New York Probate and Estate Administration Lawyer Blog
This is an uncontested proceeding for reformation of Article FIFTH of decedent’s last will and testament dated November 21, 1979, as amended by Article II of a codicil thereto dated March 24, 1982 (collectively, the “will”). Decedent died on December 12, 1984. The will was admitted to probate by decree of this court.
Petitioner, the sister of the decedent, is a co-trustee of the trust created under Article FIFTH of the will (the “Trust”) for the benefit of decedent’s son, MR. BB, who suffers from chronic physical disabilities, including malfunctioning kidneys, for which he is receiving dialysis treatment. On July 14, 2006, following the death of MR. JJ, who had been serving as co-trustee with petitioner, successor letters of trusteeship were issued by this court to MRS. LL, who is petitioner’s daughter as well as a remainderman of the trust.
Under Article III of the codicil, a trustee who is also a beneficiary of the trust is prohibited from (1) exercising discretion to pay or not to pay income or principal from the trust; (2) determining whether a beneficiary of the trust is disabled; (3) terminating any trust or life estate thereunder; and (4) exercising discretion to allocate receipts or expenses between principal and income. Petitioner and MS. LL, who are remaindermen of the trust as well as the co-trustees, are thus unable to act in respect to these decisions.
On January 17, 2007, MR. RB, who is not a remainderman, was appointed to serve as a successor co-trustee. Successor Letters of Trusteeship issued to him on January 19, 2007, and he is now serving as a co-trustee along with petitioner and MRS. LL. MR. RB has submitted an affidavit in support of the relief requested by petitioner.
According to petitioner, the Trust is valued at approximately $572,000, consisting of cash, cash equivalents and marketable securities. Petitioner avers that she is concerned that the language of Article FIFTH will frustrate the decedent’s intent that trust funds be available for the duration of MR. BB’s life for his comfort and maintenance. Petitioner states that, although MR. BB has medical insurance, the cost of his medical care may exceed the amount covered by the insurance and, over time, completely deplete trust assets prior to MR. BB’s death. For that reason, Petitioner requests that Paragraph A of Article FIFTH be reformed into a special needs trust by eliminating Paragraph [A][2] of Article Fifth and adding the following language:
A Westchester County Probate Lawyer said that courts are generally loathe to reform testamentary instruments and, as a rule, will not, unless reformation effectuates the testator’s intent. When construing a will, the testator’s intent is to be gleaned from a sympathetic reading of the instrument in its entirety and not from a single word or phrase. It is of paramount importance that the testator’s actual purpose be determined and effectuated to the extent it comports with the law and public policy.
In Matter of Escher, (94 Misc 2d 952), the trustee of a discretionary trust established under a will brought a proceeding to judicially settle his account. The New York State Department of Mental Hygiene filed objections to the disallowance by the trustee of its claim for reimbursement from the trust for the cost of the care of the trust’s lifetime beneficiary, the testator’s daughter, who had been a patient at the Rockland Psychiatric Center since 1947. Surrogate’s Court, Bronx County, dismissed the objections, finding that “under the terms of the trust at issue, it is not an abuse of discretion for the trustee to decline to invade corpus for the purpose advocated by objectant”.
In reaching its conclusion, the court relied on the language of the testator’s will and codicil, which the Court found evidenced the testator’s knowledge of his daughter’s disabilities and his apparent intent to provide for her ongoing needs during her lifetime within the framework of a continuing trust. The Court also reasoned that in recent years the view of public assistance had changed from that of a “gift” to a “right” and that the stigma attached to it had, for the most part, disappeared, particularly with respect to programs “designed to meet the astronomical cost of illness or institutional care of any sort. It is divorced from the realities of life to presume that if the testator were aware of the facts as they now exist, he would desire to pay the immense cost for his daughter’s care in preference to having society share his burden”. When the case reached the Court of Appeals, it held that, as a matter of law, the trustee did not abuse her discretion by refusing to invade the trust’s corpus to reimburse the Department of Mental Hygiene.
Enacted in 1993, EPTL 7-1.12, in essence, codified the holding in Escher. The statute authorizes the creation of non-self-settled, testamentary supplemental needs trusts when the following requirements are satisfied: (1) the person for whose benefit the trust is established suffers from a “severe or chronic or persistent disability”; (2) the trust evidences the intent that the assets be used to supplement, not supplant, government benefits; (3) the trust prohibits the trustee from using assets in any way that may jeopardize the beneficiary’s entitlement to government benefits or assistance; and (4) the beneficiary does not have the power to assign, encumber, direct, distribute or authorize distribution of trust assets (EPTL 7-1.12[a][5][i]-[iv]). The policy of the State of New York is to encourage the creation of supplemental needs trusts for people who are mentally or physically disabled.
Courts have shown a willingness to reform wills to obtain the benefits of an SNT where the testator’s intent to supplement, rather than supplant, government benefits is evident from the language of the testamentary instrument.
The proposed reformation of the trust for MR. BB’s benefit meets the criteria enunciated in Escher and later in EPTL 7-1.12. MR. BB, the income beneficiary, suffers from chronic disabilities. The will evidences decedent’s intention to provide for MR. BB to the extent that his needs are not met by government assistance and that the trust’s assets be used to supplement, not supplant, government benefits. In that regard, Article FIFTH [A][2] currently directs that principal may be paid to, or on behalf of, MR. BB from time to time for his health, support or maintenance “taking into account funds available from other sources.” MR. BB has no power to dispose of any trust assets. The requested reformation does not alter decedent’s testamentary plan and the court finds the requested reformation to be in MR. BB’s best interests. Significantly, the Nassau County Department of Social Services was cited in this proceeding and did not appear or object. Finally, all other interested parties have consented to the relief requested in the petition.
Accordingly, the petition to reform the trust under Article Fifth of the will is granted. The co-trustees should be mindful of the restrictions imposed on petitioner and MRS. LL by Article III of the codicil.
The construction of a poor written, vague and doubtful provision of a will may sometimes lead to changing the real intention of the testator to that of the party seeking its construction.
To avoid this, contact the Kings County Probate Attorneys and Kings County Estate Lawyers of Stephen Bilkis & Associates to help you make a clear and legally sound will. Call us now.