co-trustee, who had previously resigned as co-trustee, but basically denied our motion to dismiss the objections to the accounting of our client. In Matter of Bloomingdale, 48 A.D.3d 559, 853 N.Y.S.2d 92 (2d Dep’t 2008), the Appellate Division partially reversed the Surrogate, holding that because co-fiduciaries are one entity, the remaindermen could not maintain objections for the period in which they served as co-trustees.
Our lawyers represent clients on dispute on prenuptial and post nuptial agreements. Here, in a declaratory judgment action involving an esoteric point of law, Stephen Davis and Joel M. Aurnou achieved an abatement of a surviving spouse’s contract with her husband to bequeath the proceeds of sale of the couple’s Miami Beach oceanfront condominium residence to her late husband’s daughter. Applying the ademption concept, the trial court - unanimously affirmed by the appellate court - ruled that the promise to bequeath pertained only to the condominium owned by the couple at the time of the promise, notwithstanding that they replaced their original condominium with another in the very same Collins Avenue condominium building.
Our lawyers defend corporate executors and trustees against unwarranted charges made against such clients. Here, Robert M. Redis successfully represented The Bank of New York (now BNY Mellon, N.A.) in dismissing a $300 million action in Supreme Court, New York County, against the Bank and a Hong Kong businessman arising out of actions that Bank took as executor of an estate and ancillary proceedings on that same estate in Hong Kong. Justice Ramos, after extensive briefings, dismissed the complaint on grounds of preclusion since the matters had been previously litigated or could have been both in Hong Kong and New York. Justice Ramos also imposed sanctions of $10,000 on the plaintiff and awarded the Bank its reasonable attorney fees as part of those sanctions. Bob also persuaded the Appellate Division, First Department, to unanimously affirm the lower court determination.
Will and Trust Contests comes in different forms. Here, the Surrogate's Court faced the fairly novel issue of whether an attorney-in-fact could use the authority conferred on her in a power of attorney form to amend a trust created by another person to grant to herself a limited power of appointment over the trust remainder. Pursuant to the terms of the trust in question, the grantor reserved to himself the right to amend or revoke its terms during his lifetime. Representing a client that was adversely affected by the trust amendment, Gail M. Boggio and Robert M. Redis successfully argued that the attorney-in-fact had no authority to make the trust amendment and that the trust amendment was invalid. The Surrogate held, among other things, that although the terms of the subject trust gave the grantor himself the right to revoke the trust or amend its terms, it did not confer the same authority upon the grantor's agent or upon any other person.
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 clients in dealing with beneficiary designations on pension and qualified plans. In one such case, Howell Bramson, Robert M. Redis and other lawyers at the firm successfully represented a surviving spouse’s estate and persuaded the lower court to invalidate a beneficiary designation on a qualified plan for the Decedent’s child (to the exclusion of the decedent’s spouse) on the grounds that the beneficiary designation violated the spousal consent rules under ERISA. The trial court's determination was upheld, on appeal, by the Second Circuit Court of Appeals. The appeal also deal with significant legal questions, such as the applicability of ERISA to controlled foreign corporations and whether these sufficiently implicated the Interstate Commerce Clause of the United States Constitution.
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.