You are here: / / THE TRUST-ASSET-SUBSTITUTION AGREEMENT, SUBSTITUTING LIFE INSURANCE FOR...
, ,

THE TRUST-ASSET-SUBSTITUTION AGREEMENT, SUBSTITUTING LIFE INSURANCE FOR CERTAIN ASSETS, WAS SUBJECT TO EPTL 11-1.7(a)(1); THEREFORE THE PROVISION OF THE AGREEMENT RELEASING THE TRUSTEE FROM LIABILITY WAS AGAINST PUBLIC POLICY AND THE TRUSTEE IS LIABLE FOR FAILING TO ENSURE THE LIFE INSURANCE PREMIUMS WERE PAID (SECOND DEPT).

The Second Department, reversing Surrogate’s Court, determined the 1992 agreement substituting life insurance for trust assets was covered by Estates, Powers and Trusts Law (EPTL) 11-1.7(a)(1) and the trustee, which owned the policies, was liable in negligence for failing to ensure the premiums were paid (the policies had lapsed). The provision of the trust-asset-substitution agreement exonerating the trustee from liability was invalid as against public policy. The matter was remitted for a determination of damages:

The Surrogate’s Court found that the 1992 agreement created a “new trust agreement” funded in part by the life insurance policies, which was not part of the testamentary trust, and therefore not governed by EPTL 11-1.7(a). The court further found that the agreement released the trustee from any promises relating to “the substitution of property,” which relieved the trustee of any “liability to monitor the investment owed to the trust,” released the trustee and any successor trustee “from any future lawsuit,” and released the trustee of any fiduciary duty to act upon Robert’s default in paying insurance premiums.

Contrary to the conclusion of the Surrogate’s Court, the agreement did not create a new trust. Rather, the agreement provided for the substitution of testamentary trust property with life insurance policies. The petitioner included the life insurance policies in its final account of the testamentary trusts as worthless assets. There is no reference to any separate accounting for the life insurance policies as part of a separate trust. Thus, the duty of the trustee was governed by EPTL 11-1.7(a)(1), which states that the exoneration of a testamentary trustee from liability for failure to exercise reasonable care, diligence, and prudence is contrary to public policy. Matter of Wilkinson, 2020 NY Slip Op 00286, Second Dept 1-15-20

 

You might also like
PLAINTIFF JUDICIALLY ESTOPPED FROM IMPOSING A CONSTRUCTIVE TRUST ON REAL PROPERTY, PLAINTIFF STATED HE HAD NO INTEREST IN THE PROPERTY IN PRIOR BANKRUPTCY PROCEEDINGS (SECOND DEPT).
PHYSICIAN’S DUTY EXTENDS ONLY TO THE TASK ASSIGNED, HERE THE INTERPRETATION OF MRI FILM.
Online Promotion Which Offered a Coupon to Persons Who Provided His or Her Email Address Did Not Constitute an “Offer” Which Could Be “Accepted” to Create a Contract/In Light of the Disclaimers the Promotion Was Not “Deceptive” and Plaintiff Suffered No “Actual Injury” within the Meaning of the General Business Law
AN ELEVATED BOARDWALK WITH NO GUARDRAILS WAS OPEN AND OBVIOUS AND NOT INHERENTLY DANGEROUS; THE VILLAGE WAS NOT LIABLE FOR PLAINTIFF BICYCLIST’S RIDING OFF THE BOARDWALK (SECOND DEPT).
ROPE WHICH CAUSED PLAINTIFF TO FALL WAS AN OPEN AND OBVIOUS CONDITION KNOWN TO THE PLAINTIFF, DEFENDANT’S MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED.
Standard for Liability of Members of Volunteer Fire Company
THE UNIVERSITY REVIEW BOARD’S FINDING THAT PETITIONER VIOLATED THE STUDENT CODE BY ENGAGING IN SEXUAL MISCONDUCT REVERSED, VIOLATIONS DISMISSED, RECORD EXPUNGED; THERE WAS A DISSENT (SECOND DEPT). ​
Question of Fact Whether Firefighter’s Injury Was Proximately Caused by Driver’s Negligent Operation of His Car Under the “Danger Invites Injury” Doctrine—Firefighter Was Injured Removing Injured Driver from His Car After an Accident

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

PLAINTIFF WAS ON A LADDER WHEN HE RECEIVED AN ELECTRIC SHOCK; THERE WAS NO SHOWING... THE EVIDENCE WAS INSUFFICIENT TO JUSTIFY THE RULINGS IN THIS CUSTODY/PARENTAL...