Does Kapon authorize unlimited access to a party’s financial records?

In Matter of Kapon v Koch, 23 NY3d 32, 38 (2014), the Court of Appeals concluded that a party seeking disclosure from a nonparty is not required to show “special circumstances”.  Rather, the Court held that the statute “allow[s] for the discovery of any person who possesses material and necessary evidence[.]” 

Does this mean that a litigant is entitled to unlimited access to a party’s financial records?  Not necessarily.

First, the information subpoenaed must be material and necessary, and “the subpoenaing party [must] state, either on the face of the subpoena or in a notice accompanying it, ‘the circumstances or reasons such disclosure is sought or required’” (id. at 39, citing CPLR 3101).  If the subpoena requests irrelevant information, the Court will quash it.  Similarly, if the subpoena served on a nonparty fails to set forth the circumstances or reason for the disclosure, a litigant may argue that the subpoena is non-compliant and should be quashed accordingly.

In addition, there are several related objections that are subparts of the material and necessary standard.  A party for instance may object to a subpoena on grounds that it is overbroad or constitutes a fishing expedition (see e.g. Saratoga Harness Racing v Roemer, 274 AD2d 887, 889 [3d Dept 2000] [improper “demand for … all of defendant’s balance sheets, income statements, cash flow statements, general ledger statements, expense reports and bank account statements for a period of more than three years” (citation omitted)]; Matter of American Express Prop. Cas. Co. v Vinci, 63 AD3d 1055, 1056 [2d Dept 2009]). 

The trial court also has “the authority to impose, in its discretion, appropriate restrictions on demands which are unduly burdensome . . . and to prevent abuse by issuing a protective order where the discovery request may cause unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts” (Rawlins v St. Joseph’s Hosp. Health Ctr., 108 AD3d 1191, 1192 [4th Dept 2013] [internal quotation marks and citation omitted]; see CPLR 3103).

A more aggressive litigant may further attempt to argue that the standard is or should be higher in cases involving sensitive information such as tax returns and personal financial records.  The court in Reintsema v Johnson, 2018 NY Slip Op 33612(U) (Sup Ct, Saratoga County 2018), for instance, concluded that “the scope of discovery of personal financial records and specifically income tax returns, is narrow, and such records to be disclosed, must be found indispensable to a party’s claim and unavailable from other sources … [and that] [c]ourts do not allow an adversary to ‘freely roam’ through an opponent’s financial records, except in certain limited circumstances for example when income diversion is alleged and again the relevant information is not available from any other source” (citations omitted).

What should you ask the drafting attorney during the SCPA 1404 Examination?

If you are considering objecting to a will, the Surrogate’s Court Procedure Act provides you with the right to question the drafting attorney.  But what should you ask?  

The questions for each specific case will vary.  However, in most cases you should ask questions about the attorney’s background and qualifications, the attorney’s prior interactions with the decedent and beneficiaries, the attorney’s prior legal representation of the decedent and beneficiaries, the existence of prior wills, the names of the decedent’s prior attorneys, who referred the decedent to the drafting attorney, who initiated the first contact for the services, where they met, who was present, what was discussed, the extent to which decedent discussed his family members and assets, what occurred during the will ceremony, the contents of the attorney’s notes and billing entries, whether the decedent was driven to the appointments, whether the decedent explained why he/she wanted to change his/her will, and any subsequent interactions between the decedent and the drafting attorney. 

Sample List of Questions

When were you admitted to practiced law in New York?

How long have you done estate planning?

When did you first meet the decedent?

When did you first perform any legal services for the decedent?

When did you first meet the beneficiary/named executor?

Have you ever performed any legal services for the beneficiary before?

Did the decedent have a prior will/estate plan?

How was it different than the will you drafted for him?

Do you know the name of the prior drafting attorney?

Did someone refer the decedent to you?  Who?

Who arranged for the first meeting between you and the decedent?

How did the decedent get to your office?

Who was present?

What did the decedent tell you?

What did you discuss with the decedent?

What did you discuss with the beneficiaries?

Did the decedent say anything about his family/assets?

Did the decedent ever tell you why he/she wanted to make the change to the will?

What is the basis for your conclusion that the decedent was of sound mind?

Did you prepare an engagement letter for the services? 

How much did you charge for your legal services? 

Who paid?   

Who signed check?

Who wrote out the check?

Do you have any (other) invoices or billing records to reflect the services performed?

Did you take any notes? 

Do you have any other notes other than these?

Did you send the decedent any letters/correspondence?

Did the decedent give you any writings/letters?

Did you have any other/subsequent interactions with the decedent?

Do you know the names of the decedent’s banks?  Medical providers?  Pharmacy?  Cell phone number and provider?

Do you know if the decedent made any beneficiary changes to any of his/her non-probate assets during such and such time period?

Do you know if the decedent had any Powers of Attorney?  Who was named as the agent?  Do you know if the decedent had any joint accounts with the beneficiaries?

The Top 5 Types Of Documents to Request Prior to the SCPA 1404 Examination

When representing clients looking to challenge a will, we like to take full advantage of pre-objection discovery.  It is particularly helpful to review as much information about the decedent as possible prior to conducting the SCPA 1404 examination. We like to request and review the following types of documents:

Drafting Attorney’s Case File.  The best source for cross examination will be the drafting attorney’s case file.  We are particularly interested in the billing records, the attorney notes, and the correspondence.

Medical Records.  If we have the medical and financial records, we will use them to test the witnesses’ knowledge of the decedent’s health.  We will ask the drafting attorney and the attesting witnesses about their interactions with the decedent and whether they were aware of any physical or mental conditions suffered by the decedent.  Often, these witnesses may have been completely ignorant of significant underlying conditions, thereby calling into question the reliability of their opinions about the decedent’s capacity and the lack of undue influence.

If we do not have medical records in time for the exam, however, we may still proceed without the medical records to avoid delay.  To account for this, we will ask the witnesses about their knowledge of the decedent’s health and what the decedent told them about it.  We will then later compare the answers to the records we later obtain to see if the answers are accurate.

Phone Records.  If we have the phone records, we can determine how many times the decedent called the law office, the beneficiaries, and anyone else.  We may compare the records to the witnesses’ answers about durations of calls and the number of calls.  If the decedent told the witness that he or she did not have communications with our clients, we will check the phone records to see if the statement was accurate.

Prior Estate Planning Documents.  We look to prior estate planning documents to see if there was a deviation in the decedent’s estate plan and how long the prior plan existed.  We often ask the witnesses about their knowledge of a deviation and the reason given by the decedent for it.

Financial Records and Credit Card Statements.  We look to financial records and beneficiary change forms to see if the decedent gifted any funds to the beneficiaries and if any power of attorney was used to transfer funds on the decedent’s behalf.  Again, we ask the witnesses if they were aware of any of these circumstances when the will was executed. 

We also look to credit card statements to see where the decedent was at or around the time of the will execution and who the decedent may have been communicating with.  We also try to compare this information to other sources, such as the decedent’s emails, appointment book, calendar, and contact lists.