In probate proceedings involving the issue of testamentary capacity, parties frequently present testimony at trial from an expert psychiatrist. It is often the case that that psychiatrist never saw or treated the testator, and develops his or her expert opinion solely by reviewing various documents, including the testator’s medical records.
This expert psychiatric testimony is admissible, but courts have routinely and consistently held that it is afforded very little weight, if any, and is unreliable. This appears to be an “equal-opportunity” standard. In other words, this type of testimony is given little weight regardless of which party relies on it. For example, in Matter of Swain, 125 AD2d 574 (2d Dept 1986), the objectant’s expert psychiatrist testified that based solely on an examination of the medical records, which notably did not include the month when the will was executed, the testator was so impaired by a stroke that she could not have known the nature and extent of her assets or the natural objects of her bounty. The jury returned a verdict denying the will to probate on the grounds, inter alia, that the testator lacked testamentary capacity. The Second Department reversed, finding that the psychiatrist’s testimony was purely speculative, contradicted by the testimony of the testator’s treating physician, and was entitled to no weight. Thus, it concluded that the objectant failed to rebut evidence that the testator possessed testamentary capacity.
In Matter of Slade, 106 AD2d 914 (4th Dept 1984), however, the proponent of the will relied on a psychiatrist’s testimony that the testator possessed testamentary capacity. That witness had never examined the testator, nor discussed her condition with any treating physicians. He simply reviewed her medical records. At the close of the proponent’s case, the objectant’s moved for a directed verdict pursuant to CPLR § 4404, which the court granted on the issue of lack of testamentary capacity, because the proponent failed to meet his burden. Affirming that decision, the Fourth Department stated that “such testimony is the weakest and most unreliable kind of evidence,” and noted that it contradicted the facts—which must prevail.
While attorney's fees incurred by the fiduciary are generally reimburseable from an estate as a reasonable and necessary expense of administration, this is not the rule with respect to the legal fees incurred by a beneficiary. The different standard that applies was recently examined by Surrogate Mella in In re Frey, NYLJ, July 25, 2013, p. 25 (Sur. Ct. New York County).
Before the court was an application brought by counsel for a beneficiary to have its legal fees fixed for services rendered to the beneficiary in connection with her interest in the estate of her late mother. The executor of the estate did not oppose the application provided that the fees were charged to the beneficiary’s interest in the estate.
The record revealed that the services performed by counsel over a two year period resulted in its client in receiving emergency and regular distributions from the estate, loans against her legacy, and personal property that she was unable to obtain previously. Since completing its work, counsel has not been able to contact its client and has not been paid.
The court noted that in a proceeding for the fixation of fees pursuant to SCPA 2110, the court is authorized to direct the source of payment either from the estate generally, or from the funds in the hands of the fiduciary belonging to the legatee. In examining this issue, the court relied on the factors outlined by the Court of Appeals in Matter of Hyde, 15 NY3d 186 (2010), that is: (1) whether the objecting beneficiary acted solely in his or her own interest or in the common interest of the estate; (2) the possible benefits to the individual beneficiaries from the outcome of the underlying proceeding; (3) the extent of the individual beneficiary’s participation in the proceeding; (4) the good or bad faith of the beneficiary; (5) whether there was justifiable doubt regarding the fiduciary’s conduct; (6) the relative interest of the objecting beneficiary in the estate; and (7) the effect of allocating fees on the interest of the individual beneficiary.
Based on this criteria, the court concluded that in pursuing her claim against the fiduciary, the beneficiary was not seeking to benefit or enlarge the estate, but only to secure her legacy. The court determined that there was no possibility that the other beneficiaries of the estate would benefit from the legal services performed, and thus, that it would be unfair to assess the other beneficiaries with the fees incurred.
Accordingly, the court fixed the fees and disbursements of counsel and directed that they be paid from its client’s share of the estate.
In Matter of Brigati, Surrogate Czygier of Suffolk County addressed an application to reform the decedent's life insurance trust, which contained a significant amount of insurance. The instrument contained a number of terms which could cause inclusion in the decedent’s gross estate. Among other things, it provided that upon the death of the Grantor, the life insurance policy proceeds should be distributed to the Grantor’s executor “so he may pay any estate, inheritance, transfer, succession or death taxes.”
The court had before it an affidavit from the Trust draftsman indicating that he knew the Grantor for a number of years and the purpose of the Trust was to exclude assets from his taxable estate. On top of that, the instrument itself had an article entitled “Overriding Tax Purpose,” which specifically stated that the purpose of the Trust was to exclude the life insurance proceeds from the Grantor’s gross estate for federal estate tax purposes.
The court, reciting the general law allowing it to correct mistakes, and relying heavily on the clearly stated purpose of the Trust instrument, allowed reformation to replace the erroneous language with substitute language which would carry out the purpose of the Trust.
Most estate attorneys are familiar with the concept of the so-called “slayer rule” whereby a person responsible for the murder of an individual cannot benefit from the murdered individual’s estate. This rule has its genesis in the Court of Appeals decision of Riggs v Palmer, in which the Court stated “[n]o one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime” (Riggs v Palmer, 115 NY 506, 511 ).
Though this equitable rule would appear to be relatively unambiguous in application, questions of its interpretation arise from time to time in the Surrogate’s Courts. Previous entries on this blog have discussed the Suffolk County Surrogate’s Court’s decision to expand the rule by barring a murderer from benefitting not only from his victim’s estate but also the estate of a post-deceased legatee of the victim.
In an upcoming Nassau County Surrogate’s Court hearing, Surrogate McCarty, on the other hand, will be tasked with assessing the possible boundaries of the slayer rule vis a vis the insanity defense. The hearing, scheduled for August 15, 2013, concerns the case of Leatrice Brewer who in 2008 drowned her three children in a bathtub (see Newsday July 12, 2013). Ms. Brewer admitted to killing her children and in 2010 entered a plea of “not responsible by reason of mental disease or defect” in her criminal proceeding. Thereafter, Innocent Demesyeux, the father of two of the deceased children, received limited letters of administration concerning his children’s estates and sued Nassau County for wrongful death. The suit settled for $250,000 and the father petitioned the Nassau County Surrogate’s Court to compromise the wrongful death action and settle his account. As part of his petition, Mr. Demesyeux has requested that Ms. Brewer be held to have forfeited any interest in her children’s estates by virtue of the slayer rule. The hearing this month will determine this request.
In a recent pre-hearing decision concerning access to Ms. Brewer’s court files, Surrogate McCarty addressed and previewed some of the issues that will likely be argued in the upcoming hearing (see Matter of Demesyeux, 350391/A, NYLJ 1202598464881, at *1 [Sur Ct, Nassau County, Decided March 29, 2013]). In order to respond to Mr. Demesyeux’s petition, the guardian ad litem assigned to represent Ms. Brewer’s interests in the proceeding attempted to view Ms. Brewer’s Family Court and criminal proceeding records but was told such records were sealed. The guardian ad litem thereafter filed a report in Surrogate’s Court seeking a court-order to unseal the records.
In his decision concerning the guardian ad litem’s request, Surrogate McCarty surveyed the history of the slayer rule under Riggs and its progeny noting that, though there is no express statutory statement of the rule, “numerous cases since Riggs v. Palmer have reaffirmed the applicability of the common-law general principle that one should not be permitted to profit by taking the life of another and, in particular, that one who feloniously murders shall not be entitled to share in his victim's estate” (Matter of Demesyeux at 2). Conversely, the Surrogate noted that application of the rule is not always straightforward and “there is some authority that if the killing was unintentional or accidental, the rule will not be applied” (id. at 3). For instance, the Surrogate cited Matter of Eckhardt (184 Misc 748 [Sur Ct, Orange County 1945]) concerning a somnambulist who killed her husband but was found not to have known the nature and quality of her act.
In connection with the guardian ad litem’s request to view Ms. Brewer’s criminal court files, the Surrogate considered the application of CPL §160.50, which requires that records be sealed if a criminal action is terminated in favor of the accused, ostensibly to spare the accused the social stigma of a criminal prosecution. The question, according to the Surrogate, is whether a termination by reason of an insanity plea can be construed as ‘favorable’ to the accused. Surrogate McCarty quoted the decision of Matter of Anonymous (174 Misc 2d 333 [Sup Ct, Kings County 1997]), which described persons acquitted of a crime via the insanity defense as occupying a special class. Such persons have been proven or have admitted to performance of criminal acts that would ordinarily be subject to punishment. Nevertheless, due to “society’s compassionate belief” that persons with mental defects not be criminally punished, they are spared the penalization they would otherwise justifiably receive. Then again, because they have undisputedly committed criminal acts and are dangers to society, such persons, while spared incarceration, are held in state custody. Balancing the policy considerations of the insanity defense, the court in Anonymous ruled that persons acquitted by reason of an insanity defense have not had their case terminated in their favor. Surrogate McCarty agreed, opining that Ms. Brewer’s criminal records should not be sealed.
No doubt, the upcoming hearing will involve a similar balancing of the equities and policies behind the slayer rule against those behind the insanity defense. Based upon the cases quoted by the Surrogate in Matter of Demesyeux, it appears that the parties will focus on whether or not Ms. Brewer acted with intent and knew the nature of her act. I do not envy the difficult decision Surrogate McCarty will have to make in looking beyond the strong emotional underpinnings of this case.
A recent post to this blog discussed a case in which a court declined to remove a fiduciary based on allegations of a potential conflict of interest, but in the absence of actual misconduct on the part of the fiduciary. While it is certainly rare for a court to remove a fiduciary in the absence of actual misconduct, it is still rarer for a court to do so on its own initiative, i.e., sua sponte. But that is precisely what happened in Matter of Young decided earlier this year by Nassau County Surrogate Edward W. McCarty III.
The decedent, Joseph Young, was an acclaimed lyricist of the early 20th Century, having written such classic songs as “I’m Gonna Sit Right Down and Write Myself a Letter,” “Dinah,” and “I’m Sitting on Top of the World.” He died in 1939, intestate, survived by his wife, Ruth Young, and his father, Samuel Young. Pursuant to the law of intestacy applicable at the time, Ruth and Samuel were the decedent’s only distributees. Ruth was appointed administrator of the decedent’s estate in 1939 (and she died in 1973).
Fast forward 70 years.
In 2009, Nicholas Al Young, allegedly the Decedent’s grandnephew, petitioned the court for letters of administration de bonis non. (An administrator de bonis non or “d.b.n.” is a successor administrator appointed to administer estate property not yet administered.) Nicholas’s petition alleged that the decedent was not survived by either a spouse or a parent, and that his distributees included 22 nephews/nieces and great-nephews/great-nieces. He alleged that the value of the assets in need of administration was $9,000. The Court issued letters to Nicholas.
In 2012, Rytvoc Inc. and Warock Corporation -- the alleged owners of copyrights in various musical compositions written by the Decedent -- commenced a proceeding to revoke Nicholas’s letters. (In the interest of full disclosure, Farrell Fritz represented Rytvoc and Warock in the proceeding.) Rytvoc and Warock alleged that Nicholas, armed with his letters of administration, was wrongfully interfering with their ownership of the copyrights by attempting to enforce termination rights allegedly available under Federal law. They sought his removal pursuant to SCPA § 711(4), which provides for the revocation of letters obtained “by a false suggestion of a material fact.” Specifically, they alleged that Nicholas was ineligible for letters; that he obtained them only by virtue of his misrepresentation that the decedent was not survived by a spouse or a parent; that the individuals identified in the petition were not the decedent’s distributees; and, finally, that no administrator was necessary in any event, because the estate had no rights in the compositions for a fiduciary to exercise.
Nicholas moved to dismiss Rytvoc and Warock’s petition for lack of standing. He argued that SCPA § 711, which governs removal proceedings, confers standing only on “a co-fiduciary, creditor, person interested, any person on behalf of an infant or any surety on a bond of a fiduciary.” Rytvoc and Warock, Nicholas argued, were only “adverse parties in possible future litigation over the ownership of copyrights.” Rytvoc and Warock argued that, in fact, they were creditors of the estate, having filed a claim for damages resulting from Nicholas’s alleged wrongful interference with their intellectual property rights. The Court rejected that argument, however, and dismissed the petition for lack of standing.
But the song continues.
Rytvoc and Warock argued, alternatively, that the issue of standing was a “red herring” because the Court had the authority pursuant to SCPA § 719, and the inherent authority, to revoke Nicholas’s letters. Section 719 provides, in relevant part, that a court may revoke, suspend, or modify letters it issued; it may do so sua sponte, without a petition or the issuance of citation, in certain circumstances, including when any facts provided in SCPA § 711 are brought to its attention. As previously noted, section 711(4), provides for the revocation of letters obtained “by a false suggestion of a material fact.”
The Court began its analysis by reviewing the law governing revocation of letters obtained through misrepresentations, noting that a fiduciary’s removal is appropriate even where the alleged misrepresentation was made inadvertently and without an intent to defraud the court. It concluded, therefore, that “ it is not necessary for the court to ascertain whether Nicholas made the error in bad faith.” (Although it noted that “it appears from the court file that Nicholas did not attempt to deceive the court as to the fact that Ruth Young survived the decedent. Nicholas provided the court with numerous documents evidencing Ruth’s date of death.”)
The Court then reviewed the statutory framework governing letters of administration d.b.n., to determine whether Nicholas was eligible for letters. It explained in this regard that SCPA§ 1001 (made applicable to administrators d.b.n. by section 1007) requires that letters be issued to the distributees of an intestate decedent, or, if deceased, to their fiduciaries, or to any eligible “person who is not a distributee upon the acknowledged and filed consents of all eligible distributees, or if there are no eligible distributees, then on the consent of all distributees” (SCPA § 1001). It also explained that, pursuant to SCPA § 1001(8), where letters are not granted as set forth above, they are properly granted in the following order to: (a) the public administrator, (b) the petitioner, in the court’s discretion, or (c) to any other person or persons.
The Court stated that it “has an obligation to make sure that the proper person is administering the estate.” It concluded that “[i]t is unclear whether the proper person is administering this estate.” The Court also expressed its concern regarding the petition’s allegation that the value of the Decedent’s assets in need of administration was only $9,000, stating that “[t]he court is concerned that this figure is underestimated as it appears the decedent was a successful songwriter whose estate consisted of royalty interests which may be of a greater value than indicated given the possible copyright battle.”
The Court revoked Nicholas’s letters “[b]ased upon such concerns and due to the misstatement in Nicholas’ petition. . . .” It issued letters of temporary administration to the Public Administrator, directing that it “attempt to identify the fiduciaries of Ruth Young’s estate and Samuel Young’s estate who have a prior right to letters of administration de bonis non and to ascertain the value of the assets in need of administration.”
The moral of the story is that those seeking appointment as fiduciaries must take great care to ensure the accuracy of the allegations of their petition. A mistake, even one alleged to be innocent, could prove costly.
“A testator’s choice of executor should be given great deference” (see Matter of Palma, 40 AD3d 1157, 1158 [3d Dept 2007]). This rule is fundamental to the practice of trusts and estates law, yet is often challenged by those who want to disqualify or remove the testator’s nominee -with or without valid basis.
A court will generally issue letters to the nominee who is deemed eligible to serve as a fiduciary pursuant to SCPA §707, unless an interested party makes legitimate objections to the appointment as set forth in SCPA §709. Once letters do issue, removal is a very serious proposition, but it can be achieved if the fiduciary’s conduct falls within the realm of SCPA §711 – including but not limited to wasting or imprudently investing estate assets, acting dishonestly, refusing to obey a court order, or failing to have the necessary qualifications because of “substance abuse, dishonesty, improvidence, want of understanding,” or is “otherwise unfit to serve” (see SCPA §711). Courts may also take the more drastic measure of removing a fiduciary without process under certain circumstances, such as failing to account or refusing to supply information about estate assets despite court orders to do so, being convicted of a felony or judicially declared incompetent, or commingling estate funds with his or her own (see SCPA §719). In all events, however, courts tend to exercise their powers to remove fiduciaries somewhat sparingly.
It is against this backdrop that Matter of Russo, 100 AD3d 1547 (4th Dept 2012), should be considered. There, objections to probate were filed alleging that the petitioner, to whom preliminary letters had already issued, should be disqualified from serving as executor due to a purported conflict of interest “in connection with decedent's interest in Tread City Tire, Inc. (“TCT”) and decedent's classic car collection.”
Regarding TCT, it was alleged that a conflict of interest arose from the decedent’s purported ownership interest in the entity, where petitioner also happened to be a salesperson. With respect to the decedent’s classic car collection, it seems that the purported conflict was asserted because one of the cars was bequeathed to the petitioner - but the Court did not elaborate much on this latter allegation.
Petitioner moved for summary judgment seeking dismissal of the objections, arguing that no conflict existed. In support of the motion, petitioner provided corporate tax returns for TCT along with a third party affidavit, to prove that the decedent had no ownership interest in the entity; rather, it was fully owned by a third party, and the decedent merely managed the business.
Moreover, with respect to the allegations of conflict in connection with the classic car collection, petitioner established that while one car was specifically bequeathed to him, he obtained two appraisals for each car, and two of the cars were sold at prices higher than the appraised price. In addition, petitioner demonstrated that the remaining classic cars were placed in a consignment program with objectant’s consent.
Citing the well-established law giving deference to a testator’s choice of fiduciary absent evidence of his or her actual misconduct, the court granted the petitioner’s summary judgment motion, dismissing the objections to his serving as executor. The court opined that objectant had failed to raise any issue of fact as to whether there had been any actual misconduct, explaining that the objectant did not make even one specific allegation of conflict or misconduct.
Accordingly, in view of the great deference given to the testator’s selected fiduciary, this case serves to reiterate the longstanding rule that actual misconduct is the key to the disqualification of a fiduciary; potential misconduct is not enough. Nonetheless, it should be noted that this is not an ultimate roadblock for a beneficiary who has legitimate concerns about the fiduciary’s ability to serve. Indeed, if the fiduciary subsequently displays one or more of the characteristics set forth in SCPA §711 or SCPA §719 as explained above, then he may be removed for cause during the course of his stewardship.
Appellate Division Decides Case of First Impression Concerning "Adopted Out" Child's Right Of Inheritance
The term “adopted-out” child, commonly used by the courts, refers to a child adopted out of his or her biological family, i.e., a child placed for adoption by his or her biological family. A detailed discussion of the inheritance rights of adopted-out children is available here. Recently, in a case of first impression, Matter of Svenningsen, the Appellate Division, Second Department, addressed the inheritance rights of a child adopted by the decedent (prior to his death, of course) and his spouse, but subsequently re-adopted out to another family eight years after the decedent’s death.
The child, Emily, was born in China on July 7, 1995. The decedent, John Svenningsen, and his wife, Christine, formally adopted Emily in 1996. They entered into a Chinese adoption agreement in which they guaranteed that they would deem Emily to be their biological child; that they would not transfer or have her re-adopted; and that Emily had a right to inherit from their estates.
The decedent died on May 28, 1997, survived by Christine, five biological children, and Emily. He left a Last Will and Testament dated March 17, 1997 (which was admitted to probate in July of that year), as well as two irrevocable inter vivos trusts for his children, dated July 20, 1995, and October 29, 1996.
In the 1995 trust, created prior to Emily’s adoption, the decedent directed the division of the trust assets equally among his children, when the oldest child reached the age of 30. The trust defined the term “children” to include the decedent’s four living children (the fifth had not yet been born), identified by name, “and any additional children born to or adopted by [the decedent] after the creation of this Trust.”
The 1996 trust established six equal and separate irrevocable trusts, one for each of the decedent’s children. Each child, including Emily, was expressly named as a beneficiary. The trust instrument identified Emily as the sole beneficiary of her separate irrevocable trust, denominated as “The Emily Fuqui Svenningsen Trust.”
The decedent’s Will created two testamentary trusts – a credit shelter trust and a marital trust. The credit shelter trust was for the benefit of the decedent’s “then living issue, per stirpes. . . .” The marital trust was to be funded upon Christine’s death for the benefit of the decedent’s “then living issue, per stirpes. . . .” The Will defined the term “issue” as including “children who have been legally adopted at the date of my death as well as children with respect to whom legal adoption proceedings had been commenced prior to the date of my death though not completed at the time of my death.”
In 2003, approximately six years after the decedent’s death, Christine enrolled Emily in a school for children with special educational needs. Christine’s attorneys contacted school administrators, inquiring about putting Emily up for adoption. Ultimately, Maryann Campbell, a school official, and Fred Cass, her husband (for ease of reference, the “Petitioners”), agreed to adopted Emily. Christine terminated her parental rights with respect to Emily in 2004. The re-adoption was consummated in 2006 by court order. When they adopted Emily, the Petitioners were unaware of the provisions of the decedent’s will or trusts, although they were ultimately advised that the decedent had arranged money for Emily’s education and medical needs.
In November, 2007, Christine’s financial advisor requested the Petitioners’ consent to separate Emily’s interest in the decedent’s estate from those of the decedent’s biological children, through the creation of a spray trust. In connection with that request, the advisor provided the Petitioners with a list of estimated values of estate assets, and estimated Emily’s interest in the trusts at $842,397. Ultimately, the Petitioners examined the files of the Westchester County Surrogate’s Court and learned that the decedent’s estate had an estimated value, on the estate tax return, of $250,000,000. The Petitioners commenced proceedings seeking to compel accountings with respect to Christine’s administration of the decedent’s estate, and with respect to the 1995 and 1996 trusts.
The respondents in each of the proceedings asserted affirmative defenses based on Emily’s alleged lack of standing. The Petitioners moved for summary judgment compelling the accountings and the respondents cross-moved for summary judgment dismissing the petitions. Among other things, respondents argued that Emily’s contingent interests in the trusts were extinguished upon adoption. The Surrogate’s Court, Westchester County, granted the Petitioners’ motion and denied respondents’ cross-motion. The court directed the respondents to account. An appeal ensued.
The Second Department affirmed, in a decision authored by Justice Leonard B. Austin.
The court began its analysis with a review of the law concerning the inheritance rights of adopted and adopted-out children, including a detailed discussion of Domestic Relations Law § 117 and Estates, Powers and Trusts Law 2-1.3. It then turned to the Court of Appeals’ decision in Matter of Best, 66 NY2d 151 ). At issue in that case was the right of an adopted-out child to inherit from his biological maternal grandmother. The Court held that, absent a contrary indication in the will, an adopted-out child is not entitled to share in a class gift to issue in the will of a biological relative. The Appellate Division explained that Best “remains relevant for the policy considerations enunciated in support of termination of an adopted-out child’s right of inheritance.”
The court summarized the issues before it as “whether the decedent expressly intended to include Emily as a beneficiary under the subject trusts and whether Emily’s interest in those trusts vested prior to her being adopted by the petitioners.” The court answered both those questions in the affirmative.
First, as to the decedent’s intent, the court noted that Emily was expressly named in the 1996 trust; and although she is not mentioned specifically by name in the Will or in the 1995 trust, “she is plainly referred to by status in both instruments” -- referring to definitions of the term “issue” in the trust instrument and in the Will. The court rejected respondents’ argument that the court should dismiss as “mere surplusage” the inclusion of adopted children in the definition of “issue.” In sum, the court concluded that
Emily’s adoption by the petitioners did not, and was not intended to, terminate her interest in the Marital Trust or the 1995 Trust. The decedent expressed an intention to include his adopted child in the absence of any reason to believe that his status as the parent of Emily would be terminated by her subsequent adoption many years after his death. Further, at the time of the decedent’s death, Emily was not an “adopted-out” child but instead was, and remained, his issue, as defined by the Trust instruments, despite the subsequent unforeseeable actions of Christine.
Turning to the issue of whether Emily’s rights in the trusts vested prior to her re-adoption, the court concluded that “while the rights of Emily and the other beneficiaries may be inchoate, they are, nevertheless, vested by their inclusion in the trust document. Thus, Emily’s interests under the decedent’s will and the 1995 Trust fully vested, subject only to the condition of her survival as provided for in the instruments (citation omitted).”
The court further noted that SCPA 2205 permits a “a person interested” to compel an accounting. A “person interested” is defined by SCPA 103(39) as “[a]ny person entitled or allegedly entitled to share as beneficiary in the estate.” The court concluded that Emily was a “person interested” and entitled to an accounting. Therefore, absent a genuine issue of fact requiring a trial, the Surrogate’s Court properly granted summary judgment in the Petitioners’ favor.
One thing is clear from the Svenningsen decision. Regardless of how convoluted the facts of a given case, or how complex the law governing its resolution, when it comes to inheritance rights, the courts are guided predominantly by the decedent’s intentions.
Can a surviving spouse be guilty of abandonment, consequently forfeiting the presumptive right to administer her deceased spouse’s estate, if she was effectively in a “marriage of convenience”? In her recent decision in Estate of Shoichiro Hama, 2009-4505 NYLJ 1202579753326, at *1 (Sur Ct, New York County, Decided November 26, 2012) former New York County Surrogate Glen decided in the affirmative. In considering the issue of abandonment, the Surrogate also called for a general re-examination of the concept of a ‘surviving spouse’ as it pertains to intestate succession and other spousal rights under the EPTL.
The problematic facts of the case may have spurred Surrogate Glen’s more general contemplations. It is relatively clear from the court’s decision that the decedent married the spouse primarily for tax reasons and, during the marriage, the spouse lived with another man, publicly holding herself out to be married to this second man, with the decedent’s knowledge and consent.
Shoichiro Hama, the decedent, owned a condominium apartment in Manhattan and sought to sell it. In June 2006, he consulted his accountant who informed the decedent that he would incur significant capital gains taxes on the sale. When the decedent inquired how he could mitigate these taxes, the accountant joked that he could get married. A few weeks following this discussion, on July 7, 2006, the decedent married Yuko Machida, an employee of his company. Two months thereafter, on September 6, 2006, the decedent sold his apartment. In November 2006, the decedent told his accountant that he wished to obtain a divorce and the accountant advised against it. The decedent asked how long the accountant recommended he stay married to preserve his tax benefit, and the accountant advised two years.
In 2007, the decedent moved to Japan and Machida also moved to Japan, but to live with another man, Travis Klose, with whom she had maintained a relationship prior to her marriage to the decedent. Facing parental stigma for living with a man with whom she was not married, Machida registered in Japan as being married to Klose. The decedent was aware of this and, in fact, assisted in Machida’s registration as Klose’s wife by signing and affixing his personal seal to their marriage certificate, as a witness.
In August 2009, the decedent inquired of his accountant whether he could then divorce Machida. As the decedent was contemplating the sale of another apartment in Manhattan, the accountant advised him that he should remain married. The decedent subsequently died intestate on September 4, 2009. Thereafter, Machida petitioned for issuance of letters of administration, via a designee, and the decedent’s parents cross petitioned for the same, via a designee. Temporary Letters of Administration issued to Machida’s designee. The designee of the decedent’s parents filed a motion for, among other things, summary judgment revoking Machida’s designee’s letters, and dismissing Machida’s administration petition, based on a claim of spousal abandonment.
EPTL 5-1.2 (a)(5) provides that a husband or wife is disqualified as a surviving spouse under the EPTL, for purposes of intestate distribution, among other things, if it is established that the husband or wife abandoned the deceased spouse and such abandonment continued until the time of death. Former Surrogate Glen noted that while the EPTL contains no definition of abandonment, it is generally and historically understood that the concept was imported from the Domestic Relations Law, such that if a spouse would have been entitled to a decree of divorce based on the grounds of abandonment, such spouse would be subject to a viable claim of abandonment under the EPTL.
The long-standing Court of Appeals decision in Matter of Maiden (284 NY 429 ), holds that to constitute abandonment, a spouse’s departure from the marital home must be both “unjustified and without the consent of the other spouse” (id. at 432). As Surrogate Glen noted, the decedent’s participation in Machida’s ‘marriage’ to Klose in Japan was “the very opposite of ‘lack of consent’” and the decedent’s parents’ claim of abandonment would fail under this test (Estate of Shoichiro Hama at *7).
Nevertheless, Surrogate Glen based her decision on another case, Matter of Oswald (43 Misc 2d 774 [Sur Ct, Nassau County 1964], affd 24 AD2d 465 [2d Dept 1965], affd 17 NY2d 447 ). In that case, the parties allegedly entered into a common law marriage, but later exchanged mutual releases and each married another. The Surrogate found abandonment, quoting Matter of Bingham (178 Misc 801 [Sur Ct, Kings County 1942], affd 265 AD 463 [2d Dept 1943], rearg denied and lv denied 266 AD 669 [2d Dept 1943]), that “[t]he court knows of no more convincing evidence of abandonment than the public ceremonial remarriage of the petitioner to another woman in the lifetime of the decedent and his cohabitation with such woman as husband and wife” (id. at 805). The Appellate Division affirmed Oswald “on the opinion of the Surrogate” and the Court of Appeals affirmed without decision. Thus, it is not clear whether public remarriage, valid or not, qualifies as abandonment and stands as an exception to the Maiden requirement that abandonment be without consent. Based on the ambiguity created by the Court of Appeals’ affirmation of Oswald, in seeming conflict with its earlier rule in Maiden, Surrogate Glen ultimately held for the decedent’s parents and found abandonment by Machida.
This holding lead Surrogate Glen to question general policy issues regarding surviving spouses. First and foremost, Surrogate Glen noted that New York has done away with the fault-based divorce system from which the concept of abandonment first sprung. She then traced the historical evolution and reappraisals of spousal relationships under New York’s divorce law. One of the primary factors in this evolution, she noted, has been the shift in the understanding of marriage from being a sacred bond for life to being an economic partnership. She called for a similar reappraisal in estate law.
The concept of a surviving spouse, according to the Surrogate, was originally used as a proxy for the person closest to and/or most dependent on the deceased spouse, that is, the natural object of the deceased spouse’s bounty. Thus a surviving spouse has priority to administer an estate, priority of intestate distribution, and the right to elect against an estate. But what of spouses who remain married but live apart for years? What of married partners who develop fulfilling and committed relationships with other persons, without formally divorcing their spouse? Who is the more natural object of bounty in this case? According to Surrogate Glen, the current estate concept of a surviving spouse “no longer reflects reality, at least for a large number of people.” She concluded that “[c]hanging understandings of what constitutes family, demographic shifts, and alterations in economic dependence strongly suggest the need both to reappraise the spousal disqualification statute and the interests it serves: administration, intestacy and spousal election. One may hope that the bar and the legislature will hear and heed this call” (Estate of Shoichiro Hama at *16-*17).
In light of the radically changing societal and legal conceptions of marriage, does the current standard of spousal abandonment, which is itself grounded in a fault-based divorce system that, for the most part, no longer exists, continue to serve the purposes for which it was intended or the premises on which it was based? It remains to be seen whether the legislature will consider or address Surrogate Glen’s thought-provoking questions.
As I wrote in a prior post, dated February 25, 2011, concerning the Estate of Dianne Edwards, the “slayer rule” articulated by the Court of Appeals in Riggs v. Palmer provides that “[n]o one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime” (Riggs v. Palmer, 115 N.Y. 506, 511 ). Although forfeiture does not occur in cases involving accidental killings, self-defense, and disabilities that negate a culpable mental state, the maxim articulated in Riggs has been utilized to preclude a person who intentionally kills another from taking as a beneficiary of his or her victim’s estate.
Relying upon Riggs, Suffolk County Surrogate John M. Czygier, Jr. recently held in Matter of Edwards that, under the slayer rule, an intentional killer forfeited his right to inherit not only from the estate of his victim, but also the estate of the victim’s post-deceased legatee (see Matter of Edwards, NYLJ, Apr. 13, 2012, at 35 [Sur. Ct., Suffolk County]). Surrogate Czygier’s finding was noteworthy for a variety of reasons, not the least of which was that the intentional killer was the sole beneficiary of the estate of his victim’s legatee (see id.).
In Edwards, Brandon Palladino (“Brandon”) was convicted of Manslaughter in the First Degree and sentenced to a twenty-five year term in prison in connection with the death of his mother-in-law, Dianne Edwards (“Dianne”) (see Carol MacGowan, “Fight Over Estate Continues After Sentencing”, Newsday, Feb. 3, 2011). Surrogate’s Court litigation arose after a party acting for Brandon’s benefit sought to ensure that Brandon received a substantial portion of Dianne’s estate, as beneficiary of his deceased wife Deanne Palladino’s (“Deanna”) estate (see Edwards, supra).
Dianne died, testate, leaving her entire estate to her daughter, Deanna (see id.). Although Deanna survived Dianne, she died of an accidental drug overdose, leaving no will (see id.). While, under normal circumstances, Brandon, as Deanna’s surviving spouse (with no issue), would have inherited Deanna’s entire estate, including any bequests that she received from Dianne, the circumstances in Edwards were highly unusual (see id.).
Dianne’s surviving relatives argued that, under the slayer rule, Brandon forfeited any interest in Dianne’s estate that he otherwise might have had in the assets of her estate, even indirectly as a beneficiary of Deanna’s estate (see id.). Surrogate Czygier agreed, finding that Brandon could not inherit from Dianne (see id.). In doing so, the Surrogate explained that “one who takes the life of another should not be allowed to profit from his wrongdoing” (see id.). But for Brandon’s wrongdoing, there “would be no inheritance to be obtained through his wife Deanna” (see id.). As a result, considering Brandon’s wrongdoing and his conviction, Brandon forfeited any right he otherwise might have had to inherit Dianne’s property as Deanna’s sole distribute (see id.).
The application of the slayer rule has been extended beyond those situations in which intentional killers seek to take as beneficiaries of their victims’ estates. Indeed, as Edwards demonstrates, the slayer rule has been utilized to deny intentional killers the right to inherit property belonging to their victims, whether directly as beneficiaries of the victims’ estates or indirectly through the estates of the victims’ legatees or distributees. The extension of the slayer rule is consistent with standards of common sense and decency.
Generally, where an infant or someone under another disability is a necessary party to an action, it is the parent or guardian of the property who represents him in that action. If the disabled individual has no such guardian, then the court shall appoint a guardian-ad-litem to represent his interests (see CPLR 1201). It is the appropriate guardian who will have the authority to enter into a stipulation of settlement on behalf of the incapacitated individual, but he or she must seek court approval of said agreement by motion pursuant to CPLR 1207 prior to its becoming enforceable.
Particularly relevant to the trusts and estates practitioner, the corresponding procedure in Surrogate Court is very similar. Pursuant to SCPA 315, an adult competent party who has a similar economic interest to another necessary party who suffers from a disability (i.e., an infant) may represent the latter by virtual representation. However, the statute restricts virtual representation to court proceedings and informal accounts, and thus, it does not apply with respect to a typical out of court settlement. Instead, where an individual under a disability is a necessary party to a settlement agreement that falls outside of SCPA 315, the parties must file a compromise proceeding pursuant to SCPA 2106.
Pursuant to SCPA 2106, a compromise proceeding requires the petitioner to outline for the court the facts that caused the dispute, identify the various disagreeing positions and the interests of the parties, and establish the necessity for court approval of the agreement. A guardian-ad-litem will then be appointed to represent the interests of the infant or other individuals under disabilities, and it is his responsibility to determine whether the proposed settlement is in the best interests of his ward(s). If it is, then the guardian-ad-litem must obtain authority from the court to enter into the settlement. However, it is only if the court deems the relief obtained through the settlement to be “just and reasonable,” that it will enter the requisite final decree binding on all interested parties, including those under a disability. (see Charles F. Gibbs and Colleen F. Carew, Surrogate’s Practice and Proceedings: SCPA 315 and Out-of-Court Settlements: Risk v. Reward, New York Law Journal, Nov. 6, 2006).
Although SCPA 2106 and CPLR 1207 provide vehicles by which necessary parties who are under a disability can be bound by a settlement, these statutes create additional hurdles to creating enforceable stipulations. Indeed, the proposed agreement may be rejected by the guardian-ad-litem, his or her appointment may result in the filing of objections, or the court may not find the agreement to be “just and reasonable.”