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It is a rare day that the Court of Appeals, New York’s highest Court, deals with trust and estate matters, let alone something as granular as the validity of an in terrorem clause.  But speaketh they did, on April 17, 2025, in a lengthy opinion with a 13-page dissent to boot (Carlson v. Colangelo, 2025 NY Slip Op 02264). 

In this case, the Decedent never married but he was survived by a romantic partner, Kristine M. Carlson (“Carlson”), and by his daughter Crissy Colangelo (“Colangelo”), whose mother was a prior romantic partner of the Decedent.  The Decedent executed a pour-over Will and Revocable Trust the month before he died.  Under the Trust, the Decedent left his residence in Cortlandt Manor, New York to Carlson and his “interest” in an LLC which owned real estate to Colangelo with a statement that “it is Grantor’s sincere wish and desire that Crissy Colangelo provide a stream of income, not to exceed the sum of $350,000 in total, to Kristine M. Carlson.”  The Decedent named Colangelo as Trustee.

Both instruments contained in terrorem clauses.  The Trust clause provided:

In the event that any heir, distributee, beneficiary…shall contest any aspect of this Trust, or the distribution of the Grantor’s assets pursuant to his Last Will, inter vivos Trust agreement, beneficiary designations or non-probate beneficiary designations, or shall attempt to set aside, nullify, contest or void the distributions thereof in any way …

then the challenger would forfeit benefits under the instrument. 

After a number of failed attempts to resolve issues between them, Carlson commenced an action in Supreme Court seeking to compel Colangelo to distribute the residence to her, a declaration that Carlson was a pre-mortem 50% owner of the LLC, a direction that Carlson is entitled to the $350,000 income stream from the LLC, an accounting for the LLC, and punitive damages. 

Colangelo moved for summary judgment, seeking a determination that Carlson violated the in terrorem clause and thereby forfeited her interest under the Trust.  Carlson opposed, responding that her action was meant to construe and enforce the Trust, not to contest it.  Supreme Court granted the motion, invoking the in terrorem clause, and stating “it cannot be disputed that [Carlson] contested the distribution of the Grantor’s 100% interest in Dempsaco to Colangelo under the Trust.”  On appeal, the Appellate Division modified the Supreme Court’s order by denying Colangelo’s request for legal fees, but otherwise affirmed the Supreme Court’s determination.

In a 4-3 decision, the Court of Appeals modified the Appellate Division’s order by finding that Carlson’s action did not trigger the in terrorem clause.  The majority of the Court held: “because [Carlson’s] lawsuit seeks to enforce the Trust provisions as written and intended by the Grantor, [Carlson] did not attempt to nullify the Trust or challenge its terms”.  They further stated:  “it would be contrary to the Grantor’s intent to hold that a party cannot file an action to receive exactly that which the Grantor set aside for transfer to their named beneficiary.”

Writing for the dissent, Judge Garcia opined that “because [Carlson’s] lawsuit challenged the decedent’s intended distribution of his assets as provided for in the Trust, I would hold, as did both Courts below, that [Carlson] triggered the in terrorem clause.”

The dissent discusses the public policy issues underlying in terrorem clauses and, taking a polite swipe at the majority opinion’s logic, states:

Taken to its logical end, under the majority’s approach, a challenger could claim, without any support, that decedent had no interest in any of the Trust property, that the Trust had no property at all to distribute, and that challenger owned all the Trust property – and then avoid the consequences of an in terrorem clause by claiming the suit was merely an effort to ensure that the Grantor’s intent was fulfilled.  This is not how in terrorem clauses work, nor how they have been enforced.

While the majority opinion gives some clarity on in terrorem clauses generally, it does seem to hold that the result leaves future disputes as fact specific to each case.  One of the problems is that the statutory safe harbor provisions under EPTL 3-3.5, which lays out certain actions which will not trigger an in terrorem clause, are applicable only to Wills, not Trusts.  With the increasing use of Revocable Trusts as Will substitutes, the EPTL/SCPA Advisory Committee, in its Fourth Report in 1995 (of which your author was the draftsperson) proposed a number of amendments, including a specific amendment to EPTL 3-3.5, largely to conform substantive law and procedure in Trust contests with Will contests, and which added Trusts to the safe harbor provisions.  That proposal has not yet been adopted.

For now, continuing to draft broad in terrorem clauses to frustrate litigation, if that is the Grantor’s intent (and when would it not be?), would seem to be the best course of action.  But the Grantor should be advised that applying a forfeiture clause to litigation seeking simply to require the Trustee to discharge its duties is problematical.  Proceedings seeking construction of an instrument, or requiring a fiduciary to file an accounting, should not trigger a forfeiture.

On February 14, 2025, I will be speaking at the Suffolk Academy of Law’s annual Elder Law Update, addressing current developments in artificial intelligence (“AI”) that are relevant to trusts and estates practice, among other topics.  In preparing for that presentation, I came across a recent Surrogate’s Court, Saratoga County, decision in Matter of Weber, in which the court found that a party’s counsel has a duty to disclose to the court the fact that the party’s hearing evidence has been generated by AI.  I now address the Weber court’s AI-based findings below.

AI has been “defined as being any technology that uses machine learning, natural language processing, or any other computational mechanism to simulate human intelligence, including document generation, evidence creation or analysis, and legal research, and/or the capability of computer systems or algorithms to imitate intelligent human behavior” (Matter of Weber, 220 NYS3d 620, 635 [Sur Ct, Saratoga County 2024]).  It “can be either generative or assistive in nature” (id.).  Generative AI is “artificial intelligence that is capable of generating new content (such as images or text) in response to a submitted prompt (such as a query) by learning from a large reference database of examples” (id.).  AI “assistive materials are any document or evidence prepared with the assistance of AI technologies, but not solely generated thereby” (id.).

Continue Reading Does Counsel Have a Duty to Disclose to a Surrogate’s Court the Fact That Hearing Evidence That Counsel Proffers Has Been Generated by Artificial Intelligence?

When reforming a will or trust, the Surrogate’s Court “changes the language of the will [or trust instrument] itself by the addition or deletion of words in an attempt to conform [the instrument] to the decedent’s intent” (Matter of Stahle, NYLJ, Jan. 23, 2002, at 32 [Sur Ct, Onondaga County]).  Historically speaking, courts have been “hesitant to reform wills [and trusts,] unless the reformation effectuates the [testators and grantors’] intent” (Matter of Brill, NYLJ, Aug. 17, 2017, at 23 [Sur Ct, Bronx County]; Matter of Dousmanis, 190 AD3d 548, 549 [1st Dep’t 2021]).

However, when the reformation of a will or trust will result in a settlement of litigation, courts have been less hesitant to reform wills and trust instruments (Marilyn G. Ordover & Charles F. Gibbs, “Correcting Mistakes in Wills and Trusts”, NYLJ, Aug. 6, 1998, at 25).  This is because New York State has a strong public “policy encouraging family settlements” (Matter of Harburg, NYLJ, Aug. 12, 1997, at 26 [Sur Ct, New York County]).  Thus, in cases in which the interested parties have agreed to reform wills or trusts in order to achieve settlements, courts repeatedly have approved of the reformations to which the parties have stipulated (Matter of Schmitt, NYLJ, July 3, 2000, at 1 [Sur Ct, Westchester County]; Matter of Schwartz, NYLJ, Jan. 22, 1992, at 25 [Sur Ct, Westchester County]; Matter of Wilkie, NYLJ, Jan. 17, 1992, at 35 [Sur Ct, Westchester County]).      

Continue Reading Creative Writing: Reforming Wills and Trusts to Achieve Settlements

A power of attorney (“POA”) allows a principal to assign their agent authority to make certain legal and financial decisions on their behalf. Because a POA can give an agent tremendous power over the principal’s affairs, claims of elder abuse in connection with a POA are common. While litigation concerning claims of abuse of a POA often occurs in the context of contested probate proceedings, special proceedings under Mental Hygiene Law (“MHL”) Article 81 (“Article 81”) and the General Obligations Law (“GOL”) increasingly involve claims that an agent is abusing a POA. This post delves into the options available under the MHL and GOL when one suspects abuse of a POA.

Advanced Directives in Guardianship Litigation. Because a guardianship under MHL Article 81 puts the alleged incapacitated person’s (“AIP”) constitutionally protected civil liberties at stake, the goal of Article 81 is to safeguard the AIP and further their best interests using the least restrictive form of intervention (see Matter of Samuel S. (Helene S.), 96 AD3d 954, 957-958 [2d Dept 2012]). Advanced directives, such as a POA or a health care proxy, being less restrictive than an Article 81 guardianship, often eliminate the need for one (see Matter of Isadora R., 5 AD3d 494 [2d Dept 2004]). Yet to obviate the need for guardianship, the advanced directive(s) must be working effectively, and the agent must have acted in the AIP’s best interests (see Matter of Rachel Z. (Jack Z.–Anna B.), 181 AD3d 805 [2d Dept 2020]).

Continue Reading Abuse of Powers of Attorney

Suppose that a loved one has been missing for years, for no reason at all, and without contacting family or accessing any of his or her assets.  Sadly, this scenario is one that many families have had to confront in New York State.  This blog post addresses the steps that a missing loved one’s family members may wish to take in order to have their absentee relative declared deceased and to gain access to that person’s assets.

Estates, Powers and Trusts Law (“EPTL”) § 2-1.7 provides:

A person who is absent for a continuous period of three years, during which, after diligent search, he or she has not been seen or heard of or from, and whose absence is not satisfactorily explained shall be presumed, in any action or proceeding involving any property of such person, contractual or property rights contingent upon his or her death or the administration of his or her estate, to have died three years after the date such unexplained absence commenced, or on such earlier date as clear and convincing evidence is the most probable date of death (EPTL § 2-1.7[a]).”

To invoke EPTL § 2-1.7, a “petitioner must establish a continuous absence for three years, a diligent search, the lack of any satisfactory explanation for the absence and, during the absence, that there was no communication with the absentee” (Matter of Durso, NYLJ, June 24, 2015, at 23 [Sur Ct, Bronx County]; Matter of Bennett, 12 Misc3d 1154[A], *1-2 [Sur Ct, Suffolk County 2006]).  Proof of a diligent search is critical to any analysis involving EPTL § 2-1.7, as evidence of a person’s continuous absence for more than three years alone will not suffice (Matter of Sanchez, 22 Misc3d 1128[A], at *2 [Sur Ct, Nassau County 2009]).

Continue Reading My Relative Has Been Missing for Years. What Do I Need to Do to Have That Relative Declared Deceased?

In 2021 and 2022, I wrote about Surrogate’s Court decisions that addressed the admission of remotely witnessed wills to probate in New York State.  Since then, Surrogate’s Courts have issued at least two more decisions addressing the validity of remotely witnessed wills.  I now write to provide an update about the validity of remotely witnessed wills, having been involved in two cases that addressed the issue in 2023.

Between April 7, 2020 and June 25, 2021, New York Executive Order 202.14 (the “Executive Order”) permitted “the remote execution of wills” in this State (Matter of Holmgren, 74 Misc3d 917, 918 [Sur Ct, Queens County 2022]).  The Executive Order set forth formalities that must be observed in order to justify the admission of a remotely executed will to probate in New York (id.).  Among those formalities was the requirement that “the testator has to be either personally known to the attesting witnesses or must present valid photo identification to the witnesses during the video conference” (id. at 919).

Continue Reading The Admission of Remotely Witnessed Wills to Probate in New York

Artificial Intelligence (“AI”)  made legal and mainstream news in 2023.  In a highly publicized and widely discussed case, Mata v. Avianca, Inc., the United States District Court for the Southern District of New York sanctioned attorneys for citing to non-existent, fake cases generated by Open AI’s ChatGPT.  Despite Mata’s stark warning to the bar, AI-generated fake caselaw continues to appear in litigation nationwide.  

In Matter of Samuel, the Kings County Surrogate’s Court confronted a lawyer’s careless use of AI in a contested probate proceeding.  The objectant’s counsel submitted “fake caselaw resulting from Artificial Intelligence hallucinations” in reply papers submitted on a summary judgment motion.  Five of the six cases cited in in the objectant’s reply papers were either erroneous or non-existent.  The court held that counsel violated the rule against “frivolous” litigation under 12 NYCRR 130-1.1 by making material misstatements to the Court concerning case law.

Surrogate Graham was careful to point out that AI is not, in and of itself, the problem.  While the court was “dubious” about attorneys using AI to prepare legal documents, it focused squarely on counsel’s failure to examine and scrutinize the ostensible authorities that AI cited in support of the objectant’s arguments.  The court found that counsel had sufficient time to review and analyze the AI generated reply papers and conduct a simple cite check on reliable legal search engines, which would have revealed AI’s reliance on non-existent, fake caselaw.  Counsel’s conduct, and not AI, was the real problem. 

Continue Reading Matter of Samuel – Artificial Intelligence Hallucinates and an Incapacitated Person Makes a Will

For trust and estate litigators, the federal court experience invariably begins – and sometimes ends — with an analysis of the probate exception to federal diversity jurisdiction.  Two recent Southern District cases examine the probate exception.  Part 1 of this blog series introduces the probate exception and discusses an “easy” case; Woitovichv. Schoenfeld.  Part 2 of this series, coming soon (hopefully), examines the tougher case of Bulgariv. Bulgari. 

Continue Reading The Probate Exception to Federal Jurisdiction – From Woitovich (Part 1) to Bulgari (Part 2)

A discovery proceeding pursuant to SCPA 2103 may be commenced by any legal representative of the estate, including a preliminary executor or a temporary administrator. An estate fiduciary has a duty to collect and preserve estate assets for the benefit of the beneficiaries of an estate.  To this extent, when the fiduciary knows, or has reason to believe that assets of the estate have been misappropriated, or that someone has information about, or has a disputed claim to estate assets, a 2103 proceeding should be considered.

A SCPA 2103 proceeding has two phases.  The first phase is the inquisitorial phase, which is the discovery portion of the proceeding.  In essence the fiduciary is asking the Court for permission to examine, under oath, an individual, for the purposes of determining whether or not that individual has information relating to the existence or whereabouts of estate assets. If the court finds reasonable grounds for the examination, it will order that a respondent, or respondents, appear and subject themselves to examinations.  In this regard SCPA 2103 is very broad in scope and has been likened to a licensed fishing expedition as a fiduciary need not have concrete evidence to commence the 2103 proceeding. Indeed, the proceeding may be instituted against any person having “possession or control” or “knowledge or information” about any property, or the proceeds or value thereof, which should be paid to the fiduciary. [SCPA 2103 (1)].

SCPA 2103 provides that a fiduciary may present to the court:

 a petition showing on knowledge or information and belief that any property as defined in 103 or the proceeds or value thereof which should be paid or delivered to him is (a) in the possession or control of a person who withholds it from him, whether possession or control was obtained prior to creation of the estate or subsequent thereto, or (b) within the knowledge or information of a person who refuses to impart knowledge or information he may have concerning it or to disclose any other fact which will aid the petitioner in making discovery of the property, or (c) he has reason to believe, in the possession or control of a person described in subparagraph (a) of this subdivision or within the knowledge or information of a person described in subparagraph (b) of this subdivision and praying that an inquiry be had respecting it and that the respondent be ordered to attend and be examined accordingly and to deliver the property if in his control.

However, despite the broad latitude and liberal standards set forth by the statute, there are limits to a fiduciary’s inquiry.  New York courts have made clear that they will not grant a fiduciary unfettered power in commencing a discovery proceeding.  Significantly, there are a number of decisions holding that unless a petition for SCPA 2103 discovery seeks specific property or money that is in the possession or knowledge of a respondent, or with reasonable likelihood is in the possession or knowledge of the respondent, the proceeding must be dismissed.

However, this was not always the case.  Indeed, in years past, courts had a much more expansive view of the threshold requirements for commencement of an SCPA 2103 proceeding. For example, in Matter of Mantia, 1997 WL 34851768 (Sur Ct, Nassau County), former Surrogate Radigan, described the scope of a SCPA 2103 examination as “quite broad”, explaining that because “the believed owner of the assets is deceased and cannot be called upon to provide aid in establishing his estate’s right to possession of these assets, the courts tend to give broader inquiry than what might be allowed in other kinds of proceedings brought in the Surrogate’s Court.  Surrogate Radigan, quoting Matter of Rosencrantz, 5 Misc 2d 308 (Sur Ct, Kings County 1956), described the allowable area of inquiry as a “fishing expedition,” a term identifying a type of inquiry that is usually unnecessarily intrusive.”

Similarly, in Matter of Fialkoff, 45 Misc.3d 1205(A) (Sur Ct, Queens County 2014), Surrogate Kelly, in describing a 2103 discovery proceeding, held that “the inquisitorial stage anticipates that the pleadings will be non-specific and the petitioner is not required to set forth allegations sufficient to sustain a cause of action but only those that justify an inquiry.  The petitioner should be allowed the broadest latitude in deposing a respondent to obtain information to aid the fiduciary in administering the estate and determining whether recovery of assets should be pursued.”   Surrogate Kelly added that the petition may be stated upon information and belief and that the allegations only need show that any property or the proceeds or value thereof which should be paid or delivered to the fiduciary are in the possession or control of a person who is withholding it or within the knowledge or information of a person who refuses to tell the fiduciary where it is.

In Matter of Boccia, 2001 NY Misc LEXIS 1367 (Sur Ct, Nassau County), the court noted that the inquisitorial stage of a discovery proceeding is a licensed fishing expedition by the executor and that at that stage the fiduciary is not required to set forth allegations to sustain a cause of action, only those which justify an inquiry.  This is because a fiduciary who may know little or nothing about the decedent’s affairs should have an opportunity to assist in the recovery of estate assets or to administer the estate. The courts tend to entertain this proceeding liberally when the information sought relates to estate assets or their value because it helps the fiduciary perform his/her duty to marshal assets.

The foregoing cases, along with many others like them, set a dangerous precedent of permitting fiduciaries to engage in licensed fishing expeditions based solely on pure conjecture that a decedent may have maintained an ownership interest in property that may be in possession of a respondent.

Within this context, the Appellate Division First Department, in Matter of Perelman, 123 AD3d 436 (1st Dep’t 2014) addressed the parameters of a SCPA 2103 discovery proceeding.  In Perelman, the executor commenced a proceeding seeking information and the turnover of the decedent’s interest in various family businesses that were allegedly misappropriated prior to her death.   The respondents moved to dismiss the petition arguing that the petitioner’s claims were barred by documentary evidence, and on the basis of the statute of limitations, res judicata, and collateral estoppel.   Petitioner maintained that he had a fiduciary duty to pursue the claim and that SCPA 2103 has been broadly construed as to allow a “fishing expedition” in order to assist the fiduciary in recovering property or administering an estate.  Respondents maintained that while discovery pursuant to SCPA 2103 is often labeled a fishing expedition, the authorities did not consider it to be a fishing expedition with an unlimited license.

In an opinion and Order, dated February 15, 2015, the Surrogate’s Court denied the motion to dismiss.  On appeal, the Appellate Division First Department unanimously reversed the order of the Surrogate’s Court and granted respondents’ motion.  Critically, the Court held that the petitioner “failed to demonstrate the existence of any specific personal property or money which belongs to the estate, or even a reasonable likelihood that such specific property or money might exist.”  In doing so, the Court dismissed the notion that a fiduciary seeking discovery has the authority to engage in an unfettered fishing expedition.

Despite the fact that SCPA 2103 discovery proceedings are often referred to as licensed fishing expeditions, it is clear from the First Department’s decision in Matter of Perelman, that unless a SCPA 2103 petition lists specific property that is in the possession or knowledge of a respondent, or the petitioner reasonably believes is in the possession or control or within the knowledge or information of a respondent, the proceeding may be subject to dismissal.

 

 

This article appears in a forthcoming issue of the Trust and Estates Law Section Journal, a publication of the New York State Bar Association. To learn more about the Trusts and Estates Law Section, please visit NYSBA.ORG/TRUSTS.

The recent opinion by the Appellate Division, Third Department, in In re Strom Irrevocable Trust III, 2022 NY Slip Op 01356, provides a cautionary tale to estate litigators who conduct SCPA 1404 examinations in the face of a trust instrument’s in terrorem clause. While in terrorem clauses are strictly construed, the Appellate Division found that the subject clause had been triggered as a result of conduct engaged in by the respondent during the course of a probate proceeding regarding the grantor’s will.

Before the Court was an appeal from an Order of the Surrogate’s Court, Warren County, which granted petitioner’s motion determining that the respondent triggered the in terrorem clause of an irrevocable trust of which she was a beneficiary.

The record revealed that the subject trust was created by the grantor/decedent for the benefit of her two daughters. Shortly before her death, she transferred her home in New Jersey to the trust and the proceeds from the sale of the house were subsequently deposited into the trust. The trust agreement contained an in terrorem clause whereby any beneficiary who challenged any of the terms of the trust forfeited her interest thereunder. Notably, the clause specifically exempted from its scope the provisions for discovery set forth in EPTL 3-3.5 and SCPA 1404, but also stated that any attempt to expand the discovery beyond what was typically authorized by the provisions would result in a forfeiture. The trustee subsequently filed an order to show cause seeking a determination that the respondent had violated the clause based upon, inter alia, conduct she engaged in during the course of SCPA 1404 examinations regarding the decedent’s will. The Surrogate’s Court granted the trustee’s order to show cause in its entirety, finding that the respondent violated the clause.

In affirming the order of the Surrogate’s Court, the Appellate Division observed that while engaging in SCPA 1404 discovery, the respondent filed affidavits in which she questioned whether the grantor’s home had been lawfully and properly transferred to the trust, and therefore whether the trust may fail due to being unfunded. She also engaged in discovery and depositions of numerous individuals who were involved in the sale of the home, which had no connection to the probate of the will, and was thus found to be in violation of the grantor’s intent as expressed in the no contest clause. Specifically, the Court was troubled by the respondent’s conduct questioning the deposit of the sale proceeds into the trust rather than the grantor’s estate, when the house was the primary asset of the trust.

Accordingly, the Court held that the Surrogate’s Court had correctly determined that the respondent triggered the in terrorem clause and forfeited any disposition to her under the trust.