Estate Administration

Published on: April 29, 2016

Petitioners File Construction Proceeding to Determine Effect of Tax Exoneration Clause

by Stephen Bilkis

The executors have instituted this construction proceeding, prior to the filing of Federal and New York estate tax returns, to determine the effect of a tax exoneration clause, paragraph second and request a reformation or interpretation of paragraph eleventh, which creates a pre1969 residuary, multiple, split-income, charitable remainder trust so as to qualify it for a charitable deduction under U.S.Code, tit. 26, § 2055 as amended by the Tax Reform Act of 1969 (TRA).

The testator died on September 9, 1973, age 92, leaving a daughter, age 64, as his sole distributee, and a granddaughter and three great-grandsons. His will, executed on December 19, 1967 was admitted to probate and letters testamentary issued to petitioners on October 1, 1973. Paragraph second of the will provides: ‘I direct that all my funeral, administration expenses, just debts, and all estate and inheritance or succession taxes (without apportionment) be paid as soon after my death as may be practicable.’

The residuary probate estate, after deducting the pre-residuary outright and in trust bequests, but before estate taxes, is $845,580. Petitioners allege that the loss of the charitable deduction because the trust is not a charitable annuity trust under TRA would increase the estate tax by $163,000. It should be noted that prior to December 31, 1969, the estate would be entitled to a charitable deduction since the amounts payable to the charities could be readily determined. Before proceeding with the construction of paragraphs second and eleventh of the will, the court is called upon to determine a question of jurisdiction, which appears to be of first impression.

Published on: April 28, 2016

Court Discusses Residuary Clause of Will

by Stephen Bilkis

This is a proceeding to construe and reform Article III, the residuary clause, of the last will and testament of the decedent so as to enable the estate to qualify for an unlimited New York estate tax marital deduction. While an application to reform a will to enable the estate to qualify for a deduction for New York estate tax purposes and not federal may be uncommon, it is permissible.

The decedent died on July 21, 1988 survived by a spouse and three children. His will, dated December 14, 1979, was duly admitted to probate on December 19, 1988. Under Article III of the will the residuary estate, which comprises the entire estate with the exception of some personalty previously bequeathed to his wife, is divided into two trusts, Trust A and Trust B. Under Trust A, the decedent bequeathed in trust for his wife the following: “A pecuniary amount equal to the maximum marital deduction allowable to my estate for Federal estate tax purposes ($250,000 or 50% of my adjusted gross estate, as the case may be, less any adjustment required for marital deduction gifts made by me during my lifetime), less the aggregate amount of marital deductions, if any, allowed for interests in property passing or which have passed to my wife otherwise than by the terms of this Article, and less also the amount if any, required to increase my taxable estate to the maximum amount as to which, considering all deductions and credits allowable to my estate, there will be no federal estate tax payable by reason of my death.”

Published on: April 27, 2016

Plaintiff Moves for a Summary Judgment in Lieu of Complaint for Payment

by Stephen Bilkis

Plaintiff moves pursuant to CPLR § 3213 for an Order granting summary judgment in lieu of complaint for payment allegedly owed on a promissory note. “Defendants” or “the Estate”, as executors of the Estate of the decedent cross-move for summary judgment dismissing this proceeding pursuant to § 1810 of the Surrogate’s Court Procedure Act.

This case arises from a loan transaction between plaintiff and the decedent a real estate developer. Prior to his death, he was a 55% owner in Flatbush Extension, LLC (“Flatbush Extension”), which owned properties located at 67, 75, and 85 Flatbush Avenue in Brooklyn. On or about March 27, 2007, U.S. Bank and Flatbush Extension entered into a secured loan agreement (the “Loan Agreement”) pursuant to which the parties agreed that Flatbush Extension could borrow up to $50,000,000 in connection with the development of a luxury condominium project (“Flatbush Extension Project”).

Published on: April 26, 2016

Sister Petitions for Allowance of a Claim Against the State

by Stephen Bilkis

In this proceeding the sister of the decedent individually and as administratrix with the will annexed of the estate of the deceased, for the allowance of a claim against the estate of deceased husband of which respondent is executor. Judgment of the Special Term allowing the claim in part, was affirmed in part and reversed in part by the Appellate Division, and claimant appeals.

In 1903 the husband and his wife, lived in Brooklyn. The wife owned a building at Classon Avenue, in a part of which she lived with her husband. On January 17, 1903, she made her will, and on March 27, 1903, she died. By her will she made her husband executor and gave her sister, $1,000. She then provided: ‘Fourth. I give and bequeath to my beloved husband all of the rest and remainder of my estate both real and personal to have and to hold the same to him, his heirs and assigns forever, with the understanding that at the decease of the said husband all of the estate which he shall derive under this will which shall then remain by him undisposed of he shall give and turn over to my sister.’

Published on: April 25, 2016

Court Discusses Jurisdiction Issue

by Stephen Bilkis

In a proceeding to probate the last will and testament of the decedent respondent appeals (1) from an order of the Surrogate’s Court, Kings County, dated October 14, 1992, which (a) denied her motion, inter alia, to declare that the decedent was domiciled in Florida at the time of his death and to resettle a decree of the same court, dated August 7, 1992, to provide that the decedent was not a New York domiciliary, and (b) granted the administrator’s cross motion for a decree declaring that . validly exercised her right of election and that the decedent was domiciled in New York at the time of his death, and (2) as limited by her brief, from so much of an order of the same court, dated March 17, 1993, as directed the Dime Savings Bank to deliver the entire balance in Account No. 800003241 to the administrator.

The Surrogate erred in finding that the decedent was a domiciliary of New York at the time of his death as the appellant demonstrated by clear and convincing evidence that the decedent had changed his domicile from New York to Florida. Contrary to the recitation in the August 7, 1992, decree and plaintiff’s contention, the appellant did not stipulate that New York was the decedent’s domicile. The record of the proceedings before the Surrogate on July 7, 1992, does not reflect any such agreement.

Published on: April 24, 2016

Plaintiff Seeks to Recover Damages for Breach of Contract

by Stephen Bilkis

In an action, inter alia, to recover damages for breach of contract, which was commenced in the Supreme Court, New York County, transferred to the Surrogate’s Court, Kings County, and joined with a probate proceeding the defendants appeal, as limited by their brief, from so much of a decree of the Surrogate’s Court, Kings County, dated November 29, 2011, as awarded the plaintiff interest at the rate of 18% per annum upon each installment payment due and owing to the plaintiff individually and in his capacity as preliminary executor of the estate of the decedent, payable by the defendant from the date each payment became due, and the plaintiff cross-appeals, as limited by his brief, from so much of the same decree as is in favor of him individually and against the defendant in the principal sum of only $480,000 and is in favor of him in his capacity as preliminary executor of the estate of the decedent and against the defendant in the principal sum of only $480,000.

The plaintiff, individually and in his capacity as the executor of the estate of his mother, commenced this breach of contract action against the defendant to recover monthly installments due and owing both to him personally and to the estate beginning in February 2006, pursuant to a stock purchase agreement executed in September 1996. In exchange for shares of stock in a closely held corporation, defendant agreed to pay the total sum of $1,800,000 in monthly installments over the course of 15 years. The agreement provided for the monthly payment of $5,000 for the first five years, $10,000 for the next five years, and $15,000 for the final five years, with all payments inclusive of interest at the rate of 18% per annum.

A prior determination, this Court modified an order of the Surrogate’s Court so as to grant those branches of the plaintiff’s motion which were for summary judgment on the breach of contract causes of action. The Surrogate’s Court entered a decree upon that determination in favor of the plaintiff and against defendant, both in his individual capacity in the principal sum of $480,000, and in his capacity as the executor of the estate in the principal sum of $480,000, as those amounts equaled the sum totals of the monthly payments due beginning in April 2006. In addition, the Surrogate’s Court awarded the plaintiff prejudgment interest upon each monthly payment from the date it became due at the rate of 18% per annum.

Published on: April 23, 2016

Plaintiff Brings Case to Determine Disposition of Real Property

by Stephen Bilkis

In a probate proceeding in which an action, inter alia, pursuant to RPAPL article 15 to compel the determination of claims to real property, for ejectment, and for injunctive relief was transferred from the Supreme Court, Kings County, to the Surrogate’s Court, Kings County, the defendants appeal, as limited by their brief, from so much of an interlocutory judgment of the Surrogate’s Court, Kings County, dated January 28, 2010, as, after a nonjury trial, and upon a decision of the same court dated May 19, 2009, determining that a certain deed dated June 6, 2002, is null and void and dismissing their first affirmative defense, and upon a decision of the same court dated October 13, 2009, determining that a certain deed dated May 9, 2001, was not procured through the exercise of undue influence and dismissing their third affirmative defense, is in favor of the plaintiff and against them determining that the plaintiff holds in fee simple absolute certain real property as described in the deed dated May 9, 2001.

“In reviewing findings made following a nonjury trial, this Court may render the judgment it finds warranted by the facts, taking account in a close case the fact that the trial judge had the advantage of seeing the witnesses”. In this case, the testimony established that the deed dated June 6, 2002, was not “entitled to be recorded” until it was resubmitted with the appropriate fees attached. Accordingly, upon our review of the record, we find no error in the determination of the Surrogate that since the deed dated June 6, 2002, was not recorded, it was not delivered to the defendants prior to the decedent’s death.

The court said we decline to disturb the Surrogate’s determination that the deed dated May 9, 2001, was not procured by undue influence. The defendants failed to submit evidence supporting their contention that a confidential relationship existed between the plaintiff and her parents, who executed the deed, or that the deed dated May 9, 2001, was procured by the exercise of undue influence.

Published on: April 22, 2016

Court Decides Case Regarding Interpretation of Will

by Stephen Bilkis

This is an application by the Public Administrator of the County of Kings for a construction of testatrix’ will and other relief. Testatrix died on December 27, 1919 leaving a will dated February 11, 1905 which was duly admitted to probate in this Court on June 18, 1920. Except for the printed portions of the form used, the instrument was entirely written by pen and ink. After providing for the payment of her lawful debts, testatrix devised all her property, real and personal, to her friend, who was also named sole executrix with the further proviso as follows: ‘after Death the Balance what is left go to my Brothers or their heirs. (naming them) To be Equally divided Between my Brothers or heirs of my Brothers’ (italics, capitalization and spelling as in original).

It appears that upon testatrix’ death took possession of real and personal property of testatrix and by conveyances, transfers, assignments, sales, and alienations, by said testatrix individually and as executrix, the assets of the estate were disposed of among the several persons named in the petition herein. The question posed is whether by testatrix’ will she took a fee or a life estate with or without power of alienation or disposition.

Published on: April 21, 2016

Trustee Brings Action for Judicial Settlement of Account

by Stephen Bilkis

The decedent died on December 31, 1915. His will, made on October 20, 1915, was admitted to probate on March 31, 1916. The Kings County Trust Company was granted letters testamentary on March 31, 1916 and letters of trusteeship on October 24, 1934.

By the ninth paragraph of the will testator gave his residuary estate to his executor, in trust, to pay the net income arising therefrom to his wife, for and during her life. The wife died on March 11, 1959. The will provides that upon her death ‘said trust is to terminate, and the corpus thereof is to go, and I give, devise and bequeath the same, in equal shares, among my then surviving nephews and nieces, and the issue of any deceased nephew or niece (except issue of my niece), such issue taking in equal shares the share their parent would have taken if living. It being my intention not to make the issue of the niece beneficiaries under this my Will.’ The trustee brought this proceeding for the judicial settlement of its account and has requested in its petition ‘That the Court find and determine that, in accordance with the intent of said decedent, as set forth in Paragraph Ninth of his said Will, the net distributable principal of said now terminated trust is primarily divisible into four equal major shares, one each for the lawful issue living at such termination and who represent decedent’s deceased nephews and nieces, respectively, the issue of each said deceased nephew and niece, respectively, to receive, in equal sub-shares, per stirpes, the equal major share which the deceased nephew or niece whom they represent would have taken, if living; and direct distribution accordingly.

Published on: April 19, 2016

Court Decides Case Regarding Preliminary Letters Testamentary

by Stephen Bilkis

In a probate proceeding, the petitioner, appeals from so much of a decree of the Surrogate’s Court, Kings County, dated July 1, 2004, as denied that branch of her cross motion which was for the issuance of preliminary letters testamentary to her for the estate of the decedent and granted those branches of the motion of the objectant, which were to deny the issuance of preliminary letters testamentary to the petitioner for that estate, to disqualify the petitioner from service as executrix, and to issue letters of administration to the objectant.

A testator or testatrix has the right to determine who is most suitable among those legally qualified to settle his or her affairs, and that selection is not to be lightly discarded. While the Surrogate may disqualify a person from receiving letters of administration where the friction between such person and a beneficiary interferes with the proper administration of the estate.