Articles Posted in Westchester County

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This is a proceeding brought before the Surrogate’s Court, Kings County for judicial settlement of the first and final account of proceedings of the CM Bank, National Association, as trustee under Article “Second” of the will OF AGK, deceased, for the benefit of BMK.

This proceeding for settlement of a final trust accounting presents a question of construction occasioned by the bankruptcy of a charitable remainderman designated by the donee of a power of appointment.

On 3 March 1931, the donor of the power, AK, died. He left a 1927 will which was probated in the instant court. Under the will, the net estate shall be divided into three portions and placed in trust, each part to furnish income to one of his three children; and, upon the death of each child, the remainder interest in his or her trust shall be distributed “by valid and absolute disposition by will of such child” and in default of such exercise of the power, “as a part of the estate of such child in accordance with the statutes of descent and distribution of the State of New York.”

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This is an appeal brought before the Court of Appeals of New York from a decision rendered by the Supreme Court, Appellate Division, Second Department, in the matter of the judicial settlement of the account of MNH and others, as trustees under HH’s will.

The trustees appealed from an order of the Appellate Division affirming a decree of the Surrogate’s Court settling their account. The instant court modified and affirmed.

The issue here is the validity and effect of certain portions of the will of HH, and the correctness of the directions contained in a decree of the surrogate of Kings county as to the disposition of certain moneys of his estate.

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This proceeding was originally commenced by the son of Mrs. NED, now deceased, who was testator’s niece and one of his two distributees, for a construction that the charitable trust created under paragraph Tenth of testator’s will is invalid. The special guardian for testator’s half-sister, who was testator’s other distributee, takes a similar position. Both distributees and four other persons were given lifetime specified annual legacies under the will and codicil.

Thereafter the said son, who is a residuary legatee under his mother’s will and one of her coexecutors, in his representative capacity, and his mother’s other coexecutor made themselves parties to this proceeding by adopting, amending and supplementing the original petition. The conservator appointed for testator’s half-sister, by a separate instrument adopted the petition and the amended and supplemental petition herein.

The special guardian urges that a hearing be held to ascertain the facts surrounding the execution of an agreement dated December 12, 1936 by and among his ward, Mrs. NED, the nominated corporate executor, and the Attorney-General of the State of New York. Under said agreement the objections to probate of the testator’s will and codicil, which had been interposed by testator’s half-sister, were withdrawn, conditioned upon the payment of a substantial sum of money to each distributee, in addition to the benefits given to each of them under the will.

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JB died a resident of the City of Poughkeepsie, Dutchess County, New York, on April 5, 1954, leaving a Last Will and Testament (and Codicil) which were thereafter on the 30th day of April, 1954, duly admitted to probate in this Court. At the time of his death testator was survived by his wife Mrs. JB and his brother MR. TB. On October 18, 1965, some 11 1/2 years after probate, a petition was filed by Mrs. JB, the widow, praying for a determination of the validity, construction and effect of said Will, particularly of paragraphs ‘FOURTH’, ‘FIFTH’, and ‘SIXTH’, whereby it is alleged that more than 50% Of decedent’s estate was left to a religious association in violation of Section 17 of the Decedent Estate Law. This section provides as follows:

‘No person having a husband, wife, child, or descendant or parent, shall, by his or her last will and testament, devise or bequeath to any benevolent, charitable, literary, scientific, religious or missionary society, association, corporation or purpose, in trust or otherwise, more than one-half part of his or her estate, after the payment of his or her debts, and such devise or bequest shall be valid to the extent of one-half, and no more. The validity of a devise or bequest for more than such one-half may be contested only by a surviving husband, wife, child, descendant or parent. When payment of a devise of bequest to such society, association, corporation or purpose is postponed, in computing the one-half part of such society, association, corporation or purpose, no allowance may be made for such postponement for any interest or gains or losses which may accrue after the testator’s death. The value of an annuity or life estate, legal or equitable, shall not be computed upon the actual duration of the life, but shall be computed upon the actuarial value according to the American Experience Table of Mortality at the rate of four per centum per annum. Such value shall be deducted from the fund or property, which is subject to the annuity or life estate, in order to ascertain the value of a future estate or reminder interest passing to such society, association, corporation or purpose.’

The Last Will and Testament of Mr. JB, after making certain specific bequests and naming his wife Mrs. JB (petitioner), his brother Mr. TB and his friend and attorney Mr. DM, as executors, provided as follows:

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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.

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The law firms seek to determine and enforce charging liens pursuant to section 475 of the Judiciary Law. The liens would secure fees claimed by the Firms for legal services to respondent under a retainer agreement dated July 10, 2006 (the “2006 Retainer”). The Firms represented him in a decade-long dispute among several family members, involving various real estate holdings and family trusts. The dispute had been punctuated by at least two abortive settlements, the latter one in 2004. On January 3, 2008, however, the family internecine battles ended in a global settlement placed on the record in open court and then further memorialized in a written stipulation implemented by a closing on August 27-29, 2008. The liens now claimed by the Firms relate to his share of the proceeds of that settlement.

Discovery having concluded, the Firms and respondent have cross-moved for partial summary judgment. The issues raised on these motions involve the validity of the 2006 Retainer, its allegedly wrongful procurement, and, if it is valid, the meaning of several of its terms and the extent (if any) to which William’s obligations under it are subject to conditions that have not been satisfied. The Firms acknowledge that the sums to which they are entitled for work resulting in the 2008 settlement cannot be fully determined without a hearing. Respondent for his part asserts that a hearing is needed to determine the Firms’ fees for hourly services in the litigation preceding that settlement.

The 2006 Retainer was drafted and executed on its letterhead. As described below, the Retainer provides for fees in respect of both settlement-related work and litigation-related work. Settlement-related work gives rise to two types of fees: a flat fee and a performance fee, both contingent upon the effectuation of a settlement. Settlement itself is defined as “a settlement among substantially all of the descendants of the decedent and the trusts and estates thereof.”

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In this proceeding the sister of the decedent individually and as administratrix with the will annexed of the estate of the deceased, for the allowance of a claim against the estate of deceased husband of which respondent is executor. Judgment of the Special Term allowing the claim in part, was affirmed in part and reversed in part by the Appellate Division, and claimant appeals.

In 1903 the husband and his wife, lived in Brooklyn. The wife owned a building at Classon Avenue, in a part of which she lived with her husband. On January 17, 1903, she made her will, and on March 27, 1903, she died. By her will she made her husband executor and gave her sister, $1,000. She then provided: ‘Fourth. I give and bequeath to my beloved husband all of the rest and remainder of my estate both real and personal to have and to hold the same to him, his heirs and assigns forever, with the understanding that at the decease of the said husband all of the estate which he shall derive under this will which shall then remain by him undisposed of he shall give and turn over to my sister.’

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In an action, inter alia, to recover damages for breach of contract, which was commenced in the Supreme Court, New York County, transferred to the Surrogate’s Court, Kings County, and joined with a probate proceeding the defendants appeal, as limited by their brief, from so much of a decree of the Surrogate’s Court, Kings County, dated November 29, 2011, as awarded the plaintiff interest at the rate of 18% per annum upon each installment payment due and owing to the plaintiff individually and in his capacity as preliminary executor of the estate of the decedent, payable by the defendant from the date each payment became due, and the plaintiff cross-appeals, as limited by his brief, from so much of the same decree as is in favor of him individually and against the defendant in the principal sum of only $480,000 and is in favor of him in his capacity as preliminary executor of the estate of the decedent and against the defendant in the principal sum of only $480,000.

The plaintiff, individually and in his capacity as the executor of the estate of his mother, commenced this breach of contract action against the defendant to recover monthly installments due and owing both to him personally and to the estate beginning in February 2006, pursuant to a stock purchase agreement executed in September 1996. In exchange for shares of stock in a closely held corporation, defendant agreed to pay the total sum of $1,800,000 in monthly installments over the course of 15 years. The agreement provided for the monthly payment of $5,000 for the first five years, $10,000 for the next five years, and $15,000 for the final five years, with all payments inclusive of interest at the rate of 18% per annum.

A prior determination, this Court modified an order of the Surrogate’s Court so as to grant those branches of the plaintiff’s motion which were for summary judgment on the breach of contract causes of action. The Surrogate’s Court entered a decree upon that determination in favor of the plaintiff and against defendant, both in his individual capacity in the principal sum of $480,000, and in his capacity as the executor of the estate in the principal sum of $480,000, as those amounts equaled the sum totals of the monthly payments due beginning in April 2006. In addition, the Surrogate’s Court awarded the plaintiff prejudgment interest upon each monthly payment from the date it became due at the rate of 18% per annum.

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In a probate proceeding, the petitioner, appeals from so much of a decree of the Surrogate’s Court, Kings County, dated July 1, 2004, as denied that branch of her cross motion which was for the issuance of preliminary letters testamentary to her for the estate of the decedent and granted those branches of the motion of the objectant, which were to deny the issuance of preliminary letters testamentary to the petitioner for that estate, to disqualify the petitioner from service as executrix, and to issue letters of administration to the objectant.

A testator or testatrix has the right to determine who is most suitable among those legally qualified to settle his or her affairs, and that selection is not to be lightly discarded. While the Surrogate may disqualify a person from receiving letters of administration where the friction between such person and a beneficiary interferes with the proper administration of the estate.

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As an incident to trustee’s intermediate account of four trusts created under articles ‘Seventh,’ ‘Eighth’ and ‘Ninth’ of the will, the Court’s instruction is sought as to the investments authorized by article ‘Fourteenth’ of the will and as to significance to be given to the term ‘fiscal agent’ as used therein.

The Testator died a resident of Kings County, on February 14, 1924, leaving a will dated May 11, 1920, which was admitted to probate on April 11, 1924. The petitioner’s predecessor, a trust company, was appointed executor and trustee thereunder.

The portion of the will to be construed expressly states that the authority to invest shall be limited by the following: ‘Nor shall it invest in any shares or securities of which it may be promoter or underwriter, or of any corporation for which it shall be the fiscal agent.’

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