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

When we represent clients considering a probate contest, we take full advantage of the opportunity for pre-objection discovery.  We find it particularly helpful to review as much information about the decedent as possible prior to conducting the SCPA 1404 examination.

  • 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 obtain this information from and compare it to other sources, such as the decedent’s emails, appointment book, calendar, and contact lists.

Case Study No. 2: The Discovery Process in Surrogate’s Court

We received a call one day from two brothers complaining of their sister.  Their father had a long term, prior estate plan providing for his children equally.  Right before his death, the plan changed, and their father cut them down and provided a much larger portion of his estate to their sister.   

Around the time of the change, their father had experienced significant tragedy in his life.  His wife had passed away, his dog had died, and he was in and out of the hospital.  The daughter and her husband had also driven him to the attorney appointments to make the change to the will. 

In this type of case, the clients want to know what happened and why the decedent decided to suddenly change his estate plan.  As with a lot of probate disputes, the first step is therefore to ascertain what occurred.  To accomplish this, we generally appear on the citation date and request a scheduling order to obtain document discovery prior to the 1404 examination.   

After obtaining the scheduling order, we served an extensive document demand on the estate.  We requested items such as the estate’s case file, the father’s medical records, financial information, phone records, and written communications and emails.  As in every case, we were particularly interested in communications between the decedent and the key players – the drafting attorney, the fiduciary, and the beneficiaries. 

The estate in this case did not timely serve responses to our document demands.  It sought to delay and ask for several adjournments. To address this problem, we could have gotten the court involved.  The problem was that it could take several months for the court to resolve the issue. 

We elected instead to go around the estate for much of the information requested by engaging in third-party discovery.  So instead of waiting for the estate’s production, which could have taken months and which would likely produce only some of the documents, we simply obtained the estate file from the drafting attorney and served third party subpoenas to get the rest of the information we wanted.  As a result, we obtained much more information from the third parties in a much shorter period of time.

When we finally received the estate’s document response, we noticed that certain documents were unsigned, incomplete, or missing.  We made follow up requests with the estate and after several attempts to obtain the missing information and an office visit by me to inspect the original file, we ended up obtaining additional records and electronic data that had been omitted from the earlier production.  That information included important attorney records and notes, making them highly relevant and useful for cross examination.

So, to sum up the two main lessons from this case study, 1. we insist on receiving the complete estate case file from the drafting attorney prior to the exam, and 2. we go on a scavenger hunt for as much information as possible.

FIDUCIARY COMPENSATION

“We don’t pay taxes, only the little people pay taxes.” Leona Helmsley

This is what Leona Helmsley’s summer house keeper testified that Mrs. Helmsley had previously said, during a 1989 tax evasion trial that resulted in Mrs. Helmsley serving 19 months in jail.  At trial, her own lawyer described her as a “tough bitch”.  Leona Helmsley was known as the “Queen of Mean” for her heaping cruelty meted out toward her employees in her real estate empire worth billions.  She was legendary in penny pinching her employees, returning used shoes to stores for refund and gipping contractors that worked on her properties.  When her only child died she served his widow with an eviction notice shortly after the funeral and took judgment against his estate for a debt and property that she claimed he had borrowed from her.  It seems that while she was alive she paid no one fairly.

Mrs. Helmsley died in 2007.  Her husband (number three) Harry, predeceased her in 1997.  Fortunately for Mrs. Helmsley, she got what she wanted:  he left her his entire estate estimated to be well over $5 billion.

Her estate plan was what one would expect under the circumstances.  It cut out certain family members and manifest some rough edges.  Mrs. Helmsley’s estate in large part was left to a charitable trust.  Her Maltese dog, Trouble, was benefitted by a $12 million trust fund.  It was reduced by the court as excessive based upon litigation and alleged lack of capacity.  The court determination included providing benefit for some relatives.

In August 2019, the New York County Surrogate made a final determination on the application for judicial settlement of the final account of Mrs. Helmsley’s executors (See In re Judicial Settlement of the Final Account of Proceedings of Panzirer, 2019 N.Y. Misc. Lexis 4512).  Ironically, the focus of the court’s attention was the matter of determining reasonable compensation for the fiduciaries.

Mrs. Helmsley’s will stated that her executors were not to receive statutory commissions.  Instead, her will stated:

“Any one or more executors…may render services to the Estate…as an officer, manager or employee of the Estate…, or in any other capacity, notwithstanding the fact that they may appoint themselves to serve in such capacities, and they shall be entitled to receive reasonable compensation for such services.  No such person shall be required to furnish any bond in connection with such employment.”

The executors commenced a proceeding to be paid and filed their account.  The executors asserted that the estate was mammoth and highly complex and that they were responsible for enormous risk and potentially exposed to personal liability.  Thus, they sought $100 million ($25 million each).  This was based on well settled law in New York, concerning established factors on which reasonable compensation is to be determined (See In re Estate of Freeman, 34 N.Y.2d 1, 311 N.E.2d 480, 355 N.Y.S.2d 336 [1974]; In re Potts’ Estate, 213 A.D. 59, 209 N.Y.S. 655 [4th Dept 1925], affd 241 NY 593, 150 N.E. 568 [1925]). 

The Attorney General objected.  The Attorney General did not allege impropriety, but instead claimed that the amount sought was not “reasonable compensation.” 

The argument made was that a proposed methodology akin to quantum meruit should apply.  Only time spent should be considered, rather than the long standing law favoring multi factor analysis.  According to the Attorney General, her theoretical time and rate based formula should determine the result.

In a well reasoned and thoughtful determination the Surrogate crushed the opposition of the Attorney General, rejecting it entirely, as “misguided at best” and “simply wrong.”  The Attorney General argued that the compensation “should be based on a simple arithmetic formula which considers only the reasonable amount of time spent multiplied by an appropriate hourly rate.”  Incredibly, the Attorney General further argued that the court should appoint an expert to advise on the reasonable value of each executor’s contribution to the estate, based upon services actually rendered and based on the individual knowledge of and skills of each.

The position taken by the Attorney General was baseless and incredibly wrong.  The determination of the court reflects a displeasure with the arguments lacking any legal support.  The court stated that the Attorney General herself, self promulgated certain “guidelines” that the court found to simply be “unworkable”, and “which would foist an unwieldly time consuming and costly process onto the parties and the estate.”  Further, rejecting the notion of appointment of an expert, the court found that would involve the retention of additional professionals to help the expert, necessitate more discovery, and possibly a hearing – all at the additional expense of the estate.  Finally, the court reminded the Attorney General that the Surrogate is uniquely qualified to determine fiduciary compensation based upon the reasonable compensation standard.  The court does that routinely in these cases.  The Legislature conferred that authority to the court (see SCPA 1412(7) re preliminary executors, 2312 re corporate trustees, and 2110 re attorneys).

Despite the efforts of the Attorney General, Leona Helmsley’s fiduciaries will be fairly compensated after all.

Preparing for the SCPA 1404 Exam: Case Study

Prior to filing objections to the validity of a decedent’s will, we conduct a thorough investigation into the facts of the case.  This requires us to examine the estate case file, the fiduciary’s records, and the decedent’s personal papers and communications.  We review the drafting attorney’s work product, criticize it, and try to tear it apart.  At the end of the day, our goal is to provide our clients with answers and advice about whether to file objections.

            In one particular case, we were confronted with a situation where the decedent disinherited his family members and left the bulk of his estate to someone he had met on the internet and knew for a very short period of time.  Sadly, the decedent ended up committing suicide shortly after. 

            We conducted a very thorough investigation into the facts of this case to prepare for the 1404 exam.  We first served an extensive document demand on the estate.  We requested items such as the estate’s case file and the decedent’s medical records, financial information, and written communications.  As in every case, we were particularly interested in communications between and among the decedent, the drafting attorney, the fiduciary, and the beneficiaries.

            We also served subpoenas on third party entities to obtain records, including the decedent’s phone records, emails, internet dating messages, and social media communications.  We were also able to obtain the case file of the police investigation into the decedent’s suicide.

            In this case, we went a step further than we normally do.  We hired a computer forensic examiner to examine the decedent’s computer.  As a result, we were able to view snapshots of emails and messages, as well as numerous word documents, PDFs and photographs that were located on the computer.  We were also able to view a list of the internet sites the decedent visited, the internet searches he conducted, and the places he may have driven based the addresses he typed into Google maps.

            By the time we got to the 1404 exam, we had a wealth of information to use for cross examination.

Estate Planning for Millennials.

Part of a series involving practical solutions and tips for millennials to plan their Estates, as well as the consequences of failing to do the same.

Part One: Who gets the dog?

“Whatever one may think of treating our dogs like people- whether it is called ‘humanification,’ ‘personhood,’ or some other means of endowing dogs with humanlike qualities- it is impossible to deny the place they have in our hearts, minds and imaginations. From Odysseus’ ever-faithful dog Argo in Homer’s The Odyssey, to the All-American [C]ollie Lassie, to the Jetsons’ futuristic canine Astro, to Dorothy’s little dog Toto too, they are beloved figures in literature, movies and television. And in real life, where would we be without St. Benards and their casks of brandy in the Alps, Pavlov’s conditioned-response subjects, Balto the hero sled-dog racing to the rescue in the Artic, or, of course the [Obama’s] daughters’ [Portuguese Water Dog, Bo]?”[1]

As I write, my little dog, Princess, naps quietly at my feet. No doubt she is dreaming of chasing squirrels and eating treats. My love for her is immeasurable and I frequently refer to her as my baby. I am in my thirties, unmarried, and she is my constant companion. This dynamic is not uncommon for many millennials, particularly those of us who, through circumstance, or deliberate choice, have delayed or simply decided not to marry or have children. Indeed, millennials now make up the largest segment of pet owners in the country, with 7 out of every 10 of us owning a pet and 67% of those millennial pet owners, referring to the pet as part of the family.[2]

Courts in New York frequently deal with pet custody issues in divorce or family law cases. See Hennet v. Alan, 43 Misc 3d 542 (Sup Ct, Albany County 2014) (deviating from common law belief that pets are merely personal property, but rather a “special category of property,” such that a release agreement executed by defendant as to his rights in personal property did not relinquish his right to custody of the family dog); Travis v. Murray, 42 Misc 3d 447 (Sup Ct, NY County 2013) (where court declined to apply “best interest” standard in pet custody case but instead applied a “best for all” standard). But what about if you die without a will? What happens to your fur baby? For a single person this could mean your closest living relative, typically a parent or parents, will get the pet despite the existence of a long-term partner who you would prefer your pet to live with.

NY EPTL § 4-1.1 provides estate distribution rules when a person dies intestate, i.e., without a valid will. Subsection (a) (4) states that if the decedent dies “with one of both parents [then living], and no spouse and no issue, the whole to the surviving parent or parents.” Traditionally, New York courts have held that animals are personal property-i.e., property, exclusive of real estate, that you own; analogous to a piece of furniture or a vehicle. See Mullaly v. People, 86 NY 365 (1881); Schrage v. Hatzlacha Cab Corp., 13 AD3d 150 (1st Dept 2004); Rowan v. Sussdorff, 147 App Div 673 (2nd Dept 1911); Fowler v. Town of Ticonderoga, 131 AD2d 919 (3rd Dept 1987); ATM One, LLC v. Albano, 2001 NY Slip Op 50103 (U) (Nassau Dist Ct 2001) . What that means is that if you die without a will and you are unmarried, your beloved dog, cat, lizard, turtle, bird, or the like, just like your 2012 Honda, may be going directly to your mom or dad as part of your residuary estate. Even if your partner objects, the pet is still likely to end up with your relative.

“[In] non-matrimonial actions regarding ownership and possession of dogs [that] have generally come before New York Courts … it is the property rights of the litigants, rather than their respective abilities to care for the dog or their emotional ties to it, that are ultimately determinative.”[3]

Many people are reluctant to plan for their own deaths, it’s not a fun topic to think about. Especially as a young person. But think about what would happen to your pet if you died tomorrow without any direction as to how you want your pet cared for. Would your mom even know the name of the vet or what medications the dog needs to treat her elevated liver enzymes? Would your dad honor the cat’s bedtime routine of brushing her fur while listening to 90s alternative rock? No doubt your partner would. You share your life with this person. So how can you best ensure that your pet is cared for in the same manner as you would care for him or her in the event of your death or incapacity?

New York State allows people to provide for their pets in their wills under so called “Honorary Trusts.” See EPTL § 7-8.1. This trust is a relatively new concept in our legal history.[4] Under traditional common law, these trusts were invalid because a valid trust needed an identifiable beneficiary, and the beneficiary needed to be a person or corporation.[5] Why? Because only a person or corporation has standing to enforce their rights in the trust.[6] However, with the passage of time and the increasingly “humanization” of our pets, New Yorkers, as well as people nationwide, can now create these pet trusts.[7]

Pet owners in New York can now create a trust document and deposit funds to be held in trust for the care of their pet together with directions, ranging from general to exceedingly precise, as to how the funds are to be invested and distributed.[8] In addition, the settlor can identify a specific trustee to administer the trust, conditions for the termination of the trust as well as name remainder beneficiaries (i.e., those who get any remaining income and/or principal of trust assets upon its termination).[9]

In divorce and family law cases, such as Hennet and Travis, a recent trend has emerged. The court will not treat the distribution of pets in a divorce in the same manner as the distribution of personal property. The courts have recognized that pets, although traditionally designated as personal property, are special. When determining custody of dogs and cats the courts will now use a “best for all concerned” standard, applying such factors as how the pet was acquired, how the pet was cared for and the actual arrangement between the parties for spending time with the pet after the parties split up.[10]

Case law is silent as to whether this standard would be applied to determine pet custody between your partner and your parents in the event you die intestate without specific arrangements to care for your furry companion. Your death or incapacity should not be used as a lesson to the future lawyers of America about the harmful consequences of failing to provide for your pet. That’s why it is extremely important to work with a reputable and knowledgeable estate planner today to get more information on preparing a will with a valid honorary trust.

Contribution by Elizabeth A. Weikel, J.D. Ms. Weikel recently passed the Uniform Bar Examination and is awaiting admission to the Appellate Division, Third Department.


[1] Travis v. Murray, 42 Misc 3d 447, 451 [Sup Ct, NY County 2013].

[2] Carley Lintz, How Millennials Spend on Their Pets, PET BUSINESS available at http://www.petbusiness.com/How-Millennials-Spend-on-Their-Pets/ [May 29, 2018].

[3] Travis, 42 Misc 3d at 452-453.

[4] For an excellent discussion of the history, evolution and modern view on Testamentary Trusts, the reader is referred to Andrew B.F. Carnabuci, Note, Avoiding the Fate of Argos: The Duty of Pet Trust Protectors in Connecticut 31 QUINNIPIAC PROB. L. J., 281-334 [2018] available at: https://www.quinnipiaclawjournals.com/content/dam/qu/documents/sol/law-journals1/probate-law/volume-31/consolidated-pdfs/quinnipiac-probate-law-journal-volume-31-issue-3.pdf.

[5] See Jennifer A. Taylor, Note, A ‘Pet’ Project for State Legislatures: The Movement Toward Enforceable Pet Trusts in the Twenty-First Century, 13 QUINNIPIAC PROB L. J. 419, 420-421 [1999].

[6] See id.

[7] See Jim D. Sarlis, Pet Trusts: An Important Planning Tool, New York State Bar Association [summer 2018] available at  https://www.nysba.org/Journal/2018/Aug/Pet_Trusts__An_Important_Planning_Tool/  [last accessed Oct. 22, 2019].

[8] See id.

[9] See id.

[10] See Travis, 42 Misc 3d at 460.

Business Succession Agreements

It is important for businesses to plan ahead.  It is especially true to plan for those events that are foreseeable.  Whether we want to admit it or not, there will come a time when we will no longer be able to continue working.  It is also true of business owners. But what happens to the business when the founder or key member of the company retires, has a serious illness or dies?  That is where the business succession agreement comes into play.

A business succession agreement can address a multitude of issues that may arise when there is a change in the business’s management.  Among other things, it can specify what the roles and responsibilities of the new controlling members will be and under what circumstances the succession plan will be implemented. 

It can be especially difficult when these events involve family businesses.  If not properly addressed in a succession agreement, litigation between family members may arise or the family business may not survive.  For example, in Crabapple Corp v Elberg (153 AD3d 434 [1st Dept 2017]), siblings became embroiled in litigation over who would become the managing member of the family’s business after the death of their father. There was no succession agreement regarding the management of the LLC in the event of the death of their father, the majority member. 

Ruben Elberg, the son of Jacob Elberg, asserted that he was the sole managing member of the LLC.  His sister, Tamara, as co-executor of their father’s estate, asserted that their father was the sole owner of the LLC and that she was the LLC’s co-manager by virtue of her status as the co-executor, along with Ruben.  The record demonstrated that Ruben was a minority member and not a managing member.   Pursuant to Limited Liability Company Law § 608, the executor of a deceased member may exercise all of the member’s rights for the purpose of settling his or her estate.  Therefore, the Court held that their father’s controlling interest in the LLC passed to his estate upon his death, and Ruben and Tamara, as co-executors of the estate, both had authority as co-managers of the LLC.

Even where a succession agreement exists, if not carefully drafted, litigation may still occur.  In Shyer v Shyer (2019 NY Misc LEXIS 4022 [Sup Ct, New York Co, July 18, 2019]), after the death of Robert, one of the four siblings who owned and managed Zyloware Corporation, the company filed a third-party complaint against his widow, the preliminary executrix of his estate,  in her individual capacity, for among other things, wrongful interference with a contract.

In Shyer, the Shareholders Agreement and Master Executive Employment Agreement the siblings entered into were to formalize the succession of leadership in the company.  Pursuant to the Shareholders Agreement, the company informed Robert’s estate that it intended to purchase his remaining shares along with the price it was willing to pay for those shares.  Robert’s widow, on behalf of the estate, rejected the company’s terms.  She claimed that the company’s offer breached the Shareholder Agreement.  The company claimed the estate’s actions breached the agreement as it “ran contrary to the Shareholders Agreement.

The company alleged that the widow, in her individual capacity, improperly interfered with the Shareholders Agreement by inducing the estate to breach the shareholders agreement by failing and refusing to deliver the shares to the company no later than the Closing.  The company alleged that the widow procured the estate’s breach by forcing and directing the estate to act contrary to its contractual obligations.  The company alleged that she, as preliminary executrix, caused the estate to breach the agreements. 

The company argued that the widow was implicated in her role as preliminary executrix of the estate since the estate could act only at her behest as she was the “sole executor” of the estate.  The company claimed that the estate’s actions in allegedly breaching the shareholders agreement could not be “decoupled” from the widow’s ordering the estate to do so.

The court however reasoned that the claim that the widow interfered with the Shareholders Agreement was tantamount to a claim that she should be held personally liable for the estate breaching the Shareholders Agreement.  It held that the widow’s actions did not describe the procurement of a breach, but the breach itself.

Under New York Estates Powers and Trusts Law § 11-4.7(b), a personal representative is individually liable for obligations arising from ownership or control of the estate or for torts committed in the course of administration of the estate only if she failed to exercise reasonable care, diligence and prudence.

The court held that the company’s claim threatened to circumvent the statutory standard for imposing personal liability on estate administrators.  The company’s allegations against the widow stemmed from her “control of the estate or for torts committed in the course of administration of the estate.”  The company did not allege that the widow “failed to exercise reasonable care, diligence, [or] prudence.”  Although the court dismissed the company’s claim against the widow in her individual capacity, it did go on to say that the company could still sue the estate for breach of contract.

Planning for succession in a business, including a closely held family business, can help ensure the continuity of the management and operation of the business long after the founder or majority manager is gone.

Contribution by Jacque K. Vincent, J.D.

Does the AIP have to cooperate during an Article 81 guardianship proceeding?

Can the alleged incapacitated person (AIP) refuse to comply with information requests from the court evaluator or the other parties during a guardianship proceeding? 

This issue arose in Matter of Aida C. 44 AD3d 110 (4th Dept 2007), where the AIP asserted that her liberty interest was at stake and she therefore could not be compelled to speak to the Court Evaluator without violating her constitutional rights against self-incrimination.  The Fourth Department disagreed, concluding that the AIP’s constitutional rights against self-incrimination were inapplicable in the guardianship proceeding.  The court reasoned that the case was civil (rather than criminal), and that any confinement would be for the purpose of care and treatment rather than punishment.

The Fourth Department nevertheless held in Matter of Aida C. that the trial court lacked the power to compel the AIP to meet with the court evaluator, reasoning that Mental Hygiene Law Article 81 did not impose any such affirmative obligation on the AIP.  The Fourth Department further held that the trial court erroneously sought to punish the AIP for her failure to cooperate with the court evaluator, concluding that the AIP was not a “party” to the guardianship case so as to permit civil contempt against the AIP under Judiciary Law § 753 and that the petitioners failed to establish that they had sustained any redressable injury for which to punish the AIP.

Similarly, In Matter of Parker, 162 Misc2d 733 (Sup Ct, Onondaga County 1994), the petitioner objected to the dismissal of the petition as defective.  During oral argument, petitioner’s counsel asserted that the AIP had refused to divulge his financial resources.  In response to this argument, the court concluded in its decision that “it is certainly within [the AIP’s] rights to maintain the confidentiality of such personal matters [and that] his refusal in this area may be some indication of awareness as opposed to incapacity” (id. at 735).

Recently, in Matter of Elizabeth TT. (Suzanne YY.–Elizabeth ZZ.), ___AD3d___, 2019 NY Slip Op 06667 [2019]), the Third Department concluded that the AIP could not be forced to undergo a neuropsychological evaluation or compelled to testify against her own interests, concluding that there was no duty for an AIP to abide by a court evaluator’s recommendation that he or she undergo a neuropsychological evaluation to assess his or her present cognitive condition.

The courts have also struggled with deciding whether an AIP may be compelled to testify at the hearing.  In Matter of Heckl, 66 AD3d 1344 (2009), the Fourth Department held that the trial court may compel the AIP to testify at the guardianship hearing.  However, this conclusion has been rejected by several other courts.  In Matter of Elizabeth TT., for example, the Third Department concluded that there was no statutory requirement in Mental Hygiene Law article 81 that compels the AIP to testify at a hearing and that a petitioner must rely on other evidence to meet his or her burden. 

Similarly, in Matter of A.G., 6 Misc 3d 447 (Sup Ct, Broome County 2004), the court agreed that an AIP cannot be forced to testify in an article 81 proceeding.  The court relied upon federal and state constitutional grounds and the statutory right against self-incrimination incorporated in CPLR 4501, among other things.

In addition, in Matter of G.P., 37 Misc 3d 418 (Sup Ct, Dutchess County 2012), the court strongly criticized the court’s reasoning in Matter of Heckl and concluded that AIP could not be compelled to testify as a witness.  

Disinheritance Problem Solved – Part 2

Solution

New York law permits a person making her estate plan to cut a pre probate deal with the person who will be cut out.  More specifically, this includes before the testator’s or parent’s death or lack of capacity.  This means that the person to be cut out can be dealt with directly by the testator or parent during the testator’s or parent’s life and on the testator’s own terms.  There are many benefits to this.  First, the person being cut out is required to deal directly with the testator or parent during the testator’s life – rather than fighting with siblings after the testator has died.  The strategy can reduce family strife after the decedent has died.  The commonly asked “why question” in connection with the testator’s estate plan, is answered during the testator’s life, i.e. by the parent, rather than in the court room in the context of a 1404 hearing.  There is immediacy.  In fact, the person cut out of the estate receives his funds (the carrot absent the string) first and before all those sharing in the estate.  There is certainty.  Attorney’s fees and the substantial costs of litigation are curtailed or eliminated. 

Mrs. Cook and Her Niece

Here is how the rule evolved from the thoughtful estate planning efforts of a widow.  In the early 1920s the Court of Appeals decided In re Cook’s Will 244 NY 63, a case which arose in Washington County.  Mrs. Cook was an elderly widow of wealth and decided to make a will disposing of her property to charities.  Her only heirs and next of kin were a sister, a niece and two nephews.  They all were all adults and not close with her.  In preparing for the disposition of her property, she wrote to her niece as follows:

Dear Katherine:

In making my will, it was my intention to bequeath you something.  After consideration, it occurred to me that it will give me greater pleasure to give it now, and you to receive it now, and in doing so I am asking you if you would be willing to sign and receipt an agreement, agreeing that in consideration of this gift now, that you agree that you will not at any time contest or join with others in contesting my will.  The same conditions apply to your (2) brothers, who must also sign such an agreement. *** Kindly let me have full names and addresses of your brothers.

Her niece’s reply indicated that she was glad to receive the gift from her Aunt as her brothers and herself were trying to secure a home for their respective families.  Having failed to state, however, anything about contesting the will, another letter followed on February 8, 1924, written by G.E Knowlton, on behalf of Mrs. Cook, where he stated:

Dear Mrs. Russell:

Mrs. Robert H. Cook has handed me your letter of January 21st in which you state that you would appreciate a gift from her, but you do not say that you will refrain from contesting her will.

May I ask you to be good enough to advise Mrs. Cook as to your attitude in this matter.

A few days afterwards her niece replied:

Dear Aunt Julia:

I am sorry that I omitted to state in my letter that I would agree to the agreements mentioned in your letter. I both appreciate and agree to those conditions.

Thereafter, her niece signed and sent to Mrs. Cook the following agreement:

Dated March 5, 1924.

Received from: Francis Julia Cook

….Dollars

As a gift from her and in consideration of this gift, I agree that I will not at any time contest or join with others in contesting her Will.

The court was confronted with the question:  Having received the advances or gifts under the circumstances, can these heirs and next of kin of Mrs. Cook now contest her will? 

Despite these writings they tried to do so. They alleged that Mrs. Cook was incompetent, and that her will was procured by fraud and undue influence.  In upholding the validity of the agreements not to contest Mrs. Cook’s will, the court held that agreements not to contest another’s will are not void as against public policy.  Further, the court stated that agreements made between heirs and next of kin after the death of the decedent have always been found valid when made in good faith.  Agreements made before the death of the testator regarding the future disposition to be made of the estate are akin to those implied in the taking of a legacy bequeathed upon the condition stated in the will that no contest shall be made.

The rule in New York, is that where a distributee in consideration of a gift from the family member (testator/decedent) during her lifetime, has agreed not to challenge the decedent’s will, he shall not file objections.  The central element of the rule is that by contracting with the decedent for the present day benefit, the distributee divests himself of legal standing to challenge the will.

The effective solution is an arrangement structured as a deal or a contract.  The deal is that the distributee receives present day benefit (payment) in exchange for the agreement not to the challenge the parent’s will on death.  The problem person or child is required to contract away, relinquish and waive the right to challenge the decedent’s will.  The approach is well founded in New York law such that it must be considered as an alternative to years of potential litigation between the disinherited distributee and the estate after the testator has died.

There are some important steps to be followed to avoid litigation.  The proper approach is significant because the ultimate arbiter of the validity of the agreement will be the Surrogate Judge after the testator has died and the distributee attempts to get out of the agreement.  It is recommended that experienced and strong lawyers be involved in the process.  To this end, it is important to have the distributee represented by his own lawyers.  He should not be represented by the decedent’s lawyers.  If money is an issue, the gift can include payment of the distributee’s legal fees under certain circumstances.  The process should be considered as one involving the negotiation of a contract or in the planning context, similar to negotiation of a waiver of a spousal right of election.

As was the case for Mrs. Cook, when done correctly a pre mortum and pre probate gift to a problem person or child can be efficacious and highly successful strategy to avoid estate litigation.

Disinheritance Problem- Solved

Intentions to disinherit in connection with the making of wills are not uncommon.  Disinheritance circumstances give rise to acrimony and much litigation.  In many cases, children and family members often find themselves dealing with these circumstances.

Clients planning their estates often are confounded with how to deal with a formed intention to cut someone out of sharing in the estate.  Putting feelings and emotions aside, it is a matter of carrying out the decedent’s intentions, money and fairness. 

Common Ineffective Solution Attempt

In estate cases in New York, many challenged estate plans contain an in terrorem clause with an additional provision stating that the particular person is cut out or left nothing.  It is not uncommon for a will to make specific reference to the fact that the decedent specifically considered and deliberately intended to leave the person out of the plan.  In some instances, no reasons are stated.  In other cases, no mention of the person is made. 

There are other cases where the will expressly states that the person cut out will not benefit from the will and advances the intended double whammy threat that if the person cut out challenges the will, that person is automatically cut out.  The client drawing the will feels satisfied.

This is a failing strategy and plan.  Coupling the in terrorem clause with a provision that the ditributee, problem person or child receives nothing sets up a guaranteed challenge to the will.   The double whammy threat is empty, meaningless and ineffectual.  In fact, in practice the attempted solution often invites litigation and has no estate litigation deterrent effect whatsoever.

Better Solution Attempt

Quite simply and more properly the in terrorem clause should actually be coupled with a sufficient and enticing incentive.  Think of the cart driver dangling the carrot in front of the mule on the stick extended in front of the animal’s mouth.  For illustration, include in the will an in terrorem clause with a specific bequest of say $20,000 for the problem person.  The incentive of a specific bequest in the plan coupled with the potential for enforcement of the in terrorem clause creates significant risk of forfeiture of the bequeathed sum.  The particular sum in each case must be thoughtfully determined, and often it is not or circumstances change.

This solution is entirely acceptable but in the context of litigation, can be a failure. The carrot and stick approach still subjects the plan to risk and chance – up in the air for future lawsuits.  There is a better approach, which will be discussed in the next blog post.

Defending Against A Guardianship Petition under MHL Article 81

In a proceeding under Mental Hygiene Law Article 81, the alleged incapacitated person (“AIP”) is served with a petition alleging that she is incapacitated and requires a guardian. If the AIP disputes the allegations and objects to the guardianship, she should exercise her right to engage legal counsel to defend (see MHL § 81.10).

At the start of the case, the AIP’s counsel should immediately review the petition to determine whether it is legally sufficient. To state a claim, the petitioner is required to provide specific factual allegations that the AIP (1) is unable to provide for her personal needs or unable to manage her property and financial affairs, and (2) cannot adequately understand and appreciate the nature and consequences of such inability (see MHL §§ 81.02; 81.08).

If the allegations are conclusory or contradicted by documentary evidence, counsel should consider making a motion to dismiss pursuant to CPLR 3211 (see SRW Assocs. v Bellport Beach Prop. Owners, 129 AD2d 328, 331 [2d Dept 1987]; Matter of Parker, 162 Misc 2d 733, 734-735 [Sup Ct, Onan Co 1994] [holding that a petition that does not detail the specific functional limitations of the AIP, as required by MHL § 81.08, deprives the AIP of his right to due process as he is “left in the dark as to his purported incapacities thereby effectively precluding him from mounting any meaningful defense thereto”]; see also Matter of K.B. [D.B.], 50 Misc 3d 1219[A], *1 [Sup Ct, Dutchess County 2016]; Matter of Teitelbaum, 10 Misc 3d 659, 660 [Sup Ct, Kings County 2005]).

In Matter of K.B. [D.B.], for example, the court dismissed an Article 81 petition alleging that the AIP:

“does not have the physical or mental ability to manage her role in the divorce action and property, and having suffered from mental illness earlier in her life and cannot understand the nature and consequences of such inability. The AIP does not have the physical or mental ability to obtain, administer, protect and dispose of real or personal property, intangible property, benefits or income. In addition, she does not have the ability to budget or allocate resources for herself or her family, nor does she have the ability to direct others to do the same on her behalf. She has no knowledge of her existing debts, her bank account balances, income or her resources” (Matter of K.B. [D.B.], 50 Misc. 3d at *1).

The court concluded that the petition was insufficient to state a claim because it lacked meaningful detail and “specific factual allegations” of incapacity, as required by MHL § 81.08(a)(4) and (5) (id.). Similarly, in Matter of Parker the court dismissed the petition where the petitioner provided a physician’s note stating that the AIP did not understand his medical condition and that his ability to understand his affairs was impaired. The Court held that this conclusory opinion was insufficient. There were no references to any medical test results or any specific evaluations of the AIP’s mental or physical condition or functional level (see 162 Misc2d at 734).