New York Probate and Estate Administration Lawyer Blog

Published on: May 27, 2016

Respondent Appeals Attorney’s Fee Provision

by Stephen Bilkis

In a probate proceeding, Respondent appeals from so much of an order of the Surrogate’s Court, dated April 13, 2005, as, upon its application to fix an attorney’s fee, fixed its fee at the principal sum of $109,620, inclusive of reimbursement of a handwriting expert’s fee of $60,884, and directed the petitioner to refund to Plaintiff the sum of $25,391, and the latter cross-appeals from so much of the same order as partially dismissed her counterclaim, in effect, to reduce the sum owed as reimbursement to the petitioner for the handwriting expert’s fee.The order is modified, on the law and as a matter of discretion, by (1) deleting the provision thereof awarding the petitioner attorney and expert fees in the sum of $109,620 and substituting therefor a provision awarding the petitioner attorney and expert fees in the sum of $58,736, and (2) deleting the provision thereof directing the petitioner to reimburse the respondent the sum of $25,391, and substituting therefor a provision directing the petitioner to reimburse the respondent the sum of $76,275; as so modified, the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

It is settled that the determination of a reasonable attorney’s fee in a matter concerning an estate lies within the sound discretion of the Surrogate’s Court. Where, as here, a dispute arises over the terms of a retainer agreement, the responsibility of interpreting the agreement rests with the Surrogate’s Court. In cases of doubt and ambiguity, an agreement between a client and the attorney must be construed most favorably to the client. Here, the Surrogate’s Court properly construed the subject retainer agreement between the petitioner and the respondent.

However, Respondent is correct that the amount of $60,884 which was included in the principal sum awarded to her as reimbursement for the handwriting expert’s fee was excessive and unreasonable. In our opinion, the appropriate and reasonable amount for the services of the handwriting expert under the facts and circumstances of this case should have been $10,000. Thus, the total award to her should have been $58,736. Since it has already paid $135,011 to respondent, she is entitled to be reimbursed the sum of $76,275.

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: May 25, 2016

Court Decides Reformation of Trust Issues

by Stephen Bilkis

RL died a resident of Wyoming County on January 18, 2006. His Last Will and Testament dated October 3, 2005 was admitted to probate in this court on April 3, 2006. Under the terms of his will the testator divided his estate in equal shares for his three children, but established a testamentary trust for the share for the benefit of his son, JB. The trust provides for the distribution of income as well as principal for the benefit of JB and is not a Supplemental Needs Trust (SNT) as authorized and defined in EPTL 7-1.12.

Although there has been no formal appointment of a guardian for JB pursuant to SCPA Article 17-a or Mental Hygiene Law Article 81, he is alleged to be a person under disability and receives Supplemental Security Income (SSI) and Medicare benefits as a result of his disability. There is no indication that JB is receiving or has received Medicaid or other, local benefits through the Wyoming County Department of Social Services (DSS) or other agency.

The facts are not in dispute and the matter is before the court on cross-motions for Summary Judgment pursuant to CPLR 3212. The two issues presented are:

Published on: May 22, 2016

Plaintiff Brings Action to Recover Money from Defendant’s Default Under Commercial Credit Line

by Stephen Bilkis

In this action by plaintiff to recover monies based upon the default of defendants under a commercial line of credit and a concurrently executed personal guaranty, plaintiff moves, pursuant to CPLR 3212, for summary judgment in its favor as against defendants in the amount of $249,770, with accrued interest in the sum of $5,049.94, interest on $249,770 at its prime rate plus .50%, plus late fees in the sum of $1,935.25, and reasonable attorneys’ fees and expenses.

By a Business Credit Application dated October 17, 2005, defendant applied to plaintiff for a Business Revolving Credit Line in the sum of $250,000.1 The Business Credit Application set forth the business information of defendant and the personal financial information of defendants as the other president and vice-president, respectively.

Under the section, entitled “Authorizing Resolution,” as the president, stated that at a corporate meeting. it was resolved that Wood could complete the Business Credit Application and that Wood would then “be obliged to fulfill all of the terms and conditions of the respective note and Credit Account Agreement which it shall thereafter receive.” This section of the Business Credit Application was executed by both defendants on October 17, 2005.

Published on: May 21, 2016

Court Decides Effect of Divestiture of AT&T Stock

by Stephen Bilkis

This is the first New York decision to consider the effect of the recent AT & T divestiture on a bequest of AT & T stock. This is a proceeding brought by co-administratrix, for a construction of article “SECOND” of the testatrix’s last will and testament. The testatrix died on September 13, 1985 at the approximate age of 89. The last will and testament of the testatrix, dated February 6, 1982 and a codicil thereto, dated September 27, 1984, were admitted to probate by this court on December 2, 1986. Letters of administration were issued to the petitioner and the respondent.

Article “SECOND” of the testatrix’s will reads as follows: “SECOND: I give and bequeath to each of the following legatees the following number of shares of capital stock of American Telephone and Telegraph Company owned by me at the time of my death …” and thereafter names seventeen legatees, each to receive varying numbers of shares. A total of 1,625 shares of stock were bequeathed under Article “SECOND.” The petitioner is a legatee of 350 shares. Under Article “SIXTH”, the testatrix bequeathed the residue of her estate in equal shares to and among the heirs and the petitioner. It is undisputed that the testatrix owned 2,262 shares of AT & T stock at the time of execution and at the time of death. Therefore, 637 shares pass under the residuary.

The value of the testatrix’s gross estate is approximately $600,000 comprised primarily of stocks, valued at approximately $350,000.00, a house and property, valued between $175,000 to $225,000, jewelry and miscellaneous items, valued at approximately $9,500.00 and two bank accounts, in the amount of approximately $15,000. The testatrix’s closest relatives are four first cousins, once removed, of which only one receives a bequest under the will. The need for a construction arises as a result of the reorganization of AT & T, which occurred between the date of the execution of the will, February 6, 1982, and the date of the testatrix’s death, September 13, 1985.

Published on: May 20, 2016

Motion Brought to Change the Domicile of the Decedent

by Stephen Bilkis

A motion has been brought before this court to determine whether a domicile of the decedent was changed from New York State to Texas. The facts indicate that on July 5, 1983, the decedent, signed a Power of Attorney appointing his grandson, as his attorney-in-fact. The document was in standard form with a clause stating, this Power of Attorney shall not be affected by the subsequent disability or incompetence of the principal.”

Around August of 1983, the decedent’s mental and physical condition deteriorated as he was suffering from Alzheimer’s disease. As a result, he eventually was placed in the Gowanda Nursing Home on February 13, 1984. In June of 1984, having difficulty administering his grandfather’s affairs, the grandson who lived in Texas, moved his grandfather to a nursing home located in Texas. Three weeks later, the decedent died. However, prior to his death, the bulk of his assets had been transferred to Texas and preliminary negotiations for the sale of his home in New York were already underway. The actual contract for the sale of his residence was signed on September 28, 1984, after his death. The issued presented by this case is whether the donee of a Power of Attorney, the grandson could change the domicile of the donor, the decedent.

Although this question is one of first impression, there are several cases which the court has considered in reaching its decision. The first case is Matter of Webber, 187 Misc. 674, 64 N.Y.S.2d 281, Surrogate’s Court, Kings County, June 1946, which stands for the proposition that a fiduciary may change his ward’s residence but ordinarily cannot change his ward’s legal domicile. In the Webber case, the decedent, a domiciliary of Kings County, was adjudicated incompetent. Subsequently, she was removed from Kings County and took up residence in a hospital in Westchester County. During her stay at the hospital in Westchester County, the committee of her property with the consent of the committee of her person, sold her dwelling in King’s County as well as all of her personal belongings.

Published on: April 30, 2016

Plaintiff Seeks to Enforce Charging Liens

by Stephen Bilkis

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.”

Published on: April 29, 2016

Petitioners File Construction Proceeding to Determine Effect of Tax Exoneration Clause

by Stephen Bilkis

The executors have instituted this construction proceeding, prior to the filing of Federal and New York estate tax returns, to determine the effect of a tax exoneration clause, paragraph second and request a reformation or interpretation of paragraph eleventh, which creates a pre1969 residuary, multiple, split-income, charitable remainder trust so as to qualify it for a charitable deduction under U.S.Code, tit. 26, § 2055 as amended by the Tax Reform Act of 1969 (TRA).

The testator died on September 9, 1973, age 92, leaving a daughter, age 64, as his sole distributee, and a granddaughter and three great-grandsons. His will, executed on December 19, 1967 was admitted to probate and letters testamentary issued to petitioners on October 1, 1973. Paragraph second of the will provides: ‘I direct that all my funeral, administration expenses, just debts, and all estate and inheritance or succession taxes (without apportionment) be paid as soon after my death as may be practicable.’

The residuary probate estate, after deducting the pre-residuary outright and in trust bequests, but before estate taxes, is $845,580. Petitioners allege that the loss of the charitable deduction because the trust is not a charitable annuity trust under TRA would increase the estate tax by $163,000. It should be noted that prior to December 31, 1969, the estate would be entitled to a charitable deduction since the amounts payable to the charities could be readily determined. Before proceeding with the construction of paragraphs second and eleventh of the will, the court is called upon to determine a question of jurisdiction, which appears to be of first impression.

Published on: April 28, 2016

Court Discusses Residuary Clause of Will

by Stephen Bilkis

This is a proceeding to construe and reform Article III, the residuary clause, of the last will and testament of the decedent 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.

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.”

Published on: April 27, 2016

Plaintiff Moves for a Summary Judgment in Lieu of Complaint for Payment

by Stephen Bilkis

Plaintiff moves pursuant to CPLR § 3213 for an Order granting summary judgment in lieu of complaint for payment allegedly owed on a promissory note. “Defendants” or “the Estate”, as executors of the Estate of the decedent cross-move for summary judgment dismissing this proceeding pursuant to § 1810 of the Surrogate’s Court Procedure Act.

This case arises from a loan transaction between plaintiff and the decedent a real estate developer. Prior to his death, he was a 55% owner in Flatbush Extension, LLC (“Flatbush Extension”), which owned properties located at 67, 75, and 85 Flatbush Avenue in Brooklyn. On or about March 27, 2007, U.S. Bank and Flatbush Extension entered into a secured loan agreement (the “Loan Agreement”) pursuant to which the parties agreed that Flatbush Extension could borrow up to $50,000,000 in connection with the development of a luxury condominium project (“Flatbush Extension Project”).