Cases of Fiduciary Removal or Disqualification
This past year has been witness to multiple applications for the disqualification or removal of a fiduciary. While a decedent’s choice of a fiduciary is generally accorded great deference, there are, nevertheless, instances in which a testator’s choice is superseded by the best interests of an estate or trust and its beneficiaries. Judicial discretion in these cases is motivated by various concerns as evidenced by the following decisions:
In In re Brody, NYLJ, 10/17/08, p. 31 (Sur. Ct. Nassau County), the decedent’s son petitioned to remove his mother and sister as co-trustees of a testamentary trust created for his benefit on the grounds of hostility. The co-trustees moved to dismiss the petition for failure to state a cause of action and the court converted it to a motion for summary judgment.
In denying the application, the court opined that while hostility may prove to be a basis for disqualifying a person from being appointed fiduciary, this result will only occur when the friction between such person and the beneficiary interferes with the proper administration of the estate. To this extent, the court held that an evidentiary hearing was required in order to determine whether litigation pending between the parties in the Supreme Court impaired the estate’s administration to such a degree as to warrant the removal of the fiduciaries.
In In re Estate of Lurie, NYLJ, 6/4/08, p. 40 (Sur. Ct. New York County), application was made by the three executors named in the propounded Will for preliminary letters testamentary.
Continue Reading...Inter Vivos Gifts, Summary Judgment, and the Dead Man's Statute
It might well be an understatement to characterize New York’s Dead Man’s Statute (CPLR 4519) as somewhat “enigmatic,” at least to those practitioners who do not often encounter it. Indeed, the leading treatise on the statute is over three-quarters of a century old (see Greenfield on Testimony under Sec. 347 (CPA) § 61 [1923]).
This article contains a brief overview of the statute and more thorough discussion of its application to motions for summary judgment.
Generally -- and perhaps overly simplistically -- the Dead Man’s Statute renders an interested person incompetent to testify concerning a personal transaction (including a communication) with a deceased or mentally ill person. Such evidence is freely discoverable, however, and may be the subject of testimony at a deposition. Indeed, the rule applies only “upon the trial of an action or the hearing upon the merits of a special proceeding” (CPLR 4519).
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Westchester Surrogate's Court Examines Equitable Claims
A recent decision from the Westchester County Surrogate’s Court, Edelman v Hatami is an entertaining read. The decision addresses the Statute of Frauds, and provides a good example of how litigants will attempt to employ the equitable doctrines of promissory estoppel and constructive trust in estate litigation.
In Edelman the defendant sought recovery against a decedent’s estate, claiming breach of contract, promissory estoppel, and constructive trust. According to the decision, the defendant met the decedent sometime in 1995 or 1996, when the defendant became a tenant in a building owned by the decedent. At that time, the defendant was in her early 30s, and the decedent was in his late 60s. They developed what the Court described as an “intimate” relationship that lasted until the decedent died in September 2004 at the age of 77. According to the defendant, in exchange for certain services rendered on her part, the decedent orally agreed to pay her living expenses for a three-year period, to pay her law school tuition, and to transfer to her the apartment in which she resided. The services allegedly provided to the decedent included ensuring that decedent was cared for and fed healthy, nutritious meals; monitoring the decedent's medical and physical condition; acting as the decedent's personal confidant concerning all aspects of the decedent’s life; and, acting as decedent's business confidant. The Court dismissed all of the defendant’s claims.
The Court’s dismissal of the defendant’s breach of contract, promissory estoppel and quasi-contract claims was based, in part, on its determination that the services provided by the defendant were consistent with the “intimate” relationship that the decedent and the defendant shared. The Court also noted that the defendant received substantial benefits from the decedent in the course of their relationship, such as an allowance of approximately $5,000 per month, nearly $200,000.00 in credit card charges over a period of several years, and a year-long all-expense-paid trip to England. The Court’s dismissal of the defendant’s constructive trust claim was based on the defendant’s failure to demonstrate a necessary element of a constructive trust; a transfer on the defendant’s part in reliance on a promise of the decedent. If you enjoy reading the decision, stay tuned, as it appears that the defendant may be taking an appeal.
Powers of a Nominated Executor to Litigate Prior to the Issuance of Letters
Questions often arise regarding a nominated executor’s authority to commence an action on behalf of the estate prior to the issuance of letters testamentary. These must be answered on a case-by-case basis.
In general, the authority of an executor “is derived from the will, not from the letters issued by the Surrogate” (see Matter of Yarm, 119 AD2d 754 [2d
Pursuant to EPTL §11-1.3, a named executor of a will that has not yet been admitted to probate “has no power to dispose of any part of the estate of the testator before letters testamentary or preliminary letters testamentary are granted, . . . nor to interfere with such estate in any manner other than to take such action as is necessary to preserve it” (emphasis added). It is the language of this statute, and the similar words of its predecessor, Surrogate’s Court Act §223, that the courts have used as a guide in determining the circumstances under which named executors without letters may commence actions on behalf of the estate for which they are nominated to serve. Because the statute provides that a named executor may take actions that are necessary to “preserve” an estate, courts’ interpretations of the statute have established a fine line between those actions that are commenced for purposes of preservation, and those that constitute “active management” of estate affairs.
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