Trusts

Published on: January 3, 2024

Court refused to rule on whether future legal action would trigger an in terrorem clause. Matter of Follman 2023 NY Slip Op 23292

by Stephen Bilkis

An in terrorem clause, commonly found in wills and trusts, is a legal provision designed to deter beneficiaries from challenging the validity of the document or taking legal action against the estate. Also known as a no-contest clause, it threatens forfeiture of inheritances if a legal challenge is initiated. The clause aims to promote the testator’s intent, discourage unnecessary litigation, and maintain the integrity of the estate plan. While in terrorem clauses in New York wills and trusts are permitted, they are very narrowly construed.

Matter of Follman 2023 NY Slip Op 23292 involves a request for the construction of articles within three separate inter vivos trusts established by the decedent and his wife, Esther Follman. The petitioner, Ahron N. Follman, seeks a ruling that filing a petition for information and/or accountings will not trigger the in terrorem clauses in these trusts. Respondent Avraham Follman opposes the motion, asserting that the in terrorem clauses have already been triggered. This blog explores the background facts, the legal issue at hand, the court’s holding, and provides a comprehensive discussion of the case.

Background Facts

Published on: December 26, 2023

Court denied the requested transfer of the trusts’ situs to Delaware. Matter of Bush 2003 NY Slip Op 23933

by Stephen Bilkis

This legal case involves JPMorgan Chase Bank’s petition to resign as a trustee for trusts created by Harriet F. Bush and Donald F. Bush. The court has already granted their request for resignation and appointed J.P. Morgan Trust Company of Delaware as the successor trustee. The remaining issue is the transfer of the trusts’ situs to Delaware to avoid New York State fiduciary income tax. All interested parties have consented to the requested relief.

Background Facts

JPMorgan Chase Bank, as trustee for trusts created by Harriet F. Bush and Donald F. Bush, seeks court approval to transfer the situs of the trusts to Delaware. The primary motive is to avoid New York State fiduciary income tax. The court had previously granted the resignation of JPMorgan Chase Bank as trustee and appointed J.P. Morgan Trust Company of Delaware as the successor trustee.

Published on: December 20, 2023

Should the court compel turnover of corporate minutes relevant to an estate? Matter of Baugher 2014 NY Slip Op 51090(U)

by Stephen Bilkis

In estate proceedings, the involvement of corporate holdings, like a company owned by the deceased, can significantly affect the distribution of assets. Imagine someone owned a business worth millions when they passed away. Now, their estate has to be sorted out. The company’s value and income become part of the estate’s total worth. If there are specific legal matters or disputes, details about the company, its finances, and decisions made in board meetings may become crucial.

In the case of Phebe Baugher, her estate involved about $22 million linked to W.S. Wilson Corporation. So, understanding how the company operated, especially after Phebe’s death, becomes vital. Jonathan Kirk Baugher, managing the estate’s initial steps, wanted more information about what happened in meetings after 2008, likely to ensure everything was handled correctly. This shows how the corporate side of things can be tightly connected to the overall estate proceedings. The court’s decision on accessing specific corporate records can significantly impact how the estate is managed and how assets are eventually distributed among heirs.

Background Facts

Published on: January 9, 2023

Court determined that their was not sufficient evidence of lack of capacity or undue influence. Matter of Estate of Patricie Cabanne, 2020 NY Slip Op 51257(U) (N.Y. Sur. Ct. 2020)

by Stephen Bilkis

If the language of a trust in New York is not clear, it can result in a dispute among the beneficiaries, as well as between the beneficiaries and the trustee. If the language of the trust is ambiguous or uncertain, the court may be required to step in and interpret the trust and determine the settlor’s intent. This may result in an outcome that is different from what the settlor intended.

In addition, the ambiguity or uncertainty may also lead to confusion and uncertainty among the beneficiaries, as well as the trustee, which can further complicate the administration of the trust. It is therefore important to ensure that the language of a trust is clear and unambiguous in order to minimize the risk of disputes and confusion.

In the Matter of Estate of Patricie Cabanne, a disputed developed between classes of beneficiaries as to how to interpret the terms of the trust.

Published on: December 21, 2022

Post-conceived children have equal rights as natural child to benefit from a trust. In re Martin B., 17 Misc.3d 198 (N.Y. Misc. 2007)

by Stephen Bilkis

The trustees managing seven trusts executed by Martin B. in 1969, filed request that the Surrogate’s Court, New York County provide direction on distribution of trust assets to post-conceived children of Martin B.’s deceased son, James. The court was asked to construe the terms “issue” and “descendants.”

Background

The grantor of a trust died on July 9, 2001, survived by his wife Abigail and their son Lindsay, but predeceased by his son James, who died of Hodgkins lymphoma on January 13, 2001. James, however, after learning of his illness, deposited a sample of his semen at a laboratory with instructions that it be preserved and that, in the event of his death, it be held subject to the directions of his wife Nancy.

Published on: February 24, 2020

In a Dispute Among Siblings Over the Terms of a Trust, the Court Was Asked to Make A Judicial Construction and to Enforce a No Contest Clause

by Stephen Bilkis

In New York a construction proceeding involves a petitioner asking the Surrogate’s Court to interpret language in a will or trust that is unclear. The language may be open to conflicting interpretations, the language may be inconsistent with other terms of the will, or the language simply might not make sense.

In In re Petition of Nadler, the decedent was survived by three adult children. Four years prior to her death, the decedent created trust that was funded by shares of a realty company. One of the decedent’s children is a trustee. Under the terms of the trust, the children as beneficiaries were entitled to the income from the trust. Five years after the decedent’s death, the primary asset of the realty company was sold for over $8 million, and a year later the realty company was dissolved.

The petitioners, the beneficiaries of the trust, petitioned the Nassau County Surrogate’s Court for a judicial construction to provide that because of the sale of the assets the realty company and its dissolution, there is no longer a need for the trust. As a result, the trust should end and its assets distributed to the beneficiaries of the trust. The petitioners argue that because the trust does not contain directions related to what should happen in the event of the dissolution of the realty company, there is an ambiguity that requires to court to make a judicial construction. The petitioners point to language in a related trust that allows for the court to step in to resolve any ambiguity related to the trust termination date. The petitioners also rely on the law which states that a trust can be terminated when its purpose ends.

Published on: October 8, 2019

Appointment of a Successor Trustee is Not Required Under the Terms of a Will – Stavin’s Will, 391 N.Y.S.2d 412 (N.Y. App. Div. 1977)

by Stephen Bilkis

Testators often include provisions for successor executors to take over the responsibilities of administration in the event that the primary executor is not able or is unwilling to serve through the entire period of administration. Naming a successor trustee also provides for a more efficient transfer of responsibility in the event the primary trustee steps down.

In the case of Stavin’s Will, there was a dispute related to the appointment of a successor trustee that had its roots after probate began when one of the two co-executed died. The person named by the testator as the deceased co-executor’s successor petitioned the court for letters. The remaining co-executor objected.

In 1969 E. Stavin died testate. In her will she named her two sons, C. Stavin and M. Stavin as co-executors of her estate. The will also named the wife of C. Stavin as his successor executor if C. Stavin predeceased the testator. Similarly, the will named the wife of M. Stavin as his successor executor if he predeceased the testator. Neither son predeceased the testator. However, in 1970, four months after letters were issued, M. Stavin died. For the next 5 years C. Stavin when about the duties of administering E. Stavin’s estate.

Published on: November 4, 2018

Surrogate Court decides a will construction case where the provision of the will creating a trust failed – In re Dawe, 60 Misc.3d 949 (N.Y. Surr. Ct., 2018)

by Stephen Bilkis

In this case the Surrogate’s Court had to decide how to make sure that a testator’s overall testamentary plan remained intact where a portion of the will is determined to be invalid.

A. Dawe died on March 11, 2014. He was never married and never had children. He was survived by his two brothers, B. Dawe and R. Dawe. However, R. Dawe died in April 2014. The will was admitted to probate in September 2014, with B. Dawe being appointed as co-executor along with J. DeMuro, a friend of A. Dawe

In the will, the decedent made a specific gift to B. Dawe of his 13-year-old cat as well as $6000 to take are of her. The decedent was passionate about genealogy and spent a great deal of time researching Dawe family history. Decedent stated in his will that he is making no additional dispositions to his family. Instead, the decedent directed that the residue of the estate be transferred to the Dawe Family Trust that is to be used to continue and expand a genealogical website that the decedent created, and to create an archive of family genealogical data, photos and heirlooms. The will further provides that 21 years after the death of B. Dawe and his son, E. Dawe, the trust is to terminate and the remaining assets are to go to the Godfrey Memorial Library of Middletown, Connecticut.

Published on: June 8, 2018

Petitioner Moves for Summary Judgment in Will Challenge Case – In re Will of Ballasalmo, 2017 NY Slip Op 50193(U) (N.Y. Surr. Ct., 2017)

by Stephen Bilkis

Ballasalmo died at the age of 95, leaving 2 daughters, Knuth and Ayers as her distributees. Petitioner, the decedent’s niece-in-law, submitted a document dated August 16, 2007, purportedly as Ballasalmo’s last will and testament. The will stated that Ballasalmo’s entire estate was to be divided between the petitioner and her husband. The decedent expressly disinherited her daughters. As to be expected, both daughters filed objections to the will. The bases for their objections include that the will was not properly executed, that the decdent lacked testamentary capacity, that it was a mistake, and that it was made under fraud and duress. In response, the petitioner moved for summary judgment dismissal of the decedent’s daughters’ objections.

Summary judgment dismissal is a strategy that allows the moving party to basically win the case without going through the time and expense of a trial. In order to win a summary judgment, the moving party must establish a prima facie entitlement to judgment. In this case, the petitioner mush show that the will was executed according to the requirements of New York law, and that the decedent had testamentary capacity at the time the will was executed. In support of her motion, the petitioner submitted a copy of the decedent’s will which includes an attestation clause as well as a contemporaneous self-proving affidavit. The petitioner also submitted the transcripts of the SCPA § 1404 examinations of the attorney draftsperson who also supervised the execution of the will and of two of the three attesting witnesses.

The evidence submitted established prima facie evidence that the will was properly executed and in statutory compliance.

Published on: September 9, 2017

Court Applies Cy Pres Doctrine – In the Matter of Construction and Effect of the Revocable Trust Agreement, 20 Misc.3d 383 (N.Y. Surr. Ct., 2008)

by Stephen Bilkis

In this case the New York Surrogate’s Court considered a request to modify a testamentary trust to change the name of a beneficiary, based on the doctrine of “cy pres.” The cy-près doctrine allows the court to amend the terms of a charitable trust in order to keep the gift from failing. The doctrine requires that the amendment be consistent with the donor’s original intent.

The decedent died on April 13, 1968. Her will was admitted to probate on January 16, 1969. The will includes provisions naming various charities as beneficiaries, including: The Carmelite Sisters of the Aged and Infirmed, The Catholic Foreign Missionary Society of America (Maryknoll Fathers), The Nursing Sisters of the Sick Poor, The Monastery of Our Lady of Mt. Carmel, and The Confraternity of the Precious Blood. Each of these organization received a specific bequest of $5,000. The will also left the entire residuary estate to a trust for the benefit of Catholic Child Care Society and provides for the invasion of the principal of the trust annually until the trust and corpus is exhausted. The trust has a remaining principal of approximately $90,000.

The petitioner, Catholic Child Care Society of the Diocese of Brooklyn, requests that the court modify the decedent’s will to designate St. John’s Residence for Boys as a beneficiary of the testamentary trust established under the decedent’s will in lieu of Catholic Child Care Society pursuant to EPTL § 8-1.1. At the time the will was admitted to probate, Catholic Child Care Society operated two programs: St. John’s Residence for Boys and St. Joseph’s Children’s Services. In 1995 St. John’s Residence for Boys incorporated separately but continued to work with Catholic Child Care Society. In 2001, the petitioner ceased doing business. The children for whom petitioner had been providing services were transferred to other authorized agencies throughout New York City. As a result, the petitioner has filed this application pursuant to EPTL§ 8-1.1 to modify the trust. Section 8-1.1 is the statutory codification of the common law doctrine of cy pres. It gives authority to the Surrogate’s Court to direct a disposition to be applied in such manner that will most effectively accompany its general purposes.