Can a Felon Serve As A Fiduciary?

SCPA § 707 sets forth a list of ineligibles – those persons automatically disqualified from serving as a fiduciary in Surrogate’s Court. The statute is clear: felons cannot serve. It does not matter when the felony occurred, the age of the offender at the time, or the type of crime committed. All felons have been branded as unsuitable to manage the affairs of others in Surrogate’s Court.

Notwithstanding the prohibition, felons have argued that exceptions exist and that a certificate of relief from disabilities renders them eligible. This is based on language in the Correction Law providing that a certificate may relieve a felon from “any forfeiture or disability … automatically imposed by law by reason of [the] conviction” (Correction Law § 701 [1]). This statute generally trumps “any other provision of law” to prevent the “automatic forfeiture of any license…, permit, employment, or franchise, including the right to register for or vote at an election, or automatic forfeiture of any other right or privilege” (Correction Law § 701 [1]).

Despite this language, the Surrogate in Matter of McNair was not convinced. There, the court concluded that a certificate does not alter the mandate of SCPA 707. According to the court, the Correction Law “merely affords [a felon] the privilege of obtaining gainful employment” and that a felon “remains ineligible to hold public office, a position for which society’s trust is rightfully expected” (Matter of McNair, 16 Misc 3d 1102[A], 2007 NY Slip Op 51223[U] [Sur Ct, Dutchess County 2007]).

The conclusion reached in the McNair case appears to be a minority view. In Matter of Pullman, for example, the Second Department held that the certificate indeed removes the automatic disqualification (89 AD2d 608 [1982]; Matter of Bashwinger, 92 Misc 2d 716 [Sur Ct, Albany County 1978]; see also Matter of Smith, 14 Misc 3d 1232[A] [Sur Ct, Bronx County 2007]).

Even these cases, however, recognize that a court may still deny the appointment of a felon in its discretion, and that a certificate does not preclude the court from denying the appointment under SCPA 707 (1) (e), which renders persons ineligible for other reasons, including dishonesty (see Matter of Pullman, 89 AD2d at 608; see also Correction Law § 701 [3] [permitting any judicial authority from relying upon the conviction as the basis for the exercise of its discretionary power to suspend, revoke, refuse to issue or refuse to renew any license, permit or other authority or privilege]).

The Surrogate in the McNair case, for example, relied on SCPA 707 (1) (e) as an alternative basis for its decision. There, the felon was a former attorney who had been convicted of grand larceny in the third degree and disbarred. The court found persuasive that at least two prior estates had allegedly suffered financial losses as a result of the felon’s dishonesty.
Similarly, in the Pullman case, the court concluded that the felon was ineligible as a “dishonest” person despite the certificate. He was indebted to the estate, had exercised undue influence over the decedent and commingled trust funds in another case, and had no less than 13 unsatisfied judgments against him.

So, to answer the question posed above – yes, convicted felons may serve as fiduciaries, but only the honest ones.

How To Prepare For Your 1404 Exam- Drafting Attorneys

LOCATE THE ESTATE PLANNING FILE

Many experienced estate planning attorneys assert that estate planning files of law firms should not be purged or destroyed. They often agree that destruction or purging of planning files is only allowable after the estate is closed. Additional factors to consider are expiration of the applicable statute of limitations for potential legal malpractice claims and the law firm’s policy on document and client file retention.
Minimally, the request for a 1404 examination requires that the attorney draftsperson should have a litigation hold immediately in place. A prudent practice is that on learning of the decedent’s death the hold should be put in place. The hold must include all electronically stored information. This will protect the attorney draftsperson and the firm from an embarrassing or harmful circumstance where the file becomes lost or destroyed. It is also an easy way to bolster credibility.

Notes which pertain to the client’s instructions given to the attorney draftsperson are critical. All prior drafts of the instruments prior to execution should be located. The correspondence section of the file and the billing records should be located as well.

ASCERTAIN THE WHEREABOUTS AND STATUS OF SUBSCRIBING WITNESSES

The court will rely on the proponent and counsel to produce the witnesses. Cooperation is key. Most non-attorney witnesses naturally will look to avoid coming to court. Even more so, they seek to do little to nothing in preparation for their testimony. It is unwise to leave the arrangements to the last minute. In some instances, a witness cannot be found. We have had experience with cases involving deceased supervising and drafting attorneys. The details must be considered before coming to court. No judge likes to be surprised or confronted with a circumstance that causes delay.
Minimally, the witnesses should be provided with a copy of the will, together with any affidavit that the witnesses signed as subscribing witnesses.

DO YOUR HOMEWORK PRIOR TO TESTIFYING

In order to fulfill the obligation to the testator, the supervising attorney has a duty to prepare for the examination. The obligation of the attorney that drew the will continues through the examination. The examination, particularly the attorney’s testimony is an opportunity to prove the client’s will by showcasing the great care and attention that was provided to the decedent’s legal work.

The supervising attorney and the subscribing witnesses must read the will and any self-proving affidavit in advance. The contents should be well known and understood by the attorney and ideally the witnesses before taking the stand. Incredibly, attorneys continue to testify that they are unfamiliar with the contents of the will, cannot recollect the plan or worse, have been too busy to re-read the will and the affidavit.

Many highly skilled estate planning attorneys find their work reduced to confusing and broken-down ruble where they have not prepared. Many attorneys fail to read their own file before taking the stand. They are unprepared to address or explain contradictory notes or case sensitive issues. Some fail to produce the entire file when required to do so. A rambling effort to explain away non-compliance does not bolster confidence in the will execution. These circumstances of muddled testimony do not escape the court’s attention.

False confidence causing a lack of preparation often leads to a highly adversarial examination with the drafting attorney coming across to the court as highly defensive, perhaps arrogant and in some instances lacking credibility. Adept counsel for objectants will immediately sense the defensiveness and exploit it heavily in both the exam and in further proceedings with the court and perhaps a jury.

Amazingly, attorneys continue to testify concerning the subject of due execution without regard for what the statute actually says. While the statute itself is somewhat forgiving in terms of the sequence of events in the signing, it does prescribe the elements which are required to make a valid will.

An effort should be made to refresh recollections. This can be accomplished in several manners. If the preparation is undertaken with a degree of seriousness and professionalism, the entire file and the notes should help greatly. There may be other law firm records, including time and billing entries that can greatly aid recollections. Colleagues are often able to recall some helpful details about particular clients as it is often the case that clients have contact with more than one person in a firm.

Understanding Discovery in Probate Proceedings: Putting the Pieces Together

As explained previously, you need to be familiar with the rules of procedure to successfully play the litigation game in Surrogate’s Court. The rules can be much more complex than those applicable in the Supreme Court.

As a prime example of this, consider the rules governing discovery in Surrogate’s Court. To understand them, you need to first identify the type of proceeding at issue and then determine if the Surrogate’s Court Procedure Act (“SCPA”) contains any specific rules of its own.

SCPA Sections 1404 and 1410, for example, contain specific rules that authorize pre-objection discovery in probate proceedings. They permit parties to depose certain witnesses prior to the filing of objections, generally the attesting witnesses and the drafting attorney. They also permit the party conducting the examination to obtain documents from parties and third parties of all relevant matters which may be the basis of objections to the probate petition. Section 1404 also requires the estate to pay for the cost of these examinations if they occur prior to objections.

If objections are filed, the parties may seek to engage in post-objection discovery under Article 31 of the Civil Practice Law and Rules (“CPLR”), as applicable to probate proceedings by SPCA 102. SCPA 1404, however, limits a parties’ right to re-examine the same witnesses examined during pre-objection discovery.

Parties must also be familiar with Rule 207.27 of the uniform rules for the Surrogate’s Court. This rule is referred to as the so-called “3-2 rule”. Absent special circumstances, the 3-2 rule limits the parties’ rights to obtain discovery in probate proceedings to three years before and two years after the decedent executed the will (or up until the decedent’s death, if sooner).

To make things even more confusing, you will need to review the case law interpreting the 3-2 rule. By its plain language, the rule appears to be limited to only post-objection depositions. Section 1404 also expressly provides the party conducting a pre-objection examination with “all rights granted under [CPLR] article 31 … with respect to document discovery.” Nevertheless, the rule is drafted poorly. Given the confusion, a number of cases have decided to apply this 3-2 rule uniformly to all discovery conducted in probate proceedings, including pre-objection discovery. Parties must therefore familiarize themselves with the case law on this issue and ascertain whether the Surrogate in their case has rendered any prior decisions interpreting the rule. Parties must also review the case law to ascertain whether special circumstances exist to expand the scope of discovery.

How the Safe Act Impacts the Transfer of Firearms In an Estate

Inheriting a firearm can be a complicated process. A fiduciary of an estate cannot just give the firearm directly to an heir without the risk for potential criminal liability. Unlike other personal property, passing firearms on to a loved one after the death of the owner has its own unique rules and can be a challenge to the estate’s fiduciary if not specifically addressed during the estate planning stage.

New York’s Secure Ammunition and Firearms Enforcement Act, better known as the SAFE Act, can create the risk of criminal liability for executors and administrators as well as for the estate’s heirs where the parties are unaware of the rules.

Pursuant to the SAFE Act, a fiduciary must lawfully dispose of the firearm within fifteen days after the death of the owner. If the fiduciary is unable to transfer the firearm to the heir within fifteen days, the firearm must be surrendered to a law enforcement agency. The law enforcement agency will hold the firearm until the heir is licensed or otherwise permitted to take possession. However, if the agency does not receive a request to deliver the firearm within one year of the delivery, the firearm will be deemed a nuisance and destroyed (NY Penal Law § 400.05[6]). Fifteen days is a relatively short amount of time in which to make the transfer because a fiduciary cannot lawfully transfer or dispose of a firearm until he has been appointed by the Court.

Before the firearm can be given to the heir, the fiduciary must (1) know that the decedent legally owned the guns; (2) know that the specific beneficiary of the guns may legally own a gun and (3) adhere to proper transfer procedures. The heir receiving the decedent’s firearm must hold a valid New York State gun permit. Illegal possession of a decedent’s registered firearm without following the statutory protocol for estate transfer to an heir is a misdemeanor, specifically, criminal possession of a weapon in the fourth degree (NY Penal Law § 265.01).

In addition to a state firearm permit, a federal background check is required for a firearm to be transferred. But there is an exception to his rule when it comes to transfers between immediate family members such as spouses, domestic partners, children and step-children (General Business Law § 898).

Contributed by Jacque K. Vincent, J.D.

Do I Need to Pay a Bequest if the Beneficiary Owes the Estate Money?

A fiduciary has a legal obligation to make distributions to the beneficiaries of the estate. But what happens when a beneficiary owes the estate money? Does the law permit the fiduciary to offset the bequest with the debt? Or does the fiduciary have to first make a distribution and then sue the same beneficiary to recover the funds to pay the debt?

As a practical matter, one would assume that an offset is permitted. However, at first blush, the EPTL and SCPA do not appear to address the issue. They provide a beneficiary with the right to compel payment. But they do not expressly provide that a fiduciary may assert defenses to payment (see EPTL § 11-1.5; SCPA § 2102 [4] [“A proceeding may be commenced to require a fiduciary … to deliver a specific bequest or property to a person entitled thereto or to pay a legacy…”]). The only defense in the statute appears to be the timing of the payment: under EPTL § 11-1.5(c), a beneficiary generally must wait at least seven months from a fiduciary’s appointment before demanding payment.

The procedural rules of the SCPA and CPLR nevertheless permit a fiduciary to file an answer and assert defenses when the beneficiary commences a proceeding to compel payment. The fiduciary therefore has an opportunity to explain to the court why the legacy a or distributive share should not be paid in whole or in part (see 6 Warren’s Heaton on Surrogate’s Court Practice § 75.03 [LexisNexis 2019]).

In the answer, the fiduciary should therefore explain that the beneficiary owes the debt and assert this as a defense to payment. This is often referred to as the right to equitable retainer and lien (see Matter of Van Nostrand, 177 Misc 1, 7 [Sur Ct, Kings County 1941] [placing equitable lien upon the beneficial interest of a trustee/beneficiary who had embezzled trust property]; Matter of James, 149 Misc 135, 135-138 [Sur Ct, Kings County 1933]).

This defense is well settled under the case law and rests on sound principles of equity (see Matter of Eaton, 282 App Div 32, 34 [3d Dept 1953]). It is based on “a fundamental equitable principle of surrogate law that no beneficiary may claim any distributive rights from an estate until he has satisfied all of his obligations to it” (Matter of Van Nostrand, 177 Misc at 7; Matter of James, 149 Misc at 135-138 [Sur Ct, Kings County 1933]; Matter of Flint, 120 Misc 230, 232 [Sur Ct, Westchester County 1923], affd 206 App Div 778 [2d Dept 1923]; Matter of Foster, 15 Misc 175, 177 [Sur Ct, Orange County 1895] [holding that a debt is considered an asset of the estate in the hands of the legatee and a satisfaction of the legacy to the extent of the debt]).

Can You Admit a Lost or Destroyed Will to Probate?

An estate practitioner may be faced with a situation where the original will of the decedent cannot be found after his or her death. Don’t worry, at least not just yet.  In such a case, SCPA 1407 provides the procedure for admitting a lost or destroyed will to probate. The first hurdle is to establish that the will has not been revoked.  However, this is no easy task.

“If a will, shown once to have existed and to have been in the Decedent’s possession, cannot be found after [his or her] death, the legal presumption is that the [decedent] destroyed the will with the intention of revoking it” (Matter of Demetriou, 48 AD3d 463, 464 [2d Dept 2008]). “The burden of proof is on the will proponent to show, by facts and circumstances, that the testator did not destroy the will with the intent to revoke it; mere speculation or suspicion is insufficient” (Matter of DiSiena, 103 AD3d 1077, 1078 [3d Dept 2013]).

We had the opportunity to litigate this issue at the Appellate Division, Third Department. In the case, the record contained evidence that the decedent had disinherited one of her sons in several wills and a revocable trust, including the most recent will offered for probate. The son had left the family business and created his own competing business. The decedent therefore left her estate (including the family business) to her remaining children who had worked for the family business and contributed to its growth. The decedent also twice fought the disinherited son in court, once to preserve her rights to remove him from her will and another time to prevent him from obtaining an interest in her business.

At the Surrogate’s Court, the disinherited son sought summary judgment dismissing the probate petition. The disinherited son argued that the lost or destroyed will created a presumption of revocation and that the record evidence was insufficient to overcome the presumption.

The Surrogate’s Court ruled in favor of the disinherited son and granted summary judgment dismissing the probate petition. The Surrogate held that the proponents of the will did not overcome the presumption, relying on the strong presumption of revocation.

On appeal, we did not dispute the heavy burden imposed on a proponent of a lost will. Rather, we focused on the record evidence and argued that there was sufficient evidence to create a question of fact on the issue.

The appellate court agreed with us and reversed the summary dismissal of the case (Matter of DiSiena, 103 AD3d 1077 [3d Dept 2013]). It determined that the record evidence amounted to more than mere speculation or suspicion about the decedent’s lack of intent to revoke her will. The record, for example, contained evidence of the prior lawsuits and the several wills of the decedent disinheriting her son. Evidence also existed that the decedent had her estate attorney store her codicil for her until her death. The decedent also met with her estate attorney in her hospital room shortly before her death to discuss further estate planning. At that time, she instructed her estate attorney to create an irrevocable trust gifting her remaining interest in the family business to the identical beneficiaries named in her prior wills and revocable trust. The decedent also signed a power of attorney appointing her three children other than respondent as her agents. An unsigned copy of the irrevocable trust documents, which expressly state that respondent is not a beneficiary, was included in the record, and the estate attorney indicated that decedent died before he was able to meet with her to sign the trust documents.

While the case turned out successfully for our clients, we would not have been able to win the appeal without a sufficient record. A practitioner should be familiar with the numerous relevant factors considered by the courts on this issue and develop the record in case to avoid summary dismissal of the probate petition.

To learn more about relevant factors and case law, feel free to contact the experienced trust and estate planning attorneys at TRK Law.

The Possible Grounds to Object: Undue Influence

Undue influence provides a basis to invalidate the entire will or a specific bequest. It occurs when a wrongdoer overcomes a decedent’s free will and causes the decedent to make a will or bequest that the decedent would not otherwise have made (see Restatement 3d Property [Wills and Other Donative Transfers], § 8.3 [2003]). The influence may be forceful or alternatively subtle pressure (Matter of Edel, 182 Misc 2d 878, 885 [Surrogate’s Ct, Cattaraugus County 1999]). Look for instances of persuasion or pressure made by the wrongdoer, short of actual force, but stronger than mere advice (see 3-42 Warren’s Heaton on Surrogate’s Court Practice § 42.07 [Lexis 2017]).

To prove undue influence, a party must establish the existence of motive, opportunity, and the actual exercise of undue influence (Matter of Nofal, 35 AD3d 1132, 1134 [3d Dept 2006] [internal quotation marks omitted]). Motive is often financial. Look at the beneficiaries in the will and the dispositions made to them. Then, to establish opportunity, try to establish that the beneficiary, or another acting on the beneficiary’s behalf, had contact with the decedent or the drafting attorney and had prior knowledge about the will or bequest.

To prove the exercise of undue influence, a party may rely on direct evidence – such as testimony from a person who observed the wrongful act. However, as the only witnesses to undue influence are often the wrongdoers, parties generally must rely on circumstantial evidence to prove their case (see Matter of Kotick v Shvachko, 130 AD3d 472, 473 [1st Dept 2015]; Matter of Paigo, 53 AD3d 836, 839-840 [3d Dept 2008]).

Relevant factors to consider include: (1) the nature of the will; (2) the decedent’s family relations; (3) the decedent’s health and mind at the time of the execution of the will; (4) the decedent’s dependency upon and subjection to the control of the person charged with undue influence; (5) the opportunity and disposition of such person to wield it and his acts and declarations in doing so; and (6) the acts and declarations of such person (see Rollwagen v Rollwagen, 63 NY 504, 519-520 [1876]; 9-117 Warren’s Heaton on Surrogate’s Court Practice§ 117.02 [3] [b] [Lexis 2017]).

Additional relevant factors include the following, among others: (1) whether the primary beneficiary selected and/or was associated with the attorney draftsman; (2) whether the decedent was isolated from family and friends; (3) whether the provisions of the will were a departure from the decedent’s prior estate plan; (4) whether the decedent had knowledge of the will’s provisions and was satisfied with them; (5) whether the person(s) charged with undue influence controlled the decedent’s lifetime affairs; (6) whether the person(s) charged with undue influence benefited under the will disproportionately to other beneficiaries; (7) whether the donor received independent advice from an attorney; and (8) whether the will or will substitute was prepared in secrecy or in haste (see 9-117 Warren’s Heaton on Surrogate’s Court Practice § 117.02 [3] [b]; New York State Estate Administration § 3.06 [d] [1] [2012]; Restatement 3d Property, § 8.3, comment h; see e.g. Matter of Elmore, 42 AD2d at 240; Matter of Bach, 133 AD2d at 455).

Well in advance of the SCPA 1404 exam, you should have the client provide witness information, prior wills, and other documents and information relevant to the factors discussed above. You should also serve the preliminary executor with a demand for documents to obtain the estate file, the decedent’s papers, prior wills, and other relevant materials. Then, at the SCPA 1404 exam, you should question the drafting attorney about these documents and the circumstances and factors discussed above.

The decedent’s medical records, telephone records, emails, social media accounts, financial records and authorizations should also be requested from the preliminary executor and subpoenaed at some point, either before or after the 1404 exam. After objections are filed, the attorney should depose the beneficiaries and obtain documents from them to ascertain their involvement with the decedent.

Requesting and Preparing for the SCPA 1404 Examination in New York

There are several advantages to requesting a SCPA 1404 exam prior to filing objections. The major advantage is that the estate has to pay the costs of the exam and the stenographer fees. The exam will also provide you with the opportunity to conduct pre-objection discovery to assist in preparing objections. On the other hand, if you elect to depose a witness prior to filing objections, you generally cannot re-examine the same person again after filing objections.

If you desire a pre-objection exam, you should make this request at the first appearance and discuss a proposed schedule with the court at the same time. The schedule is generally limited to dates for pre-objection document demands and responses, the date for the exam (which will be conducted at the court), and the date for filing objections after the exam.

Prior to the exam, you should specify the witnesses you intend to examine. Such persons generally include the attesting witnesses and the person who prepared the will (see SCPA 1404 [4]).

To prepare for the exam, you should demand documents in advance, requesting the decedent’s financial records, communications, medical records, and prior wills, among other things. You should also request the case file of the drafting attorney, including billing records and any retainer agreements (see CPLR 4503 [b]; SCPA 102).

The rights to pre-objection document discovery are set forth in SCPA 1404(4), which provides that “the party conducting such examination” has “all rights granted under article 31 of the civil practice law and rules with respect to document discovery.” Generally, courts permit broad inquiry into the “three-year period prior to the date of the propounded instrument and two years thereafter, or to the date of the decedent’s death, whichever is the shorter period” (22 NYCRR 207.27).

The exam should focus on all matters relevant to the filing of objections. You should inquire about the witnesses’ involvement and relationship with the decedent, the decedent’s mental health, and the circumstances of the will’s execution, among other things.

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Game Day in Surrogate’s Court: Knowing the Rules in Estate Litigation

If litigation were a sports game, the civil procedure would be the equivalent of a playbook. It provides each side with a set of rules (plays) to use to win the game. For offensive players, it sets out the plays to start a case and obtain discovery materials to run the ball down the field and score big. For defense players, it shows how to slow down the game, stop the other side from advancing the ball, and obtain an early victory.

So, what is the playbook in Surrogate’s Court? Well, using the sports analogy, image if sports rules were created by lawyers. What would they look like? Well, there would be multiple playbooks, with different books for each stadium. On top of that, there would also be rules interpreting the rules. Now, all of this would be scattered around in numerous sources and you would have to consult them all at the same time to figure anything out. The rules would also change from time to time.

As confusing as it sounds, this is exactly how lawyers created the playbook for civil procedure. In Surrogate’s Court, we start with the SCPA. From there, you should consult with the Uniform Rules for the Surrogate’s Court and see if the judge has any specific rules of his or her own. You will also find additional rules in the CPLR that may help you with your strategy. Of course, you will also need to familiarize yourself with the EPTL for more substantive based rules.

Practice Tip: The SCPA can be quite overwhelming for the beginner. To make it easier to navigate through, I recommend using the table of contents to find the rules applicable to your issue.

Overview of the Procedure

Many litigation attorneys are afraid of Surrogate’s Court. They may not understand the SCPA or how to initiate the proceedings. They may not even know what a complaint is called in Surrogate’s Court. Don’t worry! This blog series will guide you through the process. As you will see, it is a lot easier than you think.

Any person interested in challenging a will should start with SCPA Article 14. This article sets forth the grounds for standing to contest a will (Section 1410) and specifies the procedure for filing a complaint or, as the SCPA calls it, objections (Section 1410).

Generally, the proceedings are initiated by the will proponent. Often times, the executor named in the will files a petition to admit the will to probate. The court then issues a citation on the petition.

If a person objects to probate, there are generally four standard grounds to object, including lack of capacity, lack of execution, undue influence and fraud. Each of these grounds will be discussed in more detail in later parts of this series.

The objections must be filed on or before the return day of the citation seeking to admit the will to probate. However, if you request a so-called SCPA 1404 examination (discussed later), you can file objections within 10 days after the completion of the examination.

Often times, at the initial appearance, parties request extensions of these deadlines, such as permission to file objections within 20 days of receipt of the SCPA 1404 examination. You should discuss the deadline on the record to avoid any confusion, as the failure to file timely objections can be fatal to a case.

If you request a SCPA 1404 examination, the attesting witnesses, the person who prepared the will, the nominated executors in the will and the proponents may be examined as to all relevant matters which may be the basis of objections to the probate of the propounded instrument. Generally, the court permits inquiry for a five year period, including three years prior to the will and up until two years after its purported execution.

Once objections are filed, you should discuss a proposed scheduling order with the other parties. You may want to include deadlines for paper discovery, depositions, the note of issue, and dispositive motion practice.

Bear in mind that the proponent of the will may threaten to make a motion to dismiss in response to the objections. You should be prepared to respond to these threats, familiarizing yourself with case law disfavoring dispositive motions in will contests prior to the completion of discovery.

After filing objections, the court will likely require an appearance. On the return date, you should discuss the proposed scheduling dates with the court. The parties then often proceed to discovery, settlement negotiations, summary judgment motion practice, and perhaps even a trial.