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Appellate Division considered whether a trust was invalid based on last of capacity. Matter of Scelfo, 22 N.Y.3d 278 (N.Y. 2013)

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The disposition of a decedent’s assets can be a complex and emotional process, particularly when there are disputes over the validity of a will or trust. The case of Matter of Scelfo is an example of such a dispute, where family members contested the validity of a trust created by their mother on the basis of lack of capacity.

In New York, to create a trust, the settlor (person creating the trust) must have the capacity to do so. This means that the settlor must have the mental ability to understand the nature and consequences of creating a trust, the extent and nature of their property, and the identities of the beneficiaries of the trust. If a settlor lacks the capacity to create a trust, the trust may be invalidated. Lack of capacity may arise due to various factors such as mental illness, disability, or injury. The test for determining capacity to create a trust is the same as that for creating a will.

To have a lack of capacity to create a trust in New York, a person must be shown to have lacked the ability to understand and appreciate the effect of creating a trust. This could be demonstrated through evidence that the settlor did not understand the nature and purpose of a trust, or that they did not have the mental capacity to understand and manage their financial affairs.

If it is found that a settlor lacked the capacity to create a trust, the trust may be invalidated. This means that the trust will not be legally recognized, and the assets intended to be held in trust will pass to the settlor’s estate according to New York’s laws of intestacy.

 

Factual Background
The decedent, Helen Scelfo, created a trust in 2005, which named her son, Anthony, as the sole beneficiary. The trust was funded with the majority of her assets, including her home and savings. Helen’s other two children, Diane and Robert, were not named as beneficiaries of the trust.

After Helen’s passing, Diane and Robert contested the validity of the trust, alleging that their mother lacked the necessary capacity to create the trust and that she was unduly influenced by Anthony. They further alleged that Anthony had breached his fiduciary duty as trustee of the trust.

The Surrogate’s Court held a trial on the matter and found that Helen had the requisite capacity to create the trust and that there was no evidence of undue influence. The court further found that Anthony had not breached his fiduciary duty as trustee.

 

Decision
The Appellate Division affirmed the Surrogate’s Court’s decision, finding that there was sufficient evidence to support the finding of capacity and no evidence of undue influence. The court also found that Anthony had not breached his fiduciary duty as trustee.

 

Discussion
The case of Matter of Scelfo highlights the importance of capacity and undue influence in the creation of trusts. In this case, the decedent’s two children contested the validity of a trust created by their mother, alleging that she lacked capacity and was unduly influenced by their brother. The court found no evidence of undue influence and held that the decedent had the necessary capacity to create the trust.

Another important aspect of this case is the role of the trustee. Anthony was named as the sole beneficiary and trustee of the trust, and his siblings alleged that he had breached his fiduciary duty by mismanaging the trust. However, the court found no evidence of such misconduct and upheld Anthony’s actions as trustee.

 

Conclusion
Matter of Scelfo is a significant case that demonstrates the importance of meeting the legal requirements for the creation of a valid will. It also highlights the need for witnesses and beneficiaries to provide accurate and consistent testimony in order to prove or disprove the validity of a will. The court’s decision in this case serves as a reminder of the importance of seeking legal advice from an experienced New York trust lawyer and taking deliberate actions when creating a will to ensure that one’s final wishes are carried out.

 

 

 

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