Trusts and Estates Archives - New York Appellate Digest

THE PROPONENT OF THE WILL DID NOT DEMONSTRATE DECEDENT KNEW THE NATURE AND EXTENT OF THE PROPERTY HE WAS DISPOSING AT THE TIME THE WILL WAS EXECUTED (SECOND DEPT).

The Second Department, over a strong dissent, determined that Alice, the decedent’s sister, did not prove the decedent knew the nature and extent of the property he was disposing at the time the will was executed:

Alice testified that the decedent told her his total assets amounted to $200,000. The decedent then told the attorney who prepared the will that his total assets amounted to $1.5 million, when in fact, with the annuity, his assets, including nonprobate property consisting of an IRA in the amount of $258,299, are valued at more than $2.6 million. This amount does not include the CDs the decedent claimed were held in trust for his grandchildren, which are not listed on the inventory of assets filed with the Surrogate’s Court. * * *

On the day he executed the will [December 15], the 83-year-old decedent, who had stage IV prostate cancer, had been a patient at WPH for two weeks, since December 1, 2014. He was admitted with a fever, generalized weakness, pneumonia, bilateral pleural effusion, and a 30-to-40-pound weight loss over the prior three to four months. During those two weeks, he had a choking incident on December 4, which caused respiratory and cardiac arrest and resulted in intubation and transfer to the ICU, and a second incident on December 13, two days prior to executing the will, during which he developed respiratory arrest, was transferred to the CCU, and was sedated with morphine. At times, during the day before he executed the will, as well as on the morning of the day of the execution, the decedent exhibited an inability to follow instructions, disorientation, confusion, inability to benefit from education, impulsive behavior, and a potential to injure himself. On both the day prior to the execution of the will and the day the will was executed, the decedent was intubated and on a ventilator and unable to speak. The decedent was also sedated with lorazepam the day before the execution of the will. Matter of Falkowsky, 2021 NY Slip Op 05122, Second Dept 9-29-21

September 29, 2021/0 Comments/by Bruce Freeman

THE GRANTOR WAS NOT THE SOLE HEIR OF THE TITLE HOLDER; THEREFORE THE DEED PURPORTING TO TRANSFER A 100% INTEREST IN THE PROPERTY WAS VOID AB INITIO (SECOND DEPT).

The Second Department determined a deed was null and void because the grantor was not the sole heir of the title holder:

By a deed dated July 25, 2012, Colie Gallman, Jr., alleged to be the sole heir of Lillian Hudson, purportedly transferred his 100% interest in certain real property owned by Hudson to the defendant. In January 2015, the plaintiff commenced this action against the defendant seeking a judgment declaring that the July 25, 2012 deed is null and void. * * *

A misrepresentation in a deed that the seller of the property is the sole heir of the holder of the title to the property renders the conveyance void ab initio … . Here, the evidence and affidavits submitted by the plaintiff to the Supreme Court during the course of motion practice in this action established that Colie Gallman, Jr., was not the sole heir of Hudson as of the date of the subject deed, and thus, the deed purporting to convey all of the interest in the subject property is void ab initio … . In opposition, the defendant failed to raise a triable issue of fact. 23A Vernon, LLC v Oneal, 2021 NY Slip Op 05017, Second Dept 9-22-21

September 22, 2021/0 Comments/by Bruce Freeman

Civil Procedure, Evidence, Trusts and Estates

THE NONDOMICILIARY DID NOT HAVE MINIMUM CONTACTS WITH NEW YORK; NEW YORK DID NOT HAVE PERSONAL JURISDICTION OVER THIS TRUST LITIGATION (FOURTH DEPT).

The Fourth Department, reversing Surrogate’s Court, determined New York did not have jurisdiction over this trust litigation:

In the petition, the settlor and beneficiary of the trust (decedent) sought an accounting and removal of respondent, a Virginia resident, as trustee. The trust was created in 1996 in New Jersey. At the time the trust was created, decedent was a resident of Illinois and respondent was a resident of Georgia. Respondent administered the trust from Georgia until he relocated to Virginia, and he administered the trust from Virginia thereafter. Decedent relocated to New York in 2016. Solely as a consequence of decedent’s choice of residence, respondent sent to New York occasional trust-related correspondence, including “five or six” checks disbursing trust assets.

… “Due process requires that a nondomiciliary have ‘certain minimum contacts’ with the forum and ‘that the maintenance of the suit does not offend traditional notions of fair play and substantial justice’ ” … A nondomiciliary has minimum contacts with New York if he or she “purposefully avails” himself or herself of “the privilege of conducting activities within” New York … . thereby ” ‘invoking the benefits and protections’ ” of New York’s laws … . Our focus is on ” ‘the relationship among the [respondent], the forum, and the litigation’ “… . We conclude that respondent lacks the requisite minimum contacts with the New York forum. He does not live, own property, or conduct business in New York. The first and only relationship that New York had to the subject trust was 20 years after its creation, when decedent became domiciled in New York and respondent disbursed trust assets to her in New York … . Matter of Murad Irrevocable Trust, 2021 NY Slip Op 04823, Fourth Dept 8-26-21

August 26, 2021/by Bruce Freeman

Civil Procedure, Foreclosure, Trusts and Estates

IN THIS FORECLOSURE ACTION THE DEATH OF THE MORTGAGOR/PROPERTY OWNER DID NOT TRIGGER AN AUTOMATIC STAY BECAUSE THE MORTGAGOR/PROPERTY OWNER DIED INTESTATE AND THE ACTION COULD CONTINUE AGAINST THE DISTRIBUTEES WITHOUT THE APPOINTMENT OF A REPRESENTATIVE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the death of the mortgagor/property owner in this foreclosure action did not divest the court of jurisdiction because the mortgagor/property owner died intestate and the suit could continue against the distributees without the appointment of a representative:

“Generally, the death of a party divests a court of jurisdiction to act, and automatically stays proceedings in the action pending the substitution of a personal representative for the decedent” … . “In most instances a personal representative appointed by the Surrogate’s Court should be substituted in the action to represent the decedent’s estate” … . “However, if a party’s death does not affect the merits of a case, there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution” … . “Where a property owner dies intestate, title to real property is automatically vested in his or her distributees” … . Under such circumstances, “a foreclosure action may be commenced directly against the distributees” … . Thus, where a mortgagor/property owner dies intestate and the mortgagee does not seek a deficiency judgment, the mortgagor/property owner’s death “does not affect the merits of a case, [and] there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution” … . Wells Fargo Bank, N.A. v Miglio, 2021 NY Slip Op 04780, Second Dept 8-25-21

August 25, 2021/by Bruce Freeman

Civil Procedure, Contract Law, Securities, Trusts and Estates

SUPREME COURT, PURSUANT TO CPLR ARTICLE 77, PROPERLY RESOLVED THE DISTRIBUTION OF A $4.5 BILLION GLOBAL SETTLEMENT PAYMENT BY JP MORGAN CHASE IN THIS RESIDENTIAL-MORTGAGE-BACKED-SECURITIES-RELATED ACTION (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Manzanet-Daniels, determined Supreme Court properly resolved the distribution pursuant to CPLR article 77 of a $4.5 billion global settlement payment by JPMorgan Chase to investors to be made by residential mortgage-backed securities (RMBS) trusts. The opinion is detailed, fact-specific and cannot be fairly summarized here. The rulings are specific to provisions included in or absent from the relevant pooling and servicing agreements (PSA’s). Matter of Wells Fargo Bank v Aegon USA Inv. Mgt., LLC, 2021 NY Slip Op 04740, First Dept 8-19-21

August 19, 2021/by Bruce Freeman

Civil Procedure, Mental Hygiene Law, Trusts and Estates

ALTHOUGH DOMINICA, THE EXECUTRIX OF JOSEPHINE’S ESTATE, WAS NEVER SUBSTITUTED FOR JOSEPHINE AFTER JOSEPHINE’S DEATH, DOMINICA APPEARED AND ACTIVELY LITIGATED A MOTION TO VACATE; THE FAILURE TO EFFECT SUBSTITUTION IN THAT CIRCUMSTANCE IS A MERE IRREGULARITY; TWO-JUSTICE DISSENT (FOURTH DEPT).

The Fourth Department, over a two-justice dissent, determined the failure to substitute the executrix of Josephine’s estate, Dominica P., after Josephine’s death did not nullify the proceedings. Dominca P appeared and actively litigated a motion to vacate brought by Kathleen. In that circumstance the failure to effect substitution was deemed a mere irregularity:

Josephine died at some point before the entry of the order on appeal, and the executrix of her estate, Dominica P., was never formally substituted as the petitioner in this proceeding. There is no dispute, however, that Dominica was properly served with Kathleen’s motion to vacate, and Dominica never objected to adjudicating Kathleen’s motion in the absence of a formal substitution order. To the contrary, Dominica—acting in her capacity as the executrix of Josephine’s estate—appeared and successfully opposed Kathleen’s motion on the merits. Dominica likewise appeared in this Court to oppose Kathleen’s appeal. Because Dominica appeared and actively litigated Kathleen’s motion on the merits, it is well established that any “defect in failing to first effect substitution was a mere irregularity” … . Moreover, to formally correct this irregularity, we now modify the order by substituting Dominica as the petitioner in this proceeding … . Matter of Robinson v Kathleen B., 2021 NY Slip Op 04320, Fourth Dept 7-9-21

July 9, 2021/by Bruce Freeman

Contract Law, Trusts and Estates

DIFFERENCES BETWEEN AN ACTION TO IMPOSE A CONSTRUCTIVE TRUST AND AN ACTION ALLEGING UNJUST ENRICHMENT EXPLAINED (THIRD DEPT).

The Third Department explained the differences between an action to impose a constructive trust and an action alleging unjust enrichment, here in the context of a couple’s investment in building a new house and the allegation one party put in 800 hours of unpaid labor which benefitted the other party. The court held the constructive trust action was properly dismissed, but the unjust enrichment action should not have been dismissed:

Although the equitable claims of constructive trust and unjust enrichment are elementally related and involve overlapping proof, certain essential elements differ. “[A] constructive trust may be imposed when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest” … . “The elements of a constructive trust are a confidential relationship, a promise, a transfer in reliance on that promise and unjust enrichment” … .As relevant here, with respect to the promise element, it may be express or implied, as determined by the circumstances … . “Finally, a person . . . is unjustly enriched when retention of the benefit received would be unjust considering the circumstances of the transfer and the relationship of the parties” … .

Importantly, and as relevant here, “the constructive trust doctrine serves as a fraud-rectifying remedy rather than an intent-enforcing one” … . By contrast, an action based on unjust enrichment, which would only result in a money judgment rather than a judicially imposed lien, requires the plaintiff to establish that “(1) the other party was enriched, (2) at [the plaintiff’s] expense, and (3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered” … . Clark v Locey, 2021 NY Slip Op 04176, Third Dept 7-1-21

July 1, 2021/by Bruce Freeman

Trusts and Estates

DECEDENT, WHO DIED TESTATE IN 2004, WAS AWARDED COMPENSATION BY CONGRESS IN 2015 BECAUSE HER HUSBAND HAD BEEN HELD IN IRAN AS A HOSTAGE FROM 1979 TO 1981; BECAUSE THE COMPENSATION WAS AWARDED AFTER HER DEATH, IT DOES NOT PASS BY WILL, BUT RATHER BY THE LAWS OF INTESTACY (FOURTH DEPT).

The Fourth Department, reversing Surrogate’s Court, in a full-fledged opinion by Justice Centra, determined the funds awarded by Congress to the decedent, after the decedent’s death, do not pass by decedent’s will, but rather by the laws of intestacy. Decedent, who died in 2004, was the wife of a man held hostage in Iran from 1979 to 1981. In 2015 Congress awarded compensation to the hostages’ families:

Regarding property acquired by an estate after the death of the testator, case law is sparse, but is consistent with the language in EPTL 3-3.1 providing that only property that a testator is entitled to devise “at the time of his [or her] death” may be distributed pursuant to the terms of the will … . We are particularly persuaded by the decision in Shaw Family Archives Ltd. , which involved a dispute over ownership interest in Marilyn Monroe’s right of publicity after her death. The court determined that New York law did not permit a testator to dispose by will of property that she did not own at the time of her death … . The court cited to EPTL 3-3.1 and held that “[t]he corollary principle recognized by the courts is that property not owned by the testator at the time of his [or her] death is not subject to disposition by will” … .

We agree with the reasoning in Shaw Family Archives Ltd. that the New York rule is grounded in the testator’s lack of capacity to devise property he or she does not own at the time of death … . Matter of Keough, 2021 NY Slip Op 03948, Fourth Dept 6-17-21

June 17, 2021/by Bruce Freeman

Banking Law, Trusts and Estates

QUESTIONS OF FACT PRECLUDED SURROGATE’S FINDING THAT THREE JOINT BANK ACCOUNTS WERE PART OF THE ESTATE AS OPPOSED TO JOINT ACCOUNTS WITH RIGHT OF SURVIVORSHIP (FOURTH DEPT).

The Fourth Department, reversing (modifying) Surrogate’s Court, determined there were questions of fact about whether three joint bank accounts passed to respondent outside the estate or were part of the estate. The was no evidence of a signature card which included “right of survivorship” language. Respondent argued decedent intended the bank accounts to be gifts to the respondent, but the language of the will raised questions of fact about decedent’s intent:

Absent the necessary survivorship language, the statutory presumption contained in Banking Law § 675 does not apply, even if the documents creating the account provide that it is a “joint” account … . Here, on her motion, respondent failed to establish that the statutory presumption created under Banking Law § 675 is applicable because she failed to submit signature cards or ledgers of the accounts that included the required survivorship language. …

Respondent averred in an affidavit that decedent placed her name on the accounts with the stated intention of gifting them to her. Respondent also submitted related account documents, including bank documents for all four accounts that reference both respondent and decedent’s names and include survivorship or joint tenancy language. Thus, respondent submitted evidence establishing that the four accounts were joint accounts with right of survivorship, and the burden then shifted to petitioners. …

… [P]etitioners submitted decedent’s will, which left the estate to the three children. Thus, the intent of decedent, as evidenced by her will, is inconsistent with respondent’s contention that the three bank accounts were gifts to respondent or joint tenancies with survivorship rights … . … [P]etitioners submitted respondent’s deposition testimony that those three accounts were funded solely by decedent, that one of the … accounts was used as decedent’s primary checking account, and that payments out of that account were for only decedent’s benefit. … [R]espondent, who became joint owner of those three accounts when decedent was in her mid to late eighties, testified that she helped decedent with her banking. Matter of Najjar (Sanzone), 2021 NY Slip Op 03777, Fourth Dept 6-11-21

June 11, 2021/by Bruce Freeman

Civil Procedure, Fiduciary Duty, Trusts and Estates

THE FIDUCIARY TOLLING RULE TOLLED THE STATUTE OF LIMITATIONS IN THIS CONSTRUCTIVE TRUST ACTION AGAINST AN EXECUTOR (WHO WAS REMOVED BY THE COURT) UNTIL THE SUCESSOR FIDUCIARY WAS APPOINTED (THIRD DEPT).

The Third Department, reversing Surrogate’s Court, determined the constructive trust action based upon alleged self-dealing by an executor who was removed by the court was not time-barred. The fiduciary tolling rule applied:

Under the fiduciary tolling rule, a claim alleging wrongful conduct by an individual in his or her fiduciary capacity does not accrue until there is an open repudiation of the fiduciary obligation or a judicial settlement of the fiduciary’s account … . This rule tolls the statute of limitations “for all misconduct committed by the fiduciary prior to repudiation of its obligation or termination of the [fiduciary] relationship” … since, absent either repudiation or removal, the aggrieved parties “were entitled to assume that the [fiduciary] would perform his [or her fiduciary] responsibilities” … , and it is highly unlikely that a sitting fiduciary would assert a constructive trust claim against himself or herself. … Under this rule, the toll continues until a successor fiduciary is appointed … . Matter of George, 2021 NY Slip Op 03231, Third Dept 5-20-21

May 20, 2021/by Bruce Freeman