Sylvie L. F. Richards, Esq., Ph.D.: 2019

Friday, May 31, 2019

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.

(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."

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Thursday, May 9, 2019

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:

Due execution of the Will, including proof of testamentary capacity;
No subsequent revocation of the Will;
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).

Friday, May 3, 2019

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.

Thank you.