Trusts

Published on: November 4, 2018

Surrogate Court decides a will construction case where the provision of the will creating a trust failed – In re Dawe, 60 Misc.3d 949 (N.Y. Surr. Ct., 2018)

by Stephen Bilkis

In this case the Surrogate’s Court had to decide how to make sure that a testator’s overall testamentary plan remained intact where a portion of the will is determined to be invalid.

A. Dawe died on March 11, 2014. He was never married and never had children. He was survived by his two brothers, B. Dawe and R. Dawe. However, R. Dawe died in April 2014. The will was admitted to probate in September 2014, with B. Dawe being appointed as co-executor along with J. DeMuro, a friend of A. Dawe

In the will, the decedent made a specific gift to B. Dawe of his 13-year-old cat as well as $6000 to take are of her. The decedent was passionate about genealogy and spent a great deal of time researching Dawe family history. Decedent stated in his will that he is making no additional dispositions to his family. Instead, the decedent directed that the residue of the estate be transferred to the Dawe Family Trust that is to be used to continue and expand a genealogical website that the decedent created, and to create an archive of family genealogical data, photos and heirlooms. The will further provides that 21 years after the death of B. Dawe and his son, E. Dawe, the trust is to terminate and the remaining assets are to go to the Godfrey Memorial Library of Middletown, Connecticut.

Published on: June 8, 2018

Petitioner Moves for Summary Judgment in Will Challenge Case – In re Will of Ballasalmo, 2017 NY Slip Op 50193(U) (N.Y. Surr. Ct., 2017)

by Stephen Bilkis

Ballasalmo died at the age of 95, leaving 2 daughters, Knuth and Ayers as her distributees. Petitioner, the decedent’s niece-in-law, submitted a document dated August 16, 2007, purportedly as Ballasalmo’s last will and testament. The will stated that Ballasalmo’s entire estate was to be divided between the petitioner and her husband. The decedent expressly disinherited her daughters. As to be expected, both daughters filed objections to the will. The bases for their objections include that the will was not properly executed, that the decdent lacked testamentary capacity, that it was a mistake, and that it was made under fraud and duress. In response, the petitioner moved for summary judgment dismissal of the decedent’s daughters’ objections.

Summary judgment dismissal is a strategy that allows the moving party to basically win the case without going through the time and expense of a trial. In order to win a summary judgment, the moving party must establish a prima facie entitlement to judgment. In this case, the petitioner mush show that the will was executed according to the requirements of New York law, and that the decedent had testamentary capacity at the time the will was executed. In support of her motion, the petitioner submitted a copy of the decedent’s will which includes an attestation clause as well as a contemporaneous self-proving affidavit. The petitioner also submitted the transcripts of the SCPA § 1404 examinations of the attorney draftsperson who also supervised the execution of the will and of two of the three attesting witnesses.

The evidence submitted established prima facie evidence that the will was properly executed and in statutory compliance.

Published on: September 9, 2017

Court Applies Cy Pres Doctrine – In the Matter of Construction and Effect of the Revocable Trust Agreement, 20 Misc.3d 383 (N.Y. Surr. Ct., 2008)

by Stephen Bilkis

In this case the New York Surrogate’s Court considered a request to modify a testamentary trust to change the name of a beneficiary, based on the doctrine of “cy pres.” The cy-près doctrine allows the court to amend the terms of a charitable trust in order to keep the gift from failing. The doctrine requires that the amendment be consistent with the donor’s original intent.

The decedent died on April 13, 1968. Her will was admitted to probate on January 16, 1969. The will includes provisions naming various charities as beneficiaries, including: The Carmelite Sisters of the Aged and Infirmed, The Catholic Foreign Missionary Society of America (Maryknoll Fathers), The Nursing Sisters of the Sick Poor, The Monastery of Our Lady of Mt. Carmel, and The Confraternity of the Precious Blood. Each of these organization received a specific bequest of $5,000. The will also left the entire residuary estate to a trust for the benefit of Catholic Child Care Society and provides for the invasion of the principal of the trust annually until the trust and corpus is exhausted. The trust has a remaining principal of approximately $90,000.

The petitioner, Catholic Child Care Society of the Diocese of Brooklyn, requests that the court modify the decedent’s will to designate St. John’s Residence for Boys as a beneficiary of the testamentary trust established under the decedent’s will in lieu of Catholic Child Care Society pursuant to EPTL § 8-1.1. At the time the will was admitted to probate, Catholic Child Care Society operated two programs: St. John’s Residence for Boys and St. Joseph’s Children’s Services. In 1995 St. John’s Residence for Boys incorporated separately but continued to work with Catholic Child Care Society. In 2001, the petitioner ceased doing business. The children for whom petitioner had been providing services were transferred to other authorized agencies throughout New York City. As a result, the petitioner has filed this application pursuant to EPTL§ 8-1.1 to modify the trust. Section 8-1.1 is the statutory codification of the common law doctrine of cy pres. It gives authority to the Surrogate’s Court to direct a disposition to be applied in such manner that will most effectively accompany its general purposes.

Published on: July 31, 2017

Court Hears Trustees’ Accounting and Determines the Validity of Power of Appointment

by Stephen Bilkis

This is a trustees’ accounting and, as an incident thereto, the Court is required to determine the validity of the exercise of the power of appointment granted in article ‘Eighth’ of the testator’s will to his daughter as appointee.

The testator died May 11, 1933, leaving a will which was admitted to probate. By article ‘Eighth’ he created a trust of a fund, the income of which was to be paid to his daughter during her lifetime and upon her death the principal was to be paid to such persons as she designated by her last will, and should she die intestate, to those persons who at the time of her death shall constitute her next of kin. The residual provision contained in article ‘Eleventh’ of the said will provides for an identical disposition of the portion of said residual fund bequeathed to the daughter.

The daughter died a resident of Kings County on September 9, 1957, and under article ‘Fifth’ of her will she attempted to exercise the power of appointment of the corpus of the trust created for her benefit by dividing the same into as many shares as her son may leave issue living at her death which shares were to be held in trust for their respective lives, the income to be paid them from time to time and upon the death of each beneficiary the principal to their issue or, in default of issue, to the remaining children per stirpes. The children of the testator’s grandson, the only issue of the daughter are four infants, each under fourteen years of age, all of whom were born subsequent to testator’s death.

Published on: July 29, 2017

Surviving Trustees Bring an Action for Judicial Settlement of Account

by Stephen Bilkis

This is a proceeding (Article 79, Civil Practice Act) for the judicial settlement of their account as surviving trustees of an express trust created by the decedent in a letter writing dated March 10, 1902, and for the construction of the trust instrument in conjunction with the will of the decedent for whose immediate benefit the trust was created.

In March, 1902 decedent had four sons. On March 10th of that year he established the instant trust in a letter addressed to a son and a few days later delivered the securities constituting the corpus of the trust to his other sons as trustees.

The settlor augmented the corpus of the trust pursuant to instruments executed in 1905, 1907, 1909, 1910 and 1911. On December 24, 1909 the sons, as trustees, properly designated their brother Samuel (now a co-petitioner) as a co-trustee.

Published on: April 23, 2017

Court Hears Petition to Terminate Trust

by Stephen Bilkis

This is a petition to terminate a testamentary trust pursuant to EPTL 7-1.19. The trust was established under the will of a decedent, which was admitted to probate on January 23, 2004. Under her will, the testator left her residuary estate, consisting of her residence located at 2531 Ocean Avenue, Brooklyn, New York, in trust. The trustee was authorized to distribute the income to her daughters for their “maintenance, education, advancement, health, comfort or benefit, including but not limited to the need for a suitable residence of the two daughters.

Upon the death of the survivor of the two daughters, the trust terminates and the principal is distributed to the testator’s son, or, if he does not survive her sisters, to his children living at the testator’s death.

On February 18, 2005, the daughter entered into a contract to sell the Ocean Avenue property for $990,000. In April, 2005, the siblings entered into a stipulation allowing the sister to borrow $175,000, secured by a mortgage on the property, to enable her to buy another home. The mortgage was to be satisfied upon sale of the property and the amount used to satisfy the mortgage charged to the daughter’s share of the sales proceeds.

Published on: January 23, 2017

Court Discusses Powers of Guardian ad litem

by Stephen Bilkis

There are three proceedings pending in the estate of the decedent: (1) a miscellaneous proceeding to declare the decedent’s Living Trust dated March 19, 2001 invalid; (2) a proceeding to probate an instrument dated March 19, 2001 as the decedent’s last will and testament; and (3) a proceeding by respondent as trustee of the decedent’s Living Trust dated March 19, 2001, to judicially settle his account for the period from March 19, 2001 to May 9, 2007. On July 1, 2010, the court appointed a guardian ad litem for one of the decedent’s daughters, in all three proceedings.

The decedent died on May 9, 2007, survived by four distributees: two daughters, a son; and a granddaughter, the only child of the decedent’s predeceased son. The propounded will pours over to the living trust. The living trust provides only for the son, specifically omits the two daughters, and does not mention the granddaughter.

The guardian ad litem has filed a preliminary report in which he details his findings to date and, based upon them, recommends that he continue to represent his ward’s interests in all three proceedings. The guardian ad litem reports that the daughter has alleged that the son exerted undue influence and fraud upon the decedent at a time when he was physically ill and depressed. The guardian ad litem states that, based on his investigation, he deems it appropriate to participate in the SCPA 1404 examinations in the probate proceeding and to continue to represent his ward’s interests in all three proceedings. The court agrees with his conclusions.

Published on: December 5, 2016

Court Disccuses issue of Virtual Representation of Unborn Contingent Remaindermen

by Stephen Bilkis

This is an estate case where the proceeding raises an issue of virtual representation of unborn contingent remaindermen. The purpose of the virtual representation statute (SCPA 315) is to dispense with the necessity of service of process on necessary or proper parties.

The Testator was survived by his widow and one son. The son is unmarried. His unborn children are contingent remaindermen of two trusts.The first is the usual marital deduction A trust with power in the widow to appoint the principal. In default of the exercise of such power, the son is the remainderman. If he should predecease his mother, his unborn children are the contingent remaindermen. The second is a B trust. The widow and son share the income. Upon the death of the widow, the son receives the principal if then living; and if not, then his as yet unborn children are the remaindermen.

The interests of the unborn contingent remaindermen which may be adversely affected arises in this as in most cases not from the nature of the proceedings or of the trusts but from the predictable impact of the decree. It suffices simply to note that the sole assets of both trusts are shares of stock in a family corporation which represent a controlling interest in the hands of the trustee.

Published on: May 26, 2016

Motion for Summary Judgment Filed for Removal of Fiduciaries

by Stephen Bilkis

Before the court is a motion for summary judgment filed in connection with petitions for the removal of fiduciaries MRK and TOM in the related estates of Mr. KJJ and Mrs. JJ.

BACKGROUND Decedents Mr. KJJ and Mrs. JJ were a husband and wife who tragically died together in an automobile accident on April 22, 2005. They were survived by their three adult sons, CC, VV and SS, movants herein. Both decedents executed wills on November 19, 1986, and both wills provide that in the event that Mr. KJJ or Mrs. JJ is not survived by a spouse, then Mrs. JJ’s brother, MRK, shall serve as Executor.

The wills were filed for probate on October 13, 2005 and admitted to probate on March 1, 2006. Letters testamentary in each estate issued to MRK on March 3, 2006. At the same time, MRK received letters of trusteeship in Mr. KJJ’s estate.

Published on: July 11, 2015

Petitioner Seeks to Reform Residuary Clause

by Stephen Bilkis

This is a proceeding to construe and reform Article III, the residuary clause, of the last will and testament of BO, so as to enable the estate to qualify for an unlimited New York estate tax marital deduction. While an application to reform a will to enable the estate to qualify for a deduction for New York estate tax purposes and not federal may be uncommon, it is permissible. Matter of Glick, N.Y.L.J. Feb. 17, 1989, p. 22, col. 6 (Surr.Ct. New York Co.).

The decedent died on July 21, 1988 survived by a spouse and three children. His will, dated December 14, 1979, was duly admitted to probate on December 19, 1988.

Under Article III of the will the residuary estate, which comprises the entire estate with the exception of some personalty previously bequeathed to his wife, is divided into two trusts, Trust A and Trust B. Under Trust A, the decedent bequeathed in trust for his wife the following: A pecuniary amount equal to the maximum marital deduction allowable to my estate for Federal estate tax purposes ($250,000 or 50% of my adjusted gross estate, as the case may be, less any adjustment required for marital deduction gifts made by me during my lifetime), less the aggregate amount of marital deductions, if any, allowed for interests in property passing or which have passed to my wife otherwise than by the terms of this Article, and less also the amount if any, required to increase my taxable estate to the maximum amount as to which, considering all deductions and credits allowable to my estate, there will be no federal estate tax payable by reason of my death.