Articles Posted in Trusts

Matter of Sugg is a case that deals with the issue of whether a person had the capacity to create a trust. The case involved a challenge to a trust created by a deceased individual on the basis that they lacked the capacity to create the trust.

In New York, to create a trust, the person creating the trust, known as the “settlor” or “grantor,” must have the legal capacity to do so. This means that the settlor must have the mental capacity to understand the nature and consequences of creating the trust and must be acting voluntarily and free from undue influence.

Factual Background

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.

In Matter of Estate of June F. O’Connor, the Surrogate’s Court considered a case involving the interpretation of a trust and the distribution of trust assets to the beneficiaries. The case is a reminder of the importance of clear and unambiguous language in trust instruments, and the potential consequences of unclear or ambiguous language.

Background

June F. O’Connor established a trust in 2003, which was later amended in 2007 and 2009. The trust instrument provided for the creation of two separate trusts upon the death of the settlor, referred to as Trust A and Trust B. Trust A was a marital trust for the benefit of the settlor’s husband, while Trust B was a family trust for the benefit of the settlor’s children.

If the language of a trust in New York is not clear, it can result in a dispute among the beneficiaries, as well as between the beneficiaries and the trustee. If the language of the trust is ambiguous or uncertain, the court may be required to step in and interpret the trust and determine the settlor’s intent. This may result in an outcome that is different from what the settlor intended.

In addition, the ambiguity or uncertainty may also lead to confusion and uncertainty among the beneficiaries, as well as the trustee, which can further complicate the administration of the trust. It is therefore important to ensure that the language of a trust is clear and unambiguous in order to minimize the risk of disputes and confusion.

In the Matter of Estate of Patricie Cabanne, a disputed developed between classes of beneficiaries as to how to interpret the terms of the trust.

In Matter of Estate of June F. O’Connor, the Surrogate’s Court considered a case involving the interpretation of a trust and the distribution of trust assets to the beneficiaries. The case is a reminder of the importance of clear and unambiguous language in trust instruments, and the potential consequences of unclear or ambiguous language.

Background

June F. O’Connor established a trust in 2003, which was later amended in 2007 and 2009. The trust instrument provided for the creation of two separate trusts upon the death of the settlor, referred to as Trust A and Trust B. Trust A was a marital trust for the benefit of the settlor’s husband, while Trust B was a family trust for the benefit of the settlor’s children.

If the language of a trust in New York is not clear, it can result in a dispute among the beneficiaries, as well as between the beneficiaries and the trustee. If the language of the trust is ambiguous or uncertain, the court may be required to step in and interpret the trust and determine the settlor’s intent. This may result in an outcome that is different from what the settlor intended.

In addition, the ambiguity or uncertainty may also lead to confusion and uncertainty among the beneficiaries, as well as the trustee, which can further complicate the administration of the trust. It is therefore important to ensure that the language of a trust is clear and unambiguous in order to minimize the risk of disputes and confusion.

In the Matter of Estate of Patricie Cabanne, a disputed developed between classes of beneficiaries as to how to interpret the terms of the trust.

The trustees managing seven trusts executed by Martin B. in 1969, filed request that the Surrogate’s Court, New York County provide direction on distribution of trust assets to post-conceived children of Martin B.’s deceased son, James.  The court was asked to construe the terms “issue” and “descendants.”

Background

The grantor of a trust died on July 9, 2001, survived by his wife Abigail and their son Lindsay, but predeceased by his son James, who died of Hodgkins lymphoma on January 13, 2001. James, however, after learning of his illness, deposited a sample of his semen at a laboratory with instructions that it be preserved and that, in the event of his death, it be held subject to the directions of his wife Nancy.

In New York a construction proceeding involves a petitioner asking the Surrogate’s Court to interpret language in a will or trust that is unclear.  The language may be open to conflicting interpretations, the language may be inconsistent with other terms of the will, or the language simply might not make sense.

In In re Petition of Nadler, the decedent was survived by three adult children.  Four years prior to her death, the decedent created trust that was funded by shares of a realty company.  One of the decedent’s children is a trustee.  Under the terms of the trust, the children as beneficiaries were entitled to the income from the trust.   Five years after the decedent’s death, the primary asset of the realty company was sold for over $8 million, and a year later the realty company was dissolved.

The petitioners, the beneficiaries of the trust, petitioned the Nassau County Surrogate’s Court for a judicial construction to provide that because of the sale of the assets the realty company and its dissolution, there is no longer a need for the trust.  As a result, the trust should end and its assets distributed to the beneficiaries of the trust.  The petitioners argue that because the trust does not contain directions related to what should happen in the event of the dissolution of the realty company, there is an ambiguity that requires to court to make a judicial construction.  The petitioners point to language in a related trust that allows for the court to step in to resolve any ambiguity related to the trust termination date.  The petitioners also rely on the law which states that a trust can be terminated when its purpose ends.

Testators often include provisions for successor executors to take over the responsibilities of administration in the event that the primary executor is not able or is unwilling to serve through the entire period of administration.  Naming a successor trustee also provides for a more efficient transfer of responsibility in the event the primary trustee steps down.

In the case of Stavin’s Will, there was a dispute related to the appointment of a successor trustee that had its roots after probate began when one of the two co-executed died.  The person named by the testator as the deceased co-executor’s successor petitioned the court for letters.  The remaining co-executor objected.

In 1969 E. Stavin died testate. In her will she named her two sons, C. Stavin and M. Stavin as co-executors of her estate.  The will also named the wife of C. Stavin as his successor executor if C. Stavin predeceased the testator. Similarly, the will named the wife of M. Stavin as his successor executor if he predeceased the testator. Neither son predeceased the testator. However, in 1970, four months after letters were issued, M. Stavin died.  For the next 5 years C. Stavin when about the duties of administering E. Stavin’s estate.