Mental Capacity and Marriage in New York, Part 1: Background to the Issue

In New York, a person is presumed to have the mental capacity to marry.  But the standard that defines the mental capacity to marry is very low.  The mental capacity required to marry is lower than testamentary capacity, or the capacity to make a Will.  In turn, testamentary capacity is lower than the mental capacity required to execute a contract.  To put this into perspective, New York requires greater mental capacity to sign an apartment lease than it does to marry someone.

The U.S. Constitution also protects an individual’s right to marry.  The U.S. Supreme Court has affirmed that the right to marry is a fundamental right.  In Loving v. Virginia, 388 U.S. 1, 12 (1967), the Court held that the Due Process Clause includes a constitutional right to marry because “freedom to marry has long been recognized as one of the vital personal rights essential to the pursuit of happiness by free men.”  In addition, the Full Faith and  Credit Clause in Article IV requires states to credit the “public Acts, Records, and judicial Proceedings” of sister states, including marriage.

A marriage in New York results in two separate outcomes:  the marriage itself, and the property consequences that flow from the marriage.   As we will see in this series, there is a loophole in the law that has permitted some unscrupulous individuals to take advantage of elderly individuals with diminished capacity.  That is because, while the marriage itself may be annulled or broken, the property consequences of marriage are not necessary severed as a consequence.  As we will see in this series, that can result in unintended estate consequences for heirs and distributees, particularly in the area of  so-called “deathbed” marriages.

Arguably,  the property rights that flow from marriage are much greater than they are for signing an apartment lease even though the mental capacity required to enter into a marriage is significantly lower.  Federal property rights that flow from marriage include such things as Social Security survivor benefits for a spouse, and spousal survivorship rights for qualified retirement plans under the Employee Retirement Income Security Act (ERISA) that can only be waived in writing.

Among the New York State property rights for spouses is the right to title property in a tenancy by the entirety. Neither spouse can sell or diminish the 100% share that each owns without the consent of the other.  Should a creditor obtain a lien on one spouse’s interest in the property, the lien will only survive if the debtor spouse is the surviving spouse.  Otherwise, the lien is extinguished with the death of the debtor spouse.  Moreover, the property cannot be reached in a bankruptcy proceeding.   New York also has an elective share statute, meaning that a surviving spouse can elect to one-third of the decedent spouse’s estate against the decedent’s Will if there is surviving issue, or one-half of the property if there is no issue.  Even if there is no Will, New York’s intestacy statutes provide that a surviving spouse will receive at least one-third of the decedent’s property.

In New York, a marriage can be void from the start (ab initio) due to such reasons as bigamy or an incestuous marriage.  In such a case, the marriage is a legal nullity:  it never existed from the start.  The spouse, the State, or an interested third party can attack the marriage directly or collaterally in court on the ground that it is void.  The attack can even take place after the death of one or both spouses.  Note that diminished mental capacity is not a ground for voiding a marriage in New York.

A voidable marriage is valid for any civil purpose unless it it attacked by one of the spouses in an action for annulment.  The grounds for deeming a marriage as voidable include fraud, duress, temporary or permanent mental incompetence, undue influence, and sham.  As concerns mental incompetence in the case of a voidable marriage, Domestic Relations Law § 140 [c] provides that “[a]n action to annul a marriage on the ground that one of the parties thereto was a mentally ill person may be maintained at any time during the continuance of the mental illness, or, after the death of the mentally ill person in that condition, and during the life of the other party to the marriage, by any relative of the mentally ill person who has an interest to avoid the marriage.” 

Even if a third party should succeed in proving that there was sufficient evidence of diminished capacity before the marriage took place (for instance, with documented medical evidence showing dementia), the surviving spouse of an annulled marriage may still take against the Will under the right of election or under intestacy.   The property stakes are high when one enters into a marriage.  They are even higher for the children of aging parents with diminished capacity who find themselves (and their property) prey to unscrupulous persons who will marry them (sometimes in secret) in order to obtain the federal and state property benefits that flow from marriage. 

In this series, we will look at how New York courts have dealt with the issue of mental capacity and marriage, especially in cases where the results have been egregious. I invite you to join my list of subscribers to this blog by clicking on “Sign me up!” under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published.   Thank you.

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.

The Mark Rothko Estate Case: Self-Dealing in the Art World

The 2010 Tony Award for Best Broadway Play went to Red by John Logan.  The play tells the story of abstract expressionist painter Mark Rothko’s creative struggle as the artist executed a series of commissioned murals for New York’s famed Four Seasons Restaurant, now known as the Seagram Murals.  As compelling a play as this visual dramatic feast is, it is equally matched by the legal drama that surrounded Rothko’s art estate following his suicide in 1970.  Like the play, its cast of characters were colorful, monomaniacal, and behaved in ways described by the New York Court of Appeals in Matter of Rothko, 43 NY2d 305, as “manifestly wrongful and indeed shocking.”  The charges brought before the court by Rothko’s children included conspiracy, fraud, and breach of fiduciary duty resulting in the waste of estate assets.

The case would take over six years to reach the Court of Appeals.  In a non-jury trial that lasted 89 days, the case exposed how the artist’s three executors named in his Will, two of whom had conflicts of interest with the gallery that represented Rothko, disposed of 798 extremely valuable paintings.   The testimony revealed a labyrinth of shady deals, betrayal, and bald-faced greed — the seedy side of the art world. The trial also showed the importance of selecting trustworthy executors for one’s estate.

In 1956 when Rothko was a struggling artist in New York, he had made a contract with the Marlborough Gallery whereby the gallery would sell all of Rothko’s paintings in exchange for a monthly stipend.  In the 1960s, during Rothko’s most prolific output, the gallery under the direction of its owner Frances Kenneth Lloyd consistently under-reported the sale price of the paintings by filtering the payments through Swiss and Liechtensteiner bank accounts.  As a result, Rothko continued to believe erroneously that his work was not garnering high prices on the art market. Rothko renewed his contract with the Marlborough Gallery in 1969, one year before his untimely death.

According to the New York Times, Rothko had named three executors in his Will:  Bernard Reis, his financial advisor, who also drafted the Will; Morton Levine, a friend and anthropology professor; and Theodore Stamos, a fellow abstract expressionist artist.  Reis also set up the Mark Rothko Foundation, which was to be funded by the sale of Rothko’s paintings bequeathed to the Foundation.  The Foundation’s original charter stated that the trustees were to place the works with appropriate museums and collectors, with the proceeds going to educational purposes.

During the course of the trial, it was revealed that the executors had conspired to defraud the estate after Rothko’s death.  Two of the three named executors had a conflict of interest with respect to the Marlborough Gallery.   Reis was a director of the gallery.  Stamos also developed a conflict of interest when he was influenced to change his representation from the Andre Emmerich Gallery to a more generous contract with the Marlborough Gallery in exchange for his cooperation in the conspiracy.

Shortly before he committed suicide in 1970, Rothko gave some of the paintings still in his possession to his two children.   He hoped that the value of his work would increase upon his passing and thus provide for their financial security.  After his death, the children were unceremoniously informed by Lloyd that, as a result of the 1956 and the 1969 contracts, Marlborough Gallery owned all of Rothko’s paintings.   

Meanwhile the Foundation’s trustees changed the purpose clause in the charter so that the Foundation would now be awarding grants to artists.  These grants were to be funded by the sale of the paintings.  This change in the Foundation’s charter made way for a new deal with Marlborough Gallery.  The executors sold 100 paintings to Marlborough in short order for $1,800,000 and consigned another 698 works at the inflated commission of 50 percent.  They then divided up the sales proceeds as their commissions, leaving the estate with only $200,000 in proceeds from the sale of the paintings.

In 1971 the artist’s daughter Kate, along with the guardian of her brother Christopher, sued to have the executors removed and to recover the paintings by having the estate released from the contracts with Marlborough Gallery.  The bases of the complaint were fraud and a breach of fiduciary duty of care resulting in the waste of estate assets.  The case wound its way through the courts until it reached New York’s highest court in 1977.  The Court of Appeals agreed with the rulings of the courts below.  The three executors were removed and, together with the Marlborough Gallery, they were ordered to pay more than $9 million dollars plus costs, representing appreciation damages, and to return 658 paintings to the estate.  Some paintings had been sold by the gallery in 1972 in violation of a temporary restraining order. 

The Rothko case serves as a cautionary tale about the appointment of executors with clean hands who are not self-interested.   In the case of Reis and Stamos, both were involved with the Marlborough Gallery.  Their conflict of interest led to self-dealing and a betrayal of their fiduciary trust.

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.

I invite you to join my list of subscribers to this blog by clicking on “Sign me up!” under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published. Thank you.