Introducing Peace-of-Mind Legal Prevention Concierge Subscription Service!

Get answers to your legal questions before issues become a mountain of trouble! Stay on top of your life and make better choices with better knowledge-based solutions.

As a member of the Law Firm’s Concierge Subscription membership, you have access to the following concierge services:

• Invitations to concierge member-only panels and talks on legal subjects
• Monthly email newsletter
• One 30-minute scheduled Zoom call per month
• Up to 10 email exchanges per month
• Concierge subscription fee includes legal consultation only on the following matters: wills, trusts, probate of a Will, administration of an estate, when to litigate an estate, special needs children and adults, mental capacity issues, long-term care issues, guardians, Power of Attorney, Heath Care Proxy, Living Will, estate planning for blended families, charitable planning and gifts, planning for business continuation after incapacity or death, legacy planning for your children and grandchildren. No other areas of law or matters are covered by the Concierge Subscription Service.

​The Concierge Subscription Fee does not include drafting of documents, document review, litigation, or representation on client matters. Clients may choose to retain the law firm and proceed under a Prix-Fixe agreement for Prix-Fixe services, or by billable hour for A La Carte services. (see Services on website at http://www.sylvierichardsesq.com)

For more information and to subscribe, please email directly. 

Determining a Decedent's Domicile for Probate in New York

Most people assume that their home is their legal domicile, but the issue of legal domicile is much more complicated than that.  Establishment of a person's domicile depends upon the nature of the person's contacts with the State, an intent to domicile in the State, the mental capacity to form that intent to domicile in the State, and the location of a person's tangible assets.  If this sounds very much like what is required to establish a contract in New York, it's because the establishment of a domicile in New York is an implicit contract between an individual and the State that grants the State jurisdiction over the individual and his/her tangible assets.  When a person dies, the Surrogate's Court in the county in which the decedent dies or the situs of the tangible assets then has jurisdiction over the estate for the purposes of probate or administration.  For a domicile to be established, there must be a "union of residence and intention" [Matter of Urdang, 194 AD2d 615, 615–16 (2d Dept. 1993)], which requires the same mental capacity as is required to sign a contract.

Residence and domicile are not the same thing.  A person may have several residences but only one domicile.  "Residence is necessary to establish a domicile but it is not controlling unless there is the intention of making that place one of permanent abode and adopting it as the domicile. Change of residence from one place [to] another is strong evidence of an intention to change place of domicile but standing alone is insufficient and while a person may have two places of residence, he may have only one domicile." [In re Knowlton’s Will, 192 Misc. 1032, 1038 (Sur. Ct. 1948)].  Domicile is defined as “[a] fixed, permanent and principal home to which a person wherever temporarily located always intends to return”  [SCPA § 103(15)].  To change domicile then requires provable acts and intentions on the part of an individual that will effectively remove that individual from the jurisdiction of the State.  "The law is well settled that an existing domicile continues until a new one is acquired. It is incumbent upon the party seeking to prove a change of domicile to demonstrate such a change by clear and convincing evidence. To meet this burden, the movant must establish the decedent’s intention to effect a change of domicile from her acts, statements, and conduct [Matter of Pingpank, 134 AD2d 263, 265, 520 N.Y.S.2d 596)].  The legal standard of proof of clear and convincing evidence can be a difficult standard to satisfy.

In re Will of Ann Matarazzo [72 Misc.3d 1214(A)], the question before the court turned on the issue of domicile as to whether the Orange County Surrogate had jurisdiction to probate a 2014 Will executed in New York, or whether a New Jersey court had jurisdiction to probate a later 2015 Will.  Decedent had two sons; the elder son resided in Washington, New Jersey while the younger son resided in Greenwood Lake, New York.  Decedent and her husband had resided and been domiciled in Malverne, New York.  The younger son moved in with his parents to care for his parents beginning in 1986.  The father died in 2009.  In 2010, the decedent moved in with the older brother in New Jersey, and the younger son married for the first time and moved back to Greenwood Lake.  In 2015 the decedent sold her home in Malverne and continued to live in New Jersey.  Then in 2018 the decedent moved into a nursing home in Pennsylvania that cared for those suffering from Alzheimer’s disease and/or dementia, having never repurchased another home.

Was the decedent's move to New Jersey "temporary" or was her residence in New Jersey from 2010 to 2018 continuous and exclusive?  Were weekend visits to Greenwood Lake sufficient to show her intent to remain a New York domiciliary?  Did the fact that she used the Greenwood Lake address on her tax forms, financial accounts, benefit accounts, etc., and by paying New York State income taxes while she resided in New Jersey evince her desire to remain a New York domiciliary?

Moreover, there were facts in evidence to show that the decedent may have been suffering from dementia as early as 2013.  Decedent would not have had the mental capacity to legally change her domicile after 2013 because she could not form the intent.  And even if a court-ordered guardian had been appointed for the decedent under Article 81 of the Mental Hygiene Law, the guardian would only have had the power to change the ward's residence but not her domicile without a court order [In re Guardian & Prop. of Lillian, 20 Misc 3d 215, 216–17 (Sup. Ct. 2008), rev’d sub nom. In re Lillian U., 66 AD3d 1219 (3d Dept. 2009)].  

The Surrogate did not opine as the the validity of either the 2014 or 2015 Wills, or the purported  diminished capacity of the testator.  Rather, the Surrogate asked both parties to provide evidence that would definitively establish the decedent's domicile at a hearing on that question before the court would decide on the threshold question of jurisdiction.

The question of domicile must remain front and center in the mind of a testator even after a Will has been properly executed.  The threshold question of domicile could derail even the most well-though out estate plan if the estate plan is dependent upon the jurisdiction of a particular State.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

Follow Me on Twitter!

Get the latest estate planning news on estate planning strategies, long-term care issues and solutions, Medicaid asset protection, special needs trusts, and planning tips for small business owners! https://twitter.com/richardsesq

I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published. 

The Right of Sepulcher in the Age of Coronavirus

Leonard Melfi was a playwright best known for Oh! Calcutta! and for his many plays produced at LaMama Experimental Theater in New York's East Village.  In his later years, he resided at the Narragansett Hotel located at 93rd Street and Broadway on Manhattan's Upper West Side.  It was to this location that paramedics were summoned on October 24, 2001 when his niece who lived out of town tried to visit him but was unable to get him to answer the door.  Melfi was transported to Mt. Sinai Hospital where he died four hours later of congestive heart failure.

From there, Leonard Melfi's story took a strange turn, one that not even he could have written.  Even though his patient registration form contained contact information for a close friend, the hospital failed to contact her.  As a result, no one in Melfi's family knew that he had died.  His body remained in the hospital morgue for 30 days,  and thereafter his body was transferred to the City morgue at Bellevue Hospital.  There is no record as to whether any attempt was made at that point to contact Melfi's family of his body's whereabouts.  Melfi's unclaimed body was subsequently transferred to the Nassau County Community College’s Mortuary Science Department where it was used for embalming practice by the students.  Finally, on December 20, 2001, Leonard Melfi was buried in a mass grave in Potter's Field on Hart Island along with 150 other unclaimed bodies.

Melfi's niece and his brother John would be informed of Leonard's death two months later by the manager of the Narragansett Hotel. John Melfi then arranged to have his brother's body exhumed and then held a proper funeral service at the Campbell Funeral home.  Leonard Melfi was finally laid to rest in the family plot in Binghamton, New York on April 18, 2002.    In May 2002, John Melfi filed a lawsuit against Mt. Sinai Hospital and the New York City Health and Hospitals Corporation, parent company of Bellevue, for medical malpractice, wrongful death, loss of sepulcher, fraudulent concealment and punitive damages.  We will concern ourselves here with loss of sepulcher because it is an issue that may arise again with the massive death toll and the accumulation of bodies in morgues during this time of coronavirus.

The lower court denied Mt. Sinai's motion to dismiss the claim for loss of sepulcher (Melfi v. Mount Sinai Hosp., 877 N.Y.S.2d 300, 2009 N.Y. Slip Op. 03404), and the hospital appealed to the Appellate Division, First Department (Melfi v. Mount Sinai Hosp., 64 A.D.3d 26 (2009)).  In its decision, the court gave a detailed history for the right of sepulcher, but we will focus here specifically on the legal aspects that give rise to a claim under the right to sepulcher.  The court explained that  "the common-law right of sepulcher gives the next of kin the absolute right to the immediate possession of a decedent's body for preservation and burial, and ... damages will be awarded against any person who unlawfully interferes with that right or improperly deals with the decedent's body. (id. at 31)." 

The right of sepulcher is not a property right that would lead to damages and recovery under tort law but rather a quasi-possessory interest  such that damages are recoverable only for the emotional distress caused by the deprivation of the decedent's body for proper disposition.  For damages under the right of sepulcher to accrue, two elements must be present:  "1) there must be interference with the next of kin's immediate possession of decedent's body and 2) the interference has caused mental anguish, which is generally presumed. Interference can arise either by unauthorized autopsy (Darcy, 202 N.Y. at 262–263, 95 N.E. 695), or by disposing of the remains inadvertently (Finley, 220 N.Y. at 257–258, 115 N.E. 715; Correa v. Maimonides Med. Ctr., 165 Misc.2d 614, 629 N.Y.S.2d 673 (Sup.Ct., Kings County 1995)), or, as in this case, by failure to notify next of kin of the death. (id, at 39)." The presumption of mental anguish suffered lies with the family member, meaning that the burden of proof shifts to the defendant to show that no such anguish occurred.

If you or your family has suffered mental anguish as a result a loss of sepulcher in New York due to the coronavirus pandemic, you should contact an attorney to assist you.  My law firm will be happy to consult with you and discuss your particular circumstances.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

Follow Me on Twitter!

Get the latest estate planning news on estate planning strategies, long-term care issues and solutions, Medicaid asset protection, special needs trusts, and planning tips for small business owners! https://twitter.com/richardsesq

I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published. 

International Policy and Estate Planning: Foreign Distributees in the Crosshairs

Article 16 of the New York’s Surrogate’s Court Procedure Act deals with foreign estates.  The legislative purpose for the enactment of the procedure with respect to foreign estates includes the following:  “If the law of such jurisdiction does not provide for the appointment of a fiduciary but vests the property of a decedent in a person or persons subject to the obligation to pay the decedent’s debts and expenses and the legacies bequeathed in his will or the distributive shares provided by law, such a person shall be recognized as the person acting therein to administer the decedent’s estate in accordance with the law thereof, but only if such person has complied with all the requirements of such jurisdiction to entitle him to receive the property of the decedent and is acting or will act there to administer the estate“ (underlining my own).  What may seem to be at first glance a benign statement can yield unanticipated complications, particularly if foreign policy is diametrically opposed to the wishes of the testator.

In re Estate of Gyfteas, 59 Misc. 2d 977, 300 N.Y.S.2d 913, 1968 N.Y. Misc. LEXIS 993 (Surrogate's Court of New York, New York County December 12, 1968), the testator was a Greek citizen and domiciliary who owned property in New York.  His Will named three executors and devised some monetary bequests, with the residuary going to charity.  Since the decedent did not have a valid New York Will, an administration proceeding was begun by one of the executors for the property in New York.  Then the legatees filed a separate petition for letters of administration for the New York property claiming that the executors had no right to distribute the New York-based assets.

N.Y. Surr. Ct. Proc. Act § 1604(1) establishes a priority list as to the granting of ancillary letters with respect to a foreign testator’s property in New York:

(a) The person expressly appointed in the will as executor with respect to property located within this state.

(b) The person to whom domiciliary letters have been issued or if domiciliary letters are not issued, the person appointed in the will to administer all property wherever located.

(c) The person acting in the domiciliary jurisdiction to administer and distribute the testator’s estate.

(d) A person entitled under this act to letters of administration c.t.a.

Since the Will was a Greek Will, the New York court looked to the law of Greece to determine whether the named executors in the Will had the authority under SCPA § 1604 to qualify for ancillary letters.  A hearing was held on this issue.  Under Greek law, where a Will contains a charitable bequest, only the executor may distribute the assets.  Where there are no charitable bequests, the powers of the executor are subordinate to those of the legatee(s).  Citing Greek law, experts for both the petitioners and the respondents agreed on this point.  Thus, under New York law and the priorities established under SCPA § 1604(1), the executor under the Greek Will was granted ancillary letters in preference to the legatees.  However, the court stipulated that no assets from New York could be moved to Greece without further order of the court and notice to the legatees.

In part, this result was possible because the United States has diplomatic relations with Greece.  But what happens when the legatees reside in a country where State Department regulations circumscribe what the courts may do?

In re Estate of Mitzkel, 36 Misc. 2d 671, 233 N.Y.S.2d 519, 1962 N.Y. Misc. LEXIS 2467 (Surrogate's Court of New York, Kings County October 15, 1962 ), the decedent, a New York resident of Lithuanian descent, left his New York estate to his two sisters, both citizens and residents of Lithuania.  At the time, Lithuania had been annexed by the Soviet Union.   The Consul General of Lithuania at New York filed a petition in Surrogate’s Court on behalf of the Lithuanian nationals.  Thereafter, the sisters were transported 500 miles from Lithuania to Moscow where they executed a power of attoney before the U.S. Consul in Moscow appointing a New York law firm to represent them in Surrogate’s Court.   Based on this power of attorney, the Soviet government had  hired attorneys in New York to represent the interests of the sisters.  These attorneys then filed a notice of appearance with the court.   The Consul General of Lithuania then filed a motion seeking to have declared as invalid the sisters’ power of attorney executed to the Soviet government and the notice of appearance by their attorneys.

At issue was the validity of the power of attorney.  Several factors pointed to the illegitimacy of the Soviet power of attorney.  First, the instrument stated that the sisters lived in the U.S.S.R instead of Lithuania.  Second, the sisters were illiterate and could not have understood the contents of the power of attorney.  Third, the sisters had been forced the travel from their homes under duress by Soviet officials.  Fourth, the services of the law firm had been illegally procured by an agent of the Soviet Union, namely a lawyers’ collective called the "Iniurcolleguia" and described as being "an essential force in subjecting the common people of Russia to the dictator's power" (Wash. U. L. Q., supra, June, 1958, p. 252), and "tools of the State" (48 Cal. L. Rev., supra, pp. 794-795).  In the instant case, the goal of the Soviet lawyers’ collective was to extract fees from the sisters to be deposited into a common treasury used to pay these Soviet lawyers.

The United States never recognized the incorporation of the Baltic States (Estonia, Latvia, and Lithuania) into the Soviet Union.  In a letter dates March 26, 1948, the State Department had cautioned each State governor not to give access to the Surrogate’s Court (or its State equivalent) to any Soviet officials or their attorneys for the settling of estates of decedents from Baltic States dying in the U.S.  The Surrogate’s Court found this sufficient to declare the Soviet power of attorney invalid as well as the notice of appearance by the New York attorneys representing  the "Iniurcolleguia."

If you would like to discuss your own personal situation with me, review your current Will, or put together an estate plan that is tailored for your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly. 

Follow Me on Twitter!

Get the latest estate planning news on estate planning strategies, long-term care issues and solutions, Medicaid asset protection, special needs trusts, and planning tips for small business owners! https://twitter.com/richardsesq

I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published. 

When a Contentious Probate Litigation Leads to a Disadvantageous Result

As is often the case, probate litigation can quickly become contentious, especially when competing Wills are offered for probate.  Litigation can become costly, and disadvantageous errors in judgment and strategy can result in unintended consequences. 

In Re Matter of Harper (2019 N.Y. Misc. LEXIS 1073; 2019 NY Slip Op 50333(U) ; 63 Misc. 3d 1203(A); 2019 WL 1281833), an initial probate proceeding was begun on March 24, 2010, almost 15 months after the death of the testator on December 31, 2008, to probate a Will dated May 27, 1997.  In that Will, the decedent, himself an attorney, left his real estate and other tangible property to be divided equally among two nephews, his sister, and his three sons.  The residuary estate was left to his wife.  Objections to probate were then filed by his wife, his three sons, and his daughter Faith through a guardian ad litem.

However, this probate proceeding was stayed pending the outcome of another probate proceeding, this time for a Will dated September 25, 2007.  For over a decade thereafter, the parties engaged in costly litigation over the validity of the 2007 Will.  Only a copy of the 2007 Will existed, dated March 6, 2006.  Decedent’s wife filed for summary judgment, arguing that the later Will revoked the 1997 Will, though she did not argue for the admission to probate of the 2007 Will.  On January 30, 2018, the court denied the wife’s summary judgment motion.

One of the decedent’s sons who would have benefited from the real estate provision in the 1997 Will then brought another summary judgment motion, nearly identical to the wife’s, asking that the court find that the 2006 copy of the Will revoked the 1997 Will.  Decedent’s sister and her son, both non-distributees under the 2006 copy, objected to the summary judgment motion on the basis that “that production of the copy of the "unauthenticated" 2006 will is ‘simply a ploy to plunge the Estate into Administrative chaos.’”  The court wryly noted:  “This last argument is made apparently as a result of amnesia regarding the last ten years of family conflict and litigation.” 2019 N.Y. Misc. LEXIS 1073, at 3; 2019 NY Slip Op 50333(U) at 2.

In order to succeed on a summary judgment motion to revoke a prior Will as a matter of law, the objectant must make a prima facie case that  a) the  instrument was properly executed;  b) the decedent had testamentary capacity at that time; c)  the Will  presented is a true and complete copy of the original; d)  the instrument by its terms revoked the prior Will;  and  e) that the earlier Will was intentionally revoked by the decedent (see EPTL § 3-4.1).

In support of his summary judgment motion, the son offered the following evidence: 1) a copy of the Will allegedly drafted by the decedent himself who was an attorney; 2) a showing that the Will was executed in the presence of two attesting witnesses; 3) the attestation clause included in the Will; 4) a contemporaneous self-proving affidavit; and 5) deposition transcripts of the two attesting witnesses and the notary to the 2006 Will.  One of the attesting witnesses was himself an attorney.  Both attesting witnesses testified to the decedent’s testamentary capacity and that the signatures on the copy were indeed genuine.

The court then explicitly noted this:  “As probate of the 2006 instrument as a lost will is not being sought.”  The question is why not?  Did the son not know that he could make the application to the court to probate a lost Will?  Why seeks a revocation of a prior Will without first seeking to probate the 2006 copy? 

Here is why these questions matter.  Ff successful, by using the 2006 copy of the Will as a tool to only revoke the 1997 Will, the outcome would be that the decedent legally died without a Will and that New York’s intestacy statute (EPTL 4-1.1) would then apply to decedent’s estate.  Decedent’s wife is entitled to receive the following in intestacy:

1. Cash or cash equivalents, including bank accounts of up to $25,000.
2. One car of up to $25,000 (if the value of the car is greater than $25,000, the spouse has the option of paying the difference to the estate).
3. Household items, including the decedent’s clothes, furniture, appliances, and jewelry up to $20,000.
4. The decedent’s family pictures, books, computers, discs, and software, up to $2,500.

The surviving spouse also receives $50,000 in assets and 1/2 of the remainder of the estate if the decedent left children.  If there are surviving children, each child then shares equally in the other ½ remainder of the estate.  In this case, only the wife and decedent’s seven children would benefit in intestacy.  Decedent’s sister and nephews receive nothing under intestacy.

However, assuming that the 2006 copy recited essentially the same provisions or perhaps even more favorable provisions for the son, then the son could have sought to admit the copy as a lost Will under SCPA 1407.  Successful admission of the copy to probate would have meant that the 1997 would have been revoked, which seems to have been the desired outcome, and that the estate would not have gone into intestacy.  The requirements for admission of an instrument as a lost Will are the following:

1. Due execution of the Will, including proof of testamentary capacity; 
2. No subsequent revocation of the Will;
3. A copy or draft of the Will proved to be true or, if there is no copy or draft of the Will, then all of the provisions of the Will must be clearly and distinctly proved by at least two credible witnesses.

The son’s summary judgment motion contained all of the elements necessary to state a prima facie case for a lost Will.  Was it a deliberate choice to not do so, or simply a legal oversight? Since he and the other litigants had already spent time and money arguing for the probate of the September 25, 2007 Will that had been denied probate, did he deem it likely that this would be the result of a lost Will petition? Or did the new depositions make it more likely that a lost Will petition might succeed? Was the point of his summary judgment motion simply to defeat his aunt and cousins even at the expense of receiving less in intestacy than even under the 1997 Will? 

We will never know.  The court found that the May 27, 1997 Will was revoked by copy the 2006 Will dated March 6, 2006.  As a result, the court found that the decedent has died intestate (without a Will).

If you would like to discuss your own personal situation with me, review your current Will, or put together an estate plan that is tailored for your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly. 

I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published. 

Asserting Rights Obtained through Inheritance from a Foreign Decedent

In New York, individuals who wish to assert rights obtained through inheritance from a foreign decedent without first obtaining the required documentation may likely find that they do not have standing to pursue their claims in New York courts without first obtaining required letters or filing an affidavit. While this additional proof does not guarantee standing, it does allow for the presentation of a more complete record to be made upon which the court can make a determination of standing.

In 1935, Paul von Mendelssohn–Bartholdy, a descendant of the composer Felix Mendelsshon and a member of a prominent German Jewish family, was forced to sell under duress a Picasso painting “The Absinthe Drinker (Angel Ferdinand de Soto)” to the Nazis.  In 1995, Sotheby’s sold the painting to The Andrew Lloyd Webber Art Foundation at an open auction.  The Foundation then sought to sell the painting in 2006 at auction at Christie’s in New York. Julius Schoeps, a German national and a great-nephew of Bartholdy and an heir to 12.5% of the estate, filed suit against the Foundation in the United States District Court for the Southern District of New York, seeking temporary restraining orders to stop the sale of the painting and preventing the Foundation from taking the painting out of the United States (Schoeps v. Andrew Lloyd Webber Art Foundation, 66 A.D.3d 137, 884 N.Y.S.2d 396, 2009 N.Y. Slip Op. 06155).

For its part, the Foundation claimed that Schoeps lacked standing in New York to pursue his claim because he had not been appointed a personal representative of the estate pursuant to Estates, Powers and Trusts Law §§ 11–3.2(b) and 13–3.5.  Schoeps argued that, under German law, ownership rights vest immediately in the heirs, making the appointment of a personal representative of the estate unnecessary.

Section 11–3.2(b) of the Estates, Powers and Trusts Law provides, in pertinent part, that an action for injury to person or property belonging to a decedent may be maintained by a personal representative of the decedent.  EPTL 13–3.5(a)(1) provides that a personal representative of a foreign decedent who seeks to maintain a cause of action in New York must, within 10 days after commencing the action, file a copy of the letters issued to the representative, duly authenticated as prescribed by CPLR 4542. If the action is not brought by a personal representative, the individual is required to submit an affidavit setting forth the facts which authorize him to act for the decedent, along with such other proof as the court may require.

For his part, Schoeps relied on an outlier case, Roques v. Grosjean, that was nonetheless on point.  (Roques v. Grosjean, 66 N.Y.S.2d 348, [Sup. Ct., N.Y. County 1946]).  Roques remains the only New York decision holding that letters are not needed by a nonresident to maintain a cause of action in New York, when the law of the plaintiff's domicile vests title to personal property in the heirs at the time of death. Such was the case for Schoeps.  The Roques court had based its holding in part on a Ninth Circuit decision in California, holding that the public administrator was not a necessary party to an action for fraud by the heirs of a French resident and California property owner (see Anglo California Natl. Bank of San Francisco v. Lazard, 106 F.2d 693 [1939], cert. denied 308 U.S. 624, 60 S.Ct. 379, 84 L.Ed. 521 [1939] ).  However, the Ninth Circuit added a footnote that laid out the appropriate method for an heir to a French estate to establish his/her standing, namely by filing all testamentary instruments with a Notary, and then having the Notary execute a written instrument known as an “acte de notariété” (id. at 699 n. 2). A proceeding before a French Notary was still necessary for standing.

In Schoeps, the court denied Schoeps standing to pursue his claim against the Foundation because he had not complied with the procedures set out in either Estates, Powers and Trusts Law §§ 11–3.2(b) or 13–3.5. Schoeps and the Andrew Lloyd Webber Foundation reached an out-of-court settlement that allowed the foundation to retain ownership of the painting and to be free to sell the work.  On 23 June 2010, the painting was sold at auction for £34.7 million.

If you would like to discuss your own personal situation with me, review your current Will, or put together an estate plan that is tailored for your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly. 

I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published. 

Thank you.

When Estate Planning Goes Awry: Ambiguous Beneficiary Designations on Testamentary Substitutes

Beneficiary designations appear most often in insurance contracts, retirement plans, and annuity contracts.  These contracts are known as  testamentary substitutes because they pass outside of the probate estate. The insured or annuitant is asked to designate both the primary beneficiary(ies) and the contingent beneficiaries.  We will examine a case where an issue of construction with respect to the primary beneficiaries required Surrogate Court intervention.

On March 10, 1989, Archibald Foley executed a Will in which he divided the residuary estate as follows:  "...shall be divided into six (6) equal shares․ one each of those shares to each of my brothers and/or sisters who shall survive me and one share to be divided equally between my niece, Carmel Foley, and my nephew, Lawrence Foley, or their survivor.   If neither of them survive me or if any of my brothers and sisters shall fail to survive me, then I direct such share as would have gone to them to be divided equally amongst those brothers and sisters who do survive me."

On March 13, 1989, Dr. Foley changed the beneficiary designation on four 20-year guaranteed retirement annuities with a combined date-of-death value of $275,872.75 to read:   “to be divided equally, share & share alike among my living brothers and sisters, and one share to be divided equally between my niece (Carmel Foley) & nephew Lawrence Foley.'  Then on March 20, 1989, Foley designated the primary beneficiary under his defined contribution retirement plan with a date-of-death value of $709,380.04 to read:  “to be divided in equal shares among my living brothers and sisters-and an equal share to be divided between my niece Carmel Foley and my nephew Lawrence Foley.” He did not designate contingent beneficiaries under either the retirement annuities or the defined contribution retirement plan.  Foley's Will was admitted to probate on April 7, 1998 (In re Estate of Foley, 181 Misc. 2d 258, 693 N.Y.S.2d 843, 1999 N.Y. Misc. LEXIS 241 (N.Y. Sur. Ct. May 24, 1999)) [http://caselaw.findlaw.com/ny-surrogates-court/1444422.html]

By the time Archibald Foley died, all of the primary beneficiaries under the annuities and the retirement plan had died except for his sister Edna and his niece Carmel.  The executor of Foley's Will sought a judicial ruling as to how to distribute the proceeds, particularly the 1/4 share to his predeceased nephew Lawrence.

As it turned out, this was an issue of first impression for the New York County Surrogate's Court.  " No authority has been discovered which addresses whether a predeceased beneficiary's share under a retirement plan or annuity contracts passes to the estate of decedent or to the surviving beneficiaries." Basing its analysis on prior analogous cases (The New York City Fire Department Life insurance Fund and totten trust accounts), the court reasoned that where beneficiaries were designated as individuals (Carmel and Lawrence) and not as a class (my living brothers and sisters), then they took as tenants in common and not joint tenants with right of survivorship. "Here, Mr. Foley did not expressly declare a joint tenancy in the beneficiary designation of either the retirement plan or the annuities.   Nor does the Court find the evidence that Mr. Foley intended for Lawrence Foley's proceeds to pass to the surviving beneficiary, Carmel Foley, to be sufficiently clear.  Thus, the Court is required to hold that a tenancy in common has been created.  [See EPTL 6-2.2(a) ]. Accordingly, Lawrence Foley's share of the proceeds from the retirement plan and the annuities are to be distributed to the estate of Mr. Foley."  The Will then governed the distribution of Lawrence's share, being the only document with express instructions as to predeceased relatives.  Thus a non-probate asset became a testamentary asset subject to probate.

The court was sensitive to the fact that this holding may have disrupted the intent of Mr. Foley's estate plan, but in the absence of express declarations and named contingent beneficiaries, and the ambiguity of the language used to create the primary beneficiary designations, this was the only possible result.  Yet the court was aware that this was an anomalous result: "In the absence of legislation reversing the general common law presumption in the context of retirement plans, annuity contracts and other testamentary substitutes, modern thinking as to presumed intent cannot be extended to these assets.   This anomaly merits consideration and therefore is referred to the EPTL-SCPA Advisory Committee for such action as it deems appropriate."

The lesson here is clear:  the drafting of beneficiary designations on testamentary substitutes needs to be done with great care.  Moreover, you should safeguard even your testamentary substitutes by having a Will with clear bequest, beneficiary, and residuary estate language.

If you would like to discuss your own personal situation with me, review your current Will, or put together an estate plan that is tailored for your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly. 

I invite you to join my list of subscribers to this blog by clicking on "Subscribe to" on the left-hand side of the page so that you can receive a notification when the next installment has been published. 
Thank you.