Was it a Convenience Account?
A convenience account is exactly as it sounds – an account on which the holder adds someone else’s name for purposes of convenience only, i.e., check writing, bill paying, transfers, and withdrawals. It is a frequently litigated topic , as the issue often arises as to whether a joint account had really been intended as such, or whether it was created merely for convenience. If it is the latter, then all of the funds contained in the account will pass to the estate of the initial account holder.
It is generally recognized that Section 675 of the Banking Law creates a presumption that a right of survivorship is intended for each named account holder, but some courts have held that this presumption only arises where the signature card on the account contains the requisite survivorship language (see e.g. Matter of Coon, 148 AD2d 906 [3d Dept 1989]; Matter of Seidel, 134 AD2d 879 [4th Dept 1987]; Matter of Ancell, 5/2/2002 NYLJ 28 [col 4] [Sur Ct, Westchester County]; cf. Sutton v Bank of New York , 250 AD2d 447 [1st Dept 1998]). Regardless, it is the burden of the person alleging that such an account had been for convenience to come forth with sufficient evidence to rebut any existing presumption, and establish that a convenience account had been intended (see Viggiano v Viggiano, 136 AD2d 640 [2d Dept 1988]). In deciding the issue, courts typically look to the following factors:
- Whether the decedent was the sole depositor to the account;
- Whether the creation of a survivorship interest would deviate from the decedent’s testamentary plan;
- Whether the account was used exclusively by the decedent during his lifetime;
- Whether the decedent retained the right to withdraw the proceeds; and
- The conduct of the surviving joint tenant (In re Zorskas, 20 Misc 3d 1110[A], [Sur Ct, Nassau County 2008]).
These considerations will ultimately determine the outcome of Estate of Sanabria, 2011 NY Slip Op 51802(U), a recent case emanating from Bronx County. Surrogate Holzman issued an initial decision in Sanabria last week, granting the temporary administrator’s application for a preliminary injunction against a daughter of the decedent, prohibiting her from withdrawing funds from a bank account that she had held jointly with the decedent during his lifetime. The temporary administrator, who also happened to be a son of the decedent, asserted that the joint account had been for convenience only. The daughter, on the other hand, claimed that the subject account had been held jointly with right of survivorship. Her position was not supported by the signature card, which lacked survivorship language and listed the decedent “or” the daughter as the account holders. Therefore, even if the account were not a convenience account but merely a co-tenancy, principles of moiety would entitle the daughter to no more than half of the funds contained therein (see Estate of Hamburg, 151 Misc 2d 1034 [Sur Ct, Bronx County 1991]).
On the return date, counsel for the petitioner informed the court that the daughter had withdrawn approximately $358,000 from the joint account, which was then closed. Accordingly, he requested broader relief enjoining the daughter from transferring or disposing of all funds that had been in the joint account, regardless of their current location. The Court granted this relief because the temporary administrator met the requisite elements for preliminary relief, demonstrating (1) a likelihood of success on the merits (by virtue of the signature card); (2) irreparable harm to the estate if the preliminary injunction were not granted; and (3) the balance of equities of his favor (the daughter removed the funds from the account after being on notice of the estate’s claim against her). Notably, the Court’s consideration of the signature card as probative of a likelihood of success on the merits indicates that it is following the line of cases holding survivorship language on the card to be determinative as to whether a presumption of a joint tenancy will arise (see supra).
If, after a hearing, the Court decides that the account was in fact for convenience only, the daughter will be liable for the entire balance of the account as of the date of the decedent’s death.
Decedent's Purported Transfer of Residence To Wife Fails For Non-Delivery of Deed
In Matter of Ross, the Nassau County Surrogate’s Court canceled the recording of a deed pursuant to which the decedent allegedly conveyed ownership of his residence to his wife, Gladys. The court did so because it determined, after a three-day trial on the merits, that while the decedent executed the deed, he did not deliver it to his wife during his lifetime. Thus, the alleged transfer was ineffective.
Hard cases, it is said, make bad law. It is not unusual, especially in matters concerning decedents’ estates, that the facts of a case are such that a court’s rigid adherence to the law results in injustice and hardship. Ross, however, was not one of those cases. I submit that it is impossible to review the facts of the case and feel sympathy for the decedent’s widow.
The decedent executed a Will in November 2004. At that time, the decedent rejected his attorney’s suggestion that he simply bequeath his house outright to Gladys, indicating that it was not his desire at that time to do so. However, about a month later, the attorney prepared a deed at the decedent’s direction conveying the property to Gladys. The decedent did not ask his attorney to record the deed, however; the decedent told his attorney that he intended to take the deed with him. It was clear to the decedent’s attorney that the decedent “was not going out to record it himself".
The evidence elicited at trial concerning non-delivery of the deed was, simply put, overwhelming.
First, two years after executing the deed, the decedent executed another Will -- which was ultimately admitted to probate. That Will provided that the residence be placed in a marital deduction trust for Gladys’ benefit. Notably, the attorney draftsman of the Will testified that Gladys was present at all of the meetings with the decedent regarding his estate plan, and never made any mention of a deed purporting to convey the property to her. The attorney draftsman testified that she gave no indication during the meetings that she believed she already owned the property which the decedent intended to place in trust for her benefit.
Second, Gladys signed the probate petition indicating that the residence was an asset of the decedent’s estate at the time of his death. She also participated in obtaining an appraisal of the property, consistent with the proposition that the property was an estate asset.
Third, after friction arose among the co-executors and they retained separate counsel, Gladys insisted that the house be sold. She executed a contract of sale of the property to a third party. Her co-executors also executed the contract. That contract, prepared by Gladys’ attorney, initially identified Gladys as the seller of the property because the person preparing the contract was under the mistaken impression that Gladys was the owner. However, after discussing the same “at length” with Gladys and her sons, the contract was modified to reflect that the estate was the seller.
Fourth, Gladys made various demands against the estate in connection with her possibly agreeing to forego her statutory right of election. One of those demands was that the subject property be turned over to her.
Fifth, Gladys commenced a proceeding seeking the removal of her co-executors and co-trustees. Among other things, Gladys’s petition alleged that she had been attempting to sell the residence, an asset of the estate, but her co-executors refused to sign a contract of sale.
This was not a “hard case”.
The Court explained that the law presumes that an executed deed was delivered and accepted as of the date of its execution. It further noted, however, that that presumption is rebuttable and “may be repelled by proof of attendant facts and subsequent circumstances, such as . . . declarations of the supposed grantee which are inconsistent with the transfer of the title. . . .”
According to the Court, there was “not a shred of objective evidence” that the deed was ever delivered to Gladys. It noted that, on the contrary, the evidence was overwhelming that Gladys was completely unaware of the deed’s existence until she, in effect, stumbled onto it sometime after the decedent’s death.
Moreover, the Court apparently had serious issues with Gladys’ credibility. At her deposition, Gladys testified under oath that she located the deed in a piece of furniture while packing for her move to California. However, in a prior sworn statement, she alleged that she found the deed while unpacking in California.
Based on all of this, the Court determined that the deed was not delivered to Gladys during his lifetime. The transfer, therefore, was ineffective.
Court Considers Estate Planning Documents In Deciding Corporate Dispute
This post concerns a decision issued by a Supreme Court Justice in a complex corporate dissolution proceeding. It highlights the importance of familiarity with estate practice, even if you never plan to step foot into a Surrogate’s Court.
In Matter of Pappas v Corifan Enterprises Ltd., NYLJ 2/19/09 (Sup. Ct. Kings County 2009), the issue was whether the Petitioner -- the surviving spouse of the decedent -- had standing to petition for dissolution of two closely held corporations. Respondent argued that the decedent -- and, thus, the Petitioner -- lacked the requisite 20 percent ownership interest in the corporations. He argued that he was the sole owner of the corporations. After a hearing limited to the issue of standing, at which the court heard 14 witnesses testify over eight days and admitted 48 documents into evidence, the court determined that the Petitioner met her burden of demonstrating an ownership interest in one corporation, but not the other.
The substantive legal aspects of the decision are beyond the scope of this post (although an article published by my colleague, Peter Mahler, on his New York Business Divorce blog, contains an excellent discussion of the same). What should be of interest to the trust and estate litigator is the evidence the court analyzed in reaching its determination.
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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What is a Trial or Hearing on the Merits?
Be careful before you start answering this question. When it comes to applying CPLR §4519, commonly referred to as the Dead Man’s Statute, easy answers are sometimes hard to find.
CPLR §4519 precludes testimony upon an objection at “the trial of an action or the hearing upon the merits of a special proceeding,” where 1) the witness has a financial interest in the outcome of the litigation; 2) she is to be examined about a personal transaction or communication of the decedent; 3) she is to be examined as a witness on her own behalf; and, 4) the testimony sought to be elicited is against the fiduciary or survivor of the decedent or a person deriving his title from the decedent. The principle purpose of the statute is to prevent fraudulent claims which could easily be asserted against a decedent’s estate – since the decedent cannot give his version of the transaction or conversation, the financially interested witness is not permitted to give her version. There is no shortage of commentary concerning the Dead Man’s Statute and a great number of cases examine its application (see Matter of Wood 52 NY2d 139 [1981]; Sepulveda v Aviles, 308 AD2d 1 [1st Dept 2003];Matter of Radus, 140 AD2d 348 [2d Dept 1988]; Matter of Miller 97 AD2d 581 [3d Dept 1983]; Estate of Breitman, 4/7/99 NYLJ 35, [col. 5] [Sur Ct, Nassau County 1999]; Matter of Dunbar, 139 Misc 2d 955 [Sur Ct, Bronx County 1988]; See also Radigan, The Dead Man’s Statute – Alive and Well in the Surrogate’s Court, 50 NY St BJ 470 [1980]; Brooks, It’s Time to Kill the Dead Man’s Statute, NYLJ, July 18, 1988, at 1, col 1).
By its plain language, CPLR §4519 has no application at any stage of a proceeding or action other than at “a trial or a hearing on the merits.” It is clear that the statute has no application during pre-trial discovery at a deposition pursuant to Article 31 of the CPLR. Similarly, it has no application in examinations held pursuant to SCPA §§1404, 2211, or at an examination during the inquisitorial stage of a discovery proceeding (see Philips v Kantor & Co., 31 NY2d 307 [1972]; Lemlich v Lemlich, 266 AD 748 [2d Dept 1943]; Wall Street Assoc. v Brodsky, 295 AD2d 262 [1st Dept 2002]).
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