 Luis Maldonado was injured in a car accident, but by the time he filed his case, the driver of the other vehicle passed away.
Maldonado sued the driver's surviving spouse, thinking she was the administrator of the driver's estate. When he found out that wasn't the case, he named the law firm which had been assigned the matter (by the deceased driver's insurance company).
After the Bronx County Supreme Court denied a request to dismiss the complaint brought against the lawyers, an appeal to the Appellate Division, First Department, followed.
Since you can't bring a case against a dead person -- an administrator or executor must be sued in the decedent's place and stead -- the AD1 was of the view the lawsuit was a "nullity" and that the Supreme Court lacked the power to hear the matter.
Is Maldonado dead?
 To view a copy of the Appellate Division's decision, please use this link: Maldonado v Law Off. of Mary A. Bjork
 You're Invited!
Are you new to the practice of trusts and estates law or have only been practicing a few years? Thinking of joining a T&E practice? Would you like to meet experienced attorneys in the practice and connect with other young lawyers like you?
Then please join the New York State Bar Association Trusts & Estates Law Section, New Members Committee and the Honorable John M. Czygier, Surrogate, Suffolk County, for cocktails!
When:
Thursday, October 29th, 7pm
Where:
Whiskey Park, 100 Central Park South
(at 6th Avenue)
RSVP to: rkershen@gss-law.com, no later than October 15th.
For more information and directions to Whiskey Park, please visit:
www.gerberbars.com/#/new-york/whiskey-park/
Go to www.nysba.org to see upcoming events,
access section publications, blogs and much more.
 Prior to his death, Gabrielle Lequerique's father transferred property to himself and his wife Stella -- Gabrielle's mother -- as tenants-in-the-entirety.
While dad also had a Will which left his entire estate to his wife, in 2004, he transferred ownership of the property to a limited liability company, wherein each spouse held a 50% interest. He later changed the Will and left the minimum statutory share to Stella and gifted the remaining 80% of his estate to his daughter.
When Gabrielle later filed suit and asked the court to declare the LLC the property's owner, the New York County Supreme Court dismissed her case, and an appeal to the Appellate Division, First Department, followed.
When there is a tenancy-by-the-entirety, the surviving spouse gets ownership of the property upon the other's death and (absent consent) that interest can't be extinguished by a transfer.
Because the deed conveying the property wasn't signed by both spouses, the AD1 concluded that the transfer of title to the LLC was ineffective. (There was no evidence Stella ever relinquished her rights.)
That lady's a true survivor.
 To view a copy of the Appellate Division's decision, please use this link: Lequerique v. Lequerique
THOMPSON TO RESIDENTS OF BROOKLYN: MAKE OUT YOUR WILL NOW!
-Audit of Kings County Public Administrator reveals startling lack of oversight at agency-
New York City Comptroller William C. Thompson, Jr. today released an audit that found a culture of nonchalance and mismanagement existed at the Kings County Public Administrator's Office (KCPA).
"From the time my auditors began this audit, there seemed to be one startling revelation after another with regards to the lack of detail paid to the process of distributing and accounting for the estates of the deceased," Thompson said. "In every area we looked, deficiencies were found, and corrections had to be made. Brooklyn residents are urged to make out a will as soon as possible."
Thompson's audit, available at www.comptroller.nyc.gov, covered Fiscal Year 2008 (FY08) and analyzed the management practices of the KCPA, the agency responsible for administering the estates of individuals in Brooklyn who die intestate (without a will), or when no other appropriate individual is willing or qualified to administer the estate. As an estate's administrator, the KCPA makes funeral arrangements, collects debts, pays creditors, manages the descendants' assets, and searches for possible heirs.
Thompson found that, among other things, the KCPA could not identify how many estates the office was responsible for at any given time, the computer system used to keep track of estates was not supervised properly, and the data entered into the system was neither secure nor reliable.
When cash and inventory, such as jewelry, arrive at the KCPA, they should be safeguarded and a detailed accounting of each estate maintained. Thompson's auditors found that in FY 08, the KCPA did not keep track of cases received, did not log inventory, mail, phone calls, or complaints to ensure that proper actions were taken for each estate.
"My auditors were also informed by management that they were unable to determine the number of estates being administered," Thompson said. "Staff members also explained that all estate files were not in the file room, and there were no records of where they may be. Keeping track of estates and their whereabouts is what KCPA is supposed to do. It is common sense and sound business 101."
The Comptroller conducted an audit of the KCPA in Fiscal Year 2005. Since that time, the KCPA has experienced significant turnover, with almost all current staff employed for less than two years, including a new PA, who was appointed in January 2009.
"We also found no written formal policies for operations at the agency. Since the majority of the staff is there less than two years, and would have required training and guidance, written procedures would have ensured that day-to-day activities were carried out, which they clearly weren't," Thompson continued.
Due to a number of factors, such as lack of supervisory reviews and underutilization of the CompuTrust computer system, auditors found that the information in the system was unreliable. In addition, Thompson found that more than half of the users had access to all levels of administration in the system, users were still in the system after they ended employment, there was no requirement to change passwords, and no backup of the system existed, which could cause the office to lose all its critical information.
More troubling, Thompson found that all estate items were not entered into the CompuTrust system as required. In one test, auditors found that 21 percent of the selected bags of inventory, including jewelry, was not listed in the system.
"This lack of detail could lead to possible theft of the valuable belongings of the deceased," Thompson said.
KCPA is responsible for safeguarding the belongings of a decedent's residence once a search for valuables is conducted and the inventory brought to the office. However, the testing of inventory lists showed that they were not updated and did not reflect where in the vault such items were being kept. A sample found that three bags of belongings were not entered, as required, into the computer system.
"All inventory should be logged and accounted for at the time it is received. Accurate inventory will ensure that all belongings are on site," Thompson said. "Otherwise, the KCPA opens the door to misplacement and possibly theft."
Other findings of the audit included:
· Failure to report activities to the proper City and State entities
- No monthly bank account reconciliations and inadequate controls over suspense account
· Open checks were not voided after 180 days as required
· Deficiencies in procurement of outside vendors
· Lack of documentation of real estate auctions
"I sincerely hope that the new Kings County Public Administrator takes these recommendations seriously, because what we found was a clear culture of mismanagement and laziness on the part of the prior administration at the office," Thompson said. "Those who have passed away deserve better treatment than what they were receiving during the course of this audit."
Thompson made eighteen recommendations to the Kings County Public Administrator's Office, of which they agreed with fifteen and did not address three.
# # #
 In Speranza v. Repro Lab Inc., Mark Speranza deposited some semen specimens with Repro Labs right before undergoing surgery and signed a document directing Repro to destroy the specimens upon his death.
Months later, when Mark died, his parents inquired about the specimens and, although the company was unwilling to release them, Repro agreed to maintain the specimens as long as the family continued to pay the storage fees.
After several years, the Speranzas sought to have a surrogate inseminated with Mark's sperm. When Repro refused to cooperate, the Speranzas sued to recover Mark's specimens and sought a preliminary injunction preventing their disposal until a judicial determination could be secured.
When New York County Supreme Court declined to grant relief and dismissed the case, an appeal to the Appellate Division, First Department, followed.
The AD1 was of the view the New York State Department of Health Regulations and the terms of Mark's contract precluded the specimens from becoming part of Mark's estate.
Since Mark was a "semen depositor" rather than a "semen donor," and hadn't been examined or screened before his death nor tested for infectious diseases (as required by State regulations), the specimens couldn't be released.
The AD1 also thought the governing contract reinforced Mark's intention that his specimens were intended "to protect his ability to procreate if he survived, not to protect any possibility that his genetic or biological issue could be created after his death."
Was that a fitting climax to this case?
 To download a copy of the Appellate Division's decision, please use this link: Speranza v. Repro Lab Inc.
The Italy-America Chamber of Commerce is having an estate planning and real estate presentation on Tuesday, June 23, 2009, entitled: Understanding your Options and How to Navigate In Today's Uncertain Times
A copy of the event flyer follows:
 In Estate of Saul Schneider v. Finmann, Saul Schneider supposedly transferred his life insurance policy from a limited liability partnership to himself, upon the advice of Victor Finmann P.C.
A year later, Schneider died and his estate representative sued Finmann for malpractice -- alleging the policy's transfer triggered an increased tax liability.
After the Nassau County Supreme Court dismissed the case, Schneider's representative appealed to the Appellate Division, Second Department, which held an attorney isn't liable to "third parties" for harm caused by professional negligence, unless there is "fraud, collusion, malicious acts or other special circumstances."
Because Schneider's estate wasn't in privity with Finmann, and none of the governing exceptions applied, the estate couldn't maintain the case.
The AD2 explained that, even when alive, Schneider wouldn't have had a claim because any alleged damage -- that is, any increase in estate tax liability -- could only occur after his death.
What a tangled web ....
 To view a copy of the Appellate Division's decision, please use this link: Estate of Saul Schneider v. Finmann
 Rose Savino's husband entered into a agreement which provided that after his death Precision Testing & Balancing, Inc., would buy his capital stock in the company from his Estate's representative thirty days after that individual was appointed.
When her later died, Rose became the Estate's representative and, soon thereafter, sought payment from Precision for her husband's shares. But her request was denied because she supposedly failed to submit proof of her authority to act on the Estate's behalf.
When suit was filed, the Bronx County Supreme Court granted relief in Rose's favor, and declined to address Precision's "set-off" counterclaim. (Apparently, Rose's husband didn't maintain a life insurance policy which Precision claimed was to be used to fund the shares' redemption.)
On appeal, the Appellate Division, First Department, found Rose was obligated to provide adequate proof of her appointment but had failed to do so. Although she supplied some documents which showed letters testamentary issued to her, since appropriate evidence wasn't part of the appellate record her victory was reversed and she was directed to provide proof of her representative status and Precision was given 30 days thereafter to remit payment or continue its defense of the case.
The AD1 dismissed Precision's "setoff" counterclaim because the company couldn't establish it was entitled to relief based on the insurance policy's lapse. Apparently, the agreement didn't require the maintenance of the insurance as a condition of the stock's purchase.
How's that for Precision?
"'Cause I really want to know ...."
To download a copy of the Appellate Division's decision, please use this link: Savino v. Precision Testing & Balancing, Inc.
 In Beshara v. Beshara, Antoinette and George Beshara were battling over their respective interests in their deceased mother's property.
Before she died, Marie divided ownership of the disputed parcel between herself and George as "joint tenants." A few months later, Marie relinquished her remaining interest to Antoinette.
When Marie died, Antoinette asked the Kings County Supreme Court to recognize that she was the owner of an "undivided one-half interest in the real property." But since the validity of her deed was contested, her request was denied.
On appeal, the Appellate Division, Second Department, found that the mother's signature on the "duly notarized deed" couldn't be challenged without "proof [of an irregularity] so clear and convincing so as to amount to a moral certainty." Since that high burden wasn't met in this case, the AD2 concluded that Antoinette's request should have been granted.
Survey says?
 To download a copy of the Appellate Division's decision, please use this link: Beshara v. Beshara
 In Matter of Piel, Elizabeth McNabb sued to recover her share of a $9.7 million trust.
Elizabeth was born to Barbara Piel who, "within days" of Elizabeth's birth, allowed the child to be adopted by "total strangers."
Piel later inherited two irrevocable trusts which, upon her death, were to go to her descendents. Elizabeth claimed that the trustee, Fleet Bank, was required to distribute a third of the trust's principal and income to her.
Since an "adopted-out" child is typically excluded from staking an inheritance right to a biological parent's estate, the Surrogate's Court denied the request.
On appeal, the Appellate Division, Fourth Department, reversed and granted Elizabeth her fair share.
When the dispute reached our state's highest court, McNabb was denied a piece of the distribution. According to the New York State Court of Appeals, the law's intent was to "promote [the adopted child's] assimilation ... by providing the new family with the 'legal relation of parent and child'" and to safeguard the "finality of judicial decrees."
In other words, McNabb was left with nothing to grab.
 For a copy of the Court of Appeals' decision, please use this link: Matter of Piel
 In Louis v. Knowles, the Estate of Louis filed suit to recover damages for personal injuries sustained by a 17 year-old child who was assaulted "by a gang of youths" in a New York City subway car.
The attack reportedly resulted in neck and face lacerations which required over 100 stitches.
Following a jury trial, the Kings County Supreme Court found the New York City Transit Authority (NYCTA) 30% at fault for the incident.
On appeal, the Appellate Division, Second Department, concluded that without a "special relationship," the NYCTA had no duty to protect the child, nor was it demonstrated that NYCTA failed to "exercise reasonable care under the circumstances."
With that, the AD1 derailed the Estate's recovery.
(Did NYCTA avert a train-wreck?)
To download a copy of the Appellate Division's decision, please use this link: Louis v. Knowles
 In De Laurentis v. De Laurentis, Jeanne De Laurentis claimed a “constructive trust” -- that she was the co-owner of certain real property that was held in the name of her brother, Vito De Laurentis, Jr.
Jeanne alleged that the property had been transferred to Vito by their father, with the specific instructions that “a 50% ownership interest in the property belonged to her, which was to be held in trust by [Vito] and distributed to her upon the death of [their father].” Jeanne also asserted that after their father’s death, Vito retained exclusive possession of the subject property without her consent. When he filed a motion to dismiss Jeanne’s case, the Suffolk County Supreme Court granted the request. On appeal, the Appellate Division, Second Department, was equally unsympathetic to Jeanne’s claim. The AD2 held that “[a] cause of action to impose a constructive trust or equitable lien is subject to a six-year limitations period that ‘commences to run upon the occurrence of the wrongful act giving rise to a duty of restitution.’” When a constructive trustee wrongfully withholds property, the clock starts to tick the moment the trustee breaches the agreement to transfer the property. In this case, the wrongful act occurred on July 31, 1995, when Jeanne’s father died. Inexplicably, she didn’t start her case until September 13, 2006; some eleven years later (five years beyond the six-year window a claim could be filed). As a result, the AD2 was left with little choice but to affirm the case’s dismissal. Not a very constructive outcome, now was it? To download a copy of the Appellate Division’s decision, please use this link: De Laurentis v. De Laurentis
 After Harry N. Gold died, his mortgage went unpaid and his lender filed a foreclosure proceeding against his estate.
When a court-appointed referee determined that $334,393.01 was due and payable, Gold’s son made a motion to dismiss the case claiming that the lender failed to name and join, as a "necessary party" to the suit, Lorraine Bowen (one of Gold’s daughters). Since Gold’s widow, as the estate’s administrator, was named and joined as a party to the dispute, and was the only “necessary party” to the case, the Suffolk County Supreme Court denied the motion. On appeal, the Appellate Division, Second Department, noted that, “Even if Lorraine Bowen were a necessary party, she was not an indispensable party whose absence mandates dismissal of the complaint. The absence of a necessary party in a mortgage foreclosure action simply leaves that party’s rights unaffected by the judgment of the foreclosure and sale.” In other words, should she be so inclined, Bowen could seek to set aside the judgment and sale. Was that extra step really necessary? To download a copy of the Appellate Division’s decision, please use this link: Glass v. Estate of Henry N. Gold
 In Ellis v. Disch, Ari Ellis brought a holdover proceeding against his tenant, Thomas Disch.
Disch was living in a rent-stabilized apartment with his co-tenant, Charles Naylor, who died on September 6, 2005 -- several months before the lease expired. After Naylor’s death, Disch continued to live in the apartment and, when the lease expired, Disch remained in possession of the apartment despite the owner's refusal to renew. Disch sought dismissal of the holdover based on Ellis’ failure to join Naylor’s estate as a “necessary party,” and on the grounds that the estate had not been served with the non-renewal notice. The New York County Civil Court granted Disch’s motion and dismissed the case. On appeal, the Appellate Term, First Department, reversed. When Naylor died, and his lease expired, the landlord was under no obligation to join Naylor’s estate as to a party to the holdover proceedings. As the AT1 observed, “any possessory claim of the estate lapsed upon the termination of the decedent’s lease.” That’s the Disch! To download a copy of the Appellate Term’s decision, please use this link: Ellis v. Disch
 A trustee controls and manages real property and/or other assets for the benefit of the named beneficiaries in accordance with the terms and conditions of the legal instrument (known as a "declaration of trust") which created the arrangement.
The discretion the appointees have with respect to the disposition of property under their charge can be quite limited and high standards of care govern their conduct. For example, trustees are prohibited from engaging in any form of "self-dealing," and owe the the beneficiaries an "undivided and undiluted loyalty." When disputes arise, courts will look to see whether the appointees have comported with their responsibilities. By way of example, in Matter of Silverstein v. Goodman, several trustees were alleged to have breached their "duty of loyalty" by permitting certain of their family members to occupy a residential building for little or no rent. When the case reached the Appellate Division, First Department, the court concluded that a Special Referee needed to calculate the amount of income denied to the trust as a result of the purported "self dealing" or "breach," so that those sums could be deducted from the miscreants' share of the building's sale proceeds. Just goes to show you there's no such thing as "free rent." For a copy of the Appellate Division's decision in Matter of Silverstein v. Goodman
In 15th Assoc. LLC v. Pamblanco, the landlord -- 15th Associates, LLC -- won a summary holdover proceeding that it had filed against its tenant. While an appeal of the case was pending, the tenant died. Rather than issue a substantive decision on the merits, the Appellate Term, First Department, opted to dismiss the appeal without prejudice. The court cited a "lack of jurisdiction" to entertain the matter upon the death of a party. Here's what the AT1 wrote: The death of a party divests the court of jurisdiction and stays the proceedings until a proper substitution has been made pursuant to CPLR 1015(a). In the absence of a substitution of a representative for the estate of the (now) deceased tenant-appellant, this court is without jurisdiction to hear and decide the appeal ....
We don't understand why the court felt compelled to use the words "lack of jurisdiction" and why it opted to dismiss the appeal. Here's what CPLR 1015(a) provides: Substitution upon death. (a) Generally. If a party dies and the claim for or against him is not thereby extinguished the court shall order substitution of the proper parties.
Where in that statutory language does it say the court is divested of "jurisdiction" upon a litigant's death? And, why did the court refuse to stay the appeal so as to allow for an appropriate substitution (by an estate representative)? We're dying to figure this one out! For a copy of the Appellate Term's decision, please use this link: 15th Assoc. LLC v. Pamblanco
 How many Audubon Societies are there?
A flock, apparently. On June 4, 2002, orniphile Frederick Scale died. In his will, Mr. Scale left 10% of his residuary estate to “The Audubon Society of New York State.” Mr. Scale should have been a bit more specific, because there are at least 34 organizations registered as the “Audubon Society” with the New York Department of State. Of those 34, two claimed that Mr. Scale intended to bequeath his residuary estate to them. The first was the state organization, which is officially called “The Audubon Society of New York State, Inc.,” but operates as “Audubon International.” The second claimant was the national organization, which is officially called the “National Audubon Society, Inc.,” but operates as “Audubon New York.” (Now, how’s that for confusing?) Usually, extrinsic evidence -- meaning evidence other than the will itself -- is inadmissible to show the intent of the "testator" -- the maker of the will. However, when an ambiguity exists, evidence may be admitted to show what the testator intended. Since the Albany County Surrogate’s Court found Scale’s disposition to be unclear, testimony was adduced from the will’s drafter that Scale had been confused and that the decedent had intended to leave money to the national organization, which does business as “Audubon New York,” rather than the state organization, “The Audubon Society of New York, Inc.” The Surrogate’s Court relied on the drafter's testimony when it concluded that Scale intended to leave money to the national organization. Of course, the state organization appealed and the Appellate Division, Third Department, reversed because, in its view, the disposition did not suffer from any ambiguity. Since the will named “The Audubon Society of New York State,” the A.D. was of the opinion that wording signified “The Audubon Society of New York State, Inc.” According to the A.D., the omitted “Inc.” did not create an ambiguity, thus extrinsic evidence was not properly considered, even if it had shown a contrary intention. The moral of this story? When reading or drafting legal documents, be wary of the missing “Inc.” For a copy of the Appellate Division's decision, please use this link: In the Matter of Scale
In Matter of Brignole, the Richmond County Surrogate's Court was asked to decide who was entitled to ownership of the family farm: a decedent's surviving nephew or a charity?
Michael O. Brignole's will created a trust which granted his spouse income for life and, upon her death, any remaining assets were to be donated to charity. There was a specific carve-out to this charitable bequest. Mr. Brignole's will also provided as follows: "I would like my wife to turn the Farm (Pocono View Farm) in the Poconos to my nephew ... because after speaking to him, he has business acumen." Since Mrs. Brignole died before she could honor her husband's wishes (with respect to the farm's transfer), the New York State Attorney General argued that the farm became part of the "residuary estate" and belonged to charity.
The Richmond County Surrogate's Court disagreed with the Attorney General and concluded that the property should be transferred to Brignole's nephew. On appeal, the Appellate Division, Second Department, sided with the Surrogate: Upon a sympathetic reading of the entire will, the Surrogate's Court properly concluded that the decedent intended to give his wife the power to take Pocono View Farm (hereinafter the farm) out of the trust and to transfer it to the petitioner, the decedent's nephew .... Further, a letter of intent sent to the petitioner by the attorney for the executor of the decedent's will supports the Surrogate Court's determination that the decedent's wife intended to convey the farm to the decedent's nephew before her death. Finally, a case that makes sense to us!
For a copy of the Appellate Division's decision in Matter of Brignole, please use the following link: http://www.nycourts.gov/reporter/3dseries/2006/2006_06332.htm
What is the impact of a litigant's death on a pending lawsuit? The simplest answer is that all pending activity in the case is typically held in abeyance or "stayed," until an estate representative is substituted in the decedent's place and stead.* In Griffin v. Manning, the Appellate Division, First Department, guides that upon a litigant's demise a court is divested of "jurisdiction" to entertain further relief (until such time as a substitution occurs) and that any judicial directive which issues after a party's death, in contravention of this process, may be "void." In that particular dispute, a lead-poisoning personal injury case was started against a building's managing agent and Joshua and Elizabeth Krup, the building's owners. During the course of the trial, Ms. Krup passed away. Although counsel informed the court of the development, the case proceeded to verdict and the plaintiff was awarded $2,500,000. On appeal, the AD1 reversed, noting as follows: It is well settled that the death of a party divests a court of jurisdiction to conduct proceedings in an action until a proper substitution has been made pursuant to CPLR 1015(a) ... and any order rendered after the death of a party and before the substitution of a legal representative is void ... Although it has been held that the jurisdictional issue may be waived under "special circumstances," such as where there has been active participation in the litigation by the personal representative who would have been substituted for the decedent ... here there was no participation by Steven Krup prior to verdict. Moreover, Elizabeth Krup's counsel, upon hearing of her death, immediately, vigorously and repeatedly objected to participating in the continuing trial. Accordingly, the verdict, rendered after Elizabeth Krup's death, and prior to the substitution of Steve Krup, is a nullity.
Poof! (Did you catch that?) There, in a blink of the eye, went $2.5M!
For a copy of the Appellate Division's decision in Griffin v. Manning, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2007/2007_00446.htm ------------------------- *Civil Practice Law and Rules 1015(a) provides as follows: Generally. If a party dies and the claim for or against him is not thereby extinguished the court shall order substitution of the proper parties.
Regulated tenancies do not necessarily end simply because the tenant-of-record has died or relocated. Remaining family members, as defined by the governing rules, who also satisfy certain occupancy requirements, may remain in their apartments and request leases in their own names. A recent case presented an interesting twist on the topic. If a deceased tenant's Last Will and Testament disclaimed a surviving family member's entitlement to inherit any estate-related property, what impact will that disclaimer have on the occupant's succession claim? According to the Appellate Term, First Department, in the case of 350 Central Park West Assoc. v. Seiff, the consequences of being disinherited are not dire, particularly if the other elements of a succession claim can be satisfied. As the appellate court observed: While the deceased tenant elected in his will "not to leave any part of [his] estate to [respondent]," such a decree, even if unchallenged by respondent at probate, did not result in respondent's forfeiture, on collateral estoppel grounds, of any succession rights to the stabilized apartment. Inasmuch as a residential lease "is not a property right that devolves upon death to be passed from one generation to another" ... the deceased tenant's testamentary intent cannot serve to abrogate a right to succession conferred exclusively by statute. In affirming, we do not pass on the merits of respondent's underlying succession claim.
At least as far as succeeding to a regulated tenancy is concerned, this case proves that being left out of a Will doesn't necessarily mean you'll be left out in the cold. For a copy of the Appellate Term's decision in 350 Central Park West Assoc. v. Seiff, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2006/2006_51266.htm For a copy of the DHCR's Fact Sheet # 30 -- Succession Rights, please click on the following link:
http://www.dhcr.state.ny.us/ora/pubs/html/orafac30.htm
Once reserved exclusively for the extremely rich, trusts have now become an integral part of estate planning. Many utilize trusts not only as a mechanism to reduce an estate's tax exposure, but as a means to distribute property outside of the probate process. (Before property may be distributed pursuant a will, a court having appropriate jurisdiction over these types of matters--a Surrogate's Court, here in New York--will oversee and monitor the process.) Many seek to avoid probate because it has been known to be a time-consuming and costly process, particularly when disgruntled family members (or other parties) file objections with the court seeking a (greater) share of the deceased person's assets.
Trusts are also utilized when the intended beneficiary is incapable of managing his/her affairs due to age, physical or mental challenge, or other incapacity, which requires that some other person or party control the assets and distribute payments to the beneficiary pursuant to the terms and conditions delineated in the trust documents. (For example, a trust may provide that the income only be used for the beneficiary's health, education, support and maintenance for a specific time period, and that upon the occurrence of a triggering event, such as the beneficiary's reaching a certain age, all or part of any remaining income and principal would then be distributed pursuant to the trust's terms.)
A recent case decided by the New York State Court of Appeals demonstrates that trusts are not free from controversy nor exempt from protracted litigation. In the Matter of The Chase Manhattan Bank, the Court was asked to decide whether the distribution of trust-related assets complied with the creator's (or settlor's) intent. On the one hand, the deceased's survivors staked claim to the trust's remaining $526,533. On the other, two institutions asserted entitlement to the proceeds.
The Surrogate's Court and the Appellate Division found in favor of the surviving family members. On appeal, the Court of Appeals reversed, finding in favor of St. John Fisher College and The Lutheran Church of the Incarnate Word. In its decision, the state's highest court carefully scrutinized the language of the trust and examined the following provision: [T]he [Trust] shall continue for the benefit of [Kathleen Pioch], and the Trustee shall apply the income and so much of the principal as in its discretion it shall deem necessary, for the support, maintenance and general welfare of [Kathleen], during her life. The Trustee shall pay, so far as possible, all specific bills for [Kathleen's] living expenses, thus making certain that her rent, her utilities, her food, clothing and medical expenses are paid by the Trustee directly. [Kathleen] shall not be given any large sums of money, but only a small allowance by the Trustee every week to meet her personal needs. Since the trust restricted Kathleen Pioch's payments and use of the trust funds, the Court concluded that the institutions were the intended beneficiaries of any sums remaining upon Ms. Pioch's death. As the Court observed: By limiting the disbursement of income to Kathleen to a sum sufficient to cover her needs, [her father] anticipated that the Bank might pay out less than all the income for his daughter's benefit and therefore authorized the Bank to accumulate any income not expended...Generally, where a trust requires the trustee to apply only so much of the income as is necessary for the beneficiary's needs, any unexpended income accumulated by the trustee passes to the remainder beneficiaries.... Such a result is appropriate in this case where [her father] specified that Kathleen receive only income sufficient to satisfy her needs and granted her neither the power to control nor the power to alienate the trust's funds. Under these circumstances, it would be incongruous to hold that Kathleen's estate could dispose of $526,533 upon her death when she had not been allocated such funds during her life and the settlor explicitly directed in the [trust] that she not be given any substantial sums of money. We therefore conclude that the Bank should have distributed the disputed amount to objectants, not to Kathleen's estate.
For a copy of the Court of Appeals's decision in the Matter of Chase Manhattan Bank, please click on the following link:
http://www.nycourts.gov/reporter/3dseries/2006/2006_02411.htm
[Note: St. John Fisher was a vocal opponent of King Henry VIII's plan to divorce Queen Catherine of Aragon, a separation precipitated by her inability to produce a male heir to the throne. When Henry's request for an annulment of the marriage was refused by Pope Clement VII, that denial triggered a schism with the Roman Catholic Church and start of the English Reformation. Fisher was eventually beheaded for refusing to acknowledge Henry as leader of the Church of England.]
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- Cigar/Cigarette Smoke, generally
- Civil Rights
- Claim Preclusion
- Code of Conduct for United States Judges
- Code of Professional Responsibility
- Commercial Tenants
- Con Edison
- Condemnation, generally
- Condominiums, generally
- Confidentiality Provisions
- Consent Forms
- Constitutional Issues
- Construction, generally
- Constructive Eviction
- Contempt, generally
- Contracts of Sale, generally
- Contracts, generally
- Conversion, generally
- Cooperatives, generally
- Copyright Law, generally
- Corporate Residential Leases
- Cosmetic Renovations
- Court of Appeals
- Courthouse Security
- Covenants Not to Compete
- Custodial Interrogations, generally
- DHCR
- Deceptive Trade Practices
- Defamation, generally
- Defaults, generally
- Demands of the Rent
- Deregulation, generally
- Disciplinary Rules
- Disclosure, generally
- Discrimination, generally
- Doctors, generally
- Dog Bites
- Dogs, generally
- Drug Holdovers
- E-mails, generally
- Easements, generally
- Elder Abuse
- Electronic Mail, generally
- Eminent Domain
- Employment Agreements
- Essays
- Estoppel Certificates
- Ethics, generally
- Events Calendar
- Experts, generally
- Extortion, generally
- False Imprisonment, generally
- Family Court, generally
- Flooding, generally
- Food, generally
- Foreclosures, generally
- Fraud, generally
- Frequent Flyer Miles
- Frivolous Litigation Conduct
- Gay Rights, generally
- Goldfish, generally
- Graffiti
- Guarantees
- Guardians ad Litem
- Guns, generally
- HPD
- Hamburgers, generally
- Harassment
- Heat
- High-Rent Vacancy Decontrol
- Holdover Proceedings
- Home Improvements
- Homeland Security
- Horses, generally
- Hospitals, generally
- Hostile Work Environments
- Hot Water
- Hotels/Motels, generally
- Identity Theft
- Illegal Evictions
- Illegal Use
- Inadequate Supervison, generally
- Incapacity, generally
- Individual Apartment Improvements (IAIs)
- Injunctions, generally
- Insurance Policies
- Intentional Infliction of Emotional Distress
- Investigators, generally
- Judges, generally
- Juries, generally
- Labor Law, generally
- Lawyers, generally
- Lease Defaults
- Libel, generally
- Licensing, generally
- Life Estates
- Life Insurance Policies
- Liquor Licenses, generally
- Lost Baggage
- Malicious Prosecution, generally
- Marriage, generally
- Mental Illness, generally
- Minors, generally
- Mitchell-Lama Buildings
- Mold, generally
- Month-to-Month Tenants
- Mortgages, generally
- Motions to Dismiss
- Moving Companies, generally
- Negligence
- New York City Department of Buildings
- New York City Department of Housing Preservation and Development
- New York City Department of Sanitation
- New York City Rent Guidelines Board
- New York City Transit Authority
- New York State Attorney General
- New York State Department of State
- New York State Division of Housing and Community Renewal (DHCR)
- New York State Division of Human Rights
- New York State Liquor Authority
- Noise
- Non-Competition/Non-Disclosure Agreements
- Nonpayment Proceedings
- Nonprimary Residence Proceedings
- Notice of Claim
- Notices to Cure
- Nuisance
- Odors, generally
- Office of Court Administration
- Options to Renew
- Owner's Use
- Parking Violations
- Paternity Disputes
- Penal Law, generally
- Penalties
- Perpetual Leases, generally
- Personal Injury
- Pests, generally
- Pets, generally
- Politics, generally
- Poster Law, New York City
- Power of Attorney, generally
- Preferential Rents
- Premises Liability
- Prevailing Party
- Privacy Rights
- Pro Se Litigants
- Professional Responsibility
- Profiteering
- Property Condition Disclosure Statement
- Property Damage
- Property Transfers
- Protective Services, generally
- Protests, generally
- Public Interest
- Punitive Damages
- Quantum Meruit
- Reasonable Accommodation
- Release Forms
- Religious Discrimination
- Renewal Options
- Renovations, generally
- Rent Control
- Rent Demands
- Rent Overcharge, generally
- Rent Stabilization
- Rent, generally
- Residential Tenants
- Restaurants, generally
- Restraints on Alienation
- Restrictive Covenants
- Reward Travel
- Roommates
- Sanctions
- School Buses, generally
- Searches and Seizures
- Security Deposits
- Self Representation
- Senior Citizens
- Settlements, generally
- Sexual Assault, generally
- Sexual Harassment, generally
- Slander, generally
- Small Claims
- Social Dancing
- Solicitation, generally
- Specific Performance
- Spoliation
- State Commission on Judicial Conduct
- Statute of Limitations
- Statutory Interpretation
- Stipulations, generally
- Strict Liability
- Structural Renovations
- Subject Matter Jurisdiction
- Subleasing, generally
- Succession Rights
- Supers, generally
- Surveys, generally
- Taxes, generally
- Teachers, generally
- Termination Notices
- Tests, generally
- Title Disputes
- Trade Secrets, generally
- Traffic Lights, generally
- Transportation Security Administration (TSA)
- Treble Damages
- Trespass, generally
- Trusts & Estates
- Undue Influence
- Unenforceable Provisions
- Union Protests, generally
- United States Court of Appeals, Second Circuit
- United States Supreme Court
- Unreasonable Restraints on Alienation
- Unsigned Agreements
- Utilities, generally
- Vacancy Decontrol
- Verdicts
- Vermin, generally
- Vibrations, generally
- Vicious Propensities
- Voter Apathy
- Waiver
- Warrants, generally
- Warranty of Habitability
- Water Leaks, generally
- Weapons, generally
- Wills, generally
- Wrongful Evictions
- Zoning
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