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, 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.

Alexander Hamilton, Trusts and Estates Attorney, Part 3

“What are the rights of the individuals composing a society and living under the protection of the government when a revolution occurs, a dismemberment takes place, and when new governments are formed and new relations between the government and the people are established?”  This was the pressing question asked by the U.S. Supreme Court in 1830 as it considered a case arising from the Last Will and Testament of Robert Randall containing testamentary trust for the establishment of Sailor’s Snug Harbor that Alexander Hamilton had drafted.

New York has always been known as the city of immigrants.  It was so when Alexander Hamilton arrived in New York, then known as the Province of New York and a British proprietary colony. Alexander Hamilton’s role in the Revolutionary War and in the founding of the United States is now well-known.  Less well-known is the complex history of New York from the time of the Declaration of Independence until the British retaking of the city in September of 1776, and the occupation of New York by the British until the retaking of the city by George Washington’s Continental Army on November 25, 1783.  During those tumultuous times, loyalists and revolutionaries considered themselves citizens of New York.  But who was a citizen and who was an alien?  Who had the right to inherit property?

Revolution in New York had begun before the Declaration of Independence.  On May 22, 1775, a group of local revolutionary representatives calling themselves the New York Provincial Congress had declared themselves the government of New York.  But New York was also home to Loyalists, colonists born in New York who remained loyal to the British Crown.  New York was the only colony not to vote for independence on July 4, 1776 and only endorsed the Declaration of Independence five days later.  About a third of the population of New York considered themselves Loyalists.  One of them was Bishop Charles Inglis.  From 1773 until the British defeat in 1783, Charles Inglis had been the rector of Trinity Church.  He resigned his post in 1783 and, like many Loyalists, emigrated to Nova Scotia where in 1788 he founded King’s College in Windsor, Nova Scotia.  Charles Inglis never returned to New York.  He had a son, John Inglis, who was born in New York in 1776 but who emigrated to Nova Scotia with his father.  John Inglis was ordained deacon by his father in 1801 and  became Rector of St, Paul’s in Halifax, Nova Scotia in 1816.  In 1826, John Inglis became the third Bishop of Nova Scotia.  Thereafter, he began a legal challenge to reclaim his rights to Robert Randall’s estate.

In the record of the U.S. Supreme Court case of Inglis v. Trustees of Sailor’s Snug Harbor (28 U.S. 99 (1830)),  John Inglis stated an uncontroverted claim to be related to Robert Richard Randall through Margaret Inglis, his mother, who was a descendant of John Crooke, the common ancestor of Robert Richard Randall, Catherine Brewerton, and Paul R. Randall.  But was kinship sufficient to claim an inheritance under Randall’s Will?  John Inglis had been born in New York before the Declaration of Independence, and he had lived in New York prior to the British re-occupation in September 1776.  As a child, he had emigrated with his father to Nova Scotia, his mother having died while the family lived in New York.  Did his birth on New York soil alone establish his right to inherit under Robert Randall’s Will and nullify the Sailor’s Snug Harbor Trust?

In his opinion, Justice William Johnson, who had been appointed to the Court by Thomas Jefferson, held that “(A) person born in New York before 4 July, 1776, and who remained an infant with his father in the City of New York during the period it was occupied by the British troops, his father being a loyalist and having adhered to the British government and left New York with the British troops, taking his son with him, who never returned to the United States, but afterwards became a bishop of the Episcopal Church in Nova Scotia; such a person was born a British subject, and continued an alien, and is disabled from taking land by inheritance in the State of New York.” This property and inheritance holding would be used to control both immigration and property ownership throughout the 19th century in New York.  Currently, New York’s SCPA § 2218 provides a procedure for aliens to inherit money or property located in New York.

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.

 

Probating a Lost Will or a Will as an Ancient Document

There are significant benefits to having an attorney prepare your Will.  Some are more evident than others.  In this post, we are going to discuss some less obvious but highly advantageous benefits for an attorney-drafted Last Will and Testament.

What happens if the attorney-draftsman who prepares your Will and supervises the execution ceremony dies before you do and the original Will, still in the custody of the attorney, is then lost?  What happens if, before you die, one of the witnesses to the Will also passes away?  There are a significant number of cases where a decedent signed a Will many years ago and where the original Will remained in the custody of the attorney-draftsman, leaving the decedent with only a conformed copy.  A conformed copy will contain the names and addresses of all signatories, including the testator/testatrix, but it is not signed by either the testator/testatrix or any of the witnesses.  The attorney’s “back” will be affixed to the conformed copy and marked as a conformed copy.

In order to prevent the probate of fraudulent Wills, New York’s SCPA § 1407 establishes what proof is necessary to admit to probate a lost or destroyed Will:

A lost or destroyed will may be admitted to probate only if

     1. It is established that the will has not been revoked, and

     2. Execution of the will is proved in the manner required for the probate of an existing will, and

     3. All of the provisions of the will are clearly and distinctly proved by each of at least two credible witnesses or by a copy or draft of the will proved to be true and complete.”

 

If there is a conformed copy of the original Will found among the decedent’s possessions, then that conformed copy will take the place of one of the credible witnesses.   The remaining credible witness must be able then to testify as to the substance of the original Will in order for the Will to be admitted to probate.   Recalling the substance of the Will meets the publication requirement.   In re Estate of Kleefeld , 55 N.Y.2d 253, 433 N.E.2d 521, 1982 N.Y. LEXIS 3542, 448 N.Y.S.2d 456 (Feb. 25, 1982),  the Court of Appeals reversed the Appellate Division’s ruling to admit the  conformed copy of a Will lost while in the possession of the attorney-draftsman to probate, holding that “each of the witnesses must testify to all the principal parts of the will” (Id., at 258).  Since the remaining witness could not recall the substantive parts of the Will, probate was denied.  The proponent of the Will could not meet its burden on the issue of due execution.

But what happens in the case where the attorney-draftsman has passed away as well as both attesting witnesses? One of the exceptions to the Federal Rules of Evidence against hearsay that applies even when the declarant is not available as a witness is called the “ancient document rule” (Rule 803(16)): “A statement in a document that is at least 20 years old and whose authenticity is established.”   New York State Surrogate’s Courts have a long history of borrowing from the ancient document rule when it comes to probating a an old Will where the witnesses have predeceased the testator.

New York’s SCPA § 1405 (4) states that “If all of the attesting witnesses are dead or incompetent or unable to testify by reason of physical or mental condition or are absent from the state and their testimony has been dispensed with as provided in this section the will may nevertheless be admitted to probate upon proof of the handwriting of the testator and of at least one of the attesting witnesses and such other facts as would be sufficient to prove the will.”

The courts have added three elements necessary to have a Will admitted to probate as an ancient document.  First, the Will must be more than twenty (20) years old.  Second, the Will must have been taken from a natural place of custody (for example, the decedent’s safe deposit box or filing cabinet).  And third, the Will must be of an unsuspicious nature.  Any alterations to the original Will must be fully explained. In In re Estate of Tier (3 Misc.3d 587,772 N.Y.S.2d 500, 2004 N.Y.Misc. Lexis 48 (Feb. 2, 2004), the Surrogate’s Court of New York County admitted an ancient document to probate but without the alterations made to the Will.  The proponent of the Will stood to benefit from the alterations and failed to produce evidence sufficient to show that the alterations preceded the Will execution.  Once the proponent failed to produce the evidence, the burden shifted to the residuary beneficiaries, the ones who stood to lose from the alterations, to show that the alteration preceded the Will execution.  Since the residuary beneficiaries failed to provide such evidence, the Will was admitted to probate in its original form and without the alterations.

However, in the case of a lost Will or a Will propounded as an ancient document, the court must still be satisfied under SCPA § 1408 of “the genuineness of the will and the validity of its execution,” as well as the competence of the testator and the absence of fraud and undue influence.  Thus, whether the Will offered for probate is a conformed copy or an ancient document, it is still open to be examined by any party to the probate proceeding under SCPA § 1404 either before or after the filing of objections.

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.

Alexander Hamilton, Trusts and Estate Attorney: Part 1

When we think of Alexander Hamilton, we think of him as George Washington’s aide-de-camp, as the writer of the majority of the Federalist Papers, as this country’s first Secretary of the Treasury, and the founder of the New York Post. Less well known is Hamilton’s career as an attorney and the lasting impact that he had as a practicing lawyer, a practicing estates lawyer.

After leaving public service, Hamilton established his law practice in New York. Well-known for his pro bono work with destitute women and orphans, Hamilton was also an astute corporate and trusts and estates attorney. Because of his brilliance in these domains, he wrote a Last Will and Testament that not only created the wealthiest and most successful charitable bequest in New York history, the Sailors’ Snug Harbor for aging sailors, but the trust he created would later establish the right of the State to create corporations in response to charitable bequests in Wills. An ardent advocate of individual property rights, Hamilton drafted a Will that not only withstood legislative debate but also a legal challenge by an heir of the testator that would end up in the US Supreme Court.

What made this trust and estates practice unique was that Hamilton was carving out new legal ground when it came to estates. Prior to the revolution, all lands had been the property of the Crown. The original grantee would then sell off parcels of land under his original grant. The Treaty of Paris (1783) that ended the Revolutionary War also put an end of any residuary rights held by the Crown, but this only meant that a landowner in the United States no longer had any allegiance to the British Crown. Land ownership per se was not addressed by the Treaty.

During the colonial period in New York City, the merchant class under both the Dutch and the English held land by occupying it and forcibly holding it. Some of the large estates were owned by Loyalists (or Tories) who remained loyal to the British Crown during the Revolution. After the Revolution, under the leadership of New York’s first governor (and future vice president under both Thomas Jefferson and James Madison) George Clinton, the legislature passed three laws that effectively confiscated the property of the former Loyalists and forfeited their rights to their land: the Confiscation Act (1779), the Citation Act (1782), and the Trespass Act (1783). Hamilton opposed these laws as flouting fundamental democratic property rights, and he defended Loyalists against these takings by the State. All the while, he was looking for a way to the State to legitimately transfer land without the use of confiscation or eminent domain. The opportunity presented itself with the drafting of the Last Will and Testament of Robert Richard Randall.

The story will continue in Part 2 of this story…

The Presumption of Due Execution:The Importance of an Attorney-supervised Will Execution Ceremony

In a contested probate proceeding, proponents of the Last Will and Testament being offered for probate must submit evidence establishing a prima facie case for probate.  Those who object to the probate must raise a material issue of fact.  One such challenge concerns the due execution of the Will.

These days, there are any number of websites that can be used to create generic Last Wills and Testaments.   While these options may seem more cost-effective than hiring an attorney to draft a Will, in the end they may prove to be very costly options, especially in those cases where there is a Will contest.  In addition to not having the benefit of the advice of an attorney knowledgeable in New York’s Estates, Powers, and Trusts Law for the preparation of this very important document, a person availing himself/herself of these low-cost options also deprives himself/herself of something invaluable:  the presumption of due execution.

How does this work in practice?  When an attorney drafts a Will, s/he will then arrange for a Will execution ceremony with the testator and the attesting witnesses present.  The attorney not only supervises the Will execution, but explains the legal significance ceremony to the attesting witnesses and asks the testator certain questions in front of the witnesses to ascertain certain facts being attested to by the witnesses and to establish the publication requirement.  Where the execution ceremony of a Will is supervised by the attorney who drafted the Will, the presumption of due execution exists.

The presumption of due execution creates a significant deterrent to someone who contest a Will offered to probate. In Matter of Leach, 3 AD3d 763, 764 (2004), the testator had a brother with whom he was not close.  The testator, perhaps anticipating a Will contest, hired an attorney to draft his Will. As part of his regular preparation for the drafting and execution of a Will, the attorney whom the testator retained gathered information about  the testator’s family, his assets, and how he wanted to dispose of those assets

When the testator died and his Will was offered for probate, his brother contested the probate alleging, among other things, a lack of due execution.   Both witnesses, the attorney who drafted the Will, and his secretary were deposed.  The attorney testified as to as to his usual routine for the preparation and execution of a Will, and to the facts and circumstances surrounding the execution of the Will.  The Surrogate’s Court of Chenango County admitted the Will to probate, and the brother appealed.

The Appellate Division, Third Department, affirmed the Surrogate’s Court’s ruling because, among other things, the petitioner had met her burden of proof of due execution;  “When an attorney drafts a will and supervises its execution, a presumption of regularity is raised that the will was properly executed.”   Because the Will had been drafted by the attorney who then supervised its execution, the presumption of due execution existed and the petition was able to meet her burden of proof on the issue of due execution.  The burden of proof then shifted to the respondent to produce admissible evidence creating a triable issue of fact.  Arguments are not enough to meet this burden of proof.

Will contests are an expensive proposition for those offering a Will to probate.  When a Will is not prepared by an attorney and that attorney does not supervise its execution, then that Will does not carry with it the presumption of due execution.  Hiring an attorney to draft this exceedingly important document may just be the wisest expenditure that you can make.  You will ensure that those left behind have the the presumption of due execution in their arsenal should they need to defend your Last Will and Testament.

All Not in the Family? The Dead Man’s Statute and Pedigree Declarations

At times Wills contest expose deep family secrets. There are even cases where the revelation of the secret leaves even more tantalizing questions unanswered. Such is the case of In the Matter of the Estate of Esther T., 86 Misc. 2d 452; 382 N.Y.S.2d 916 (1976), where a son’s use of an exception to the Dead Man’s Statute led to an unexpected result.

One exception to the Dead Man’s Statute in New York is a pedigree declaration. Pedigree declarations, or statements regarding one’s parentage, are admissible in probate proceedings. These declarations necessarily include conversations held by the person testifying with the decedent, something the statute seeks to eliminate because the decedent is unavailable to testify on these same facts.

In In the Matter of the Estate of Esther T. ,the Surrogate’s Court of New York, Nassau County, heard testimony from a contestant, the decedent’s purported son, to the admission of a Will to probate by the proponent, the decedent’s purported husband. According to the contestant, he was the sole child of the decedent and her “purported” husband George M. “Of necessity, proof of pedigree must be based upon hearsay. The issue of lineage rarely comes into question when all of the parties who could testify are available to testify. The necessary foundation for the admission of pedigree declarations is as follows: (1) the declarant is dead; (2) the declarant was related by blood or affinity to the family concerning which he speaks; (3) the declarations were made ante litem motam” Id., at 455. While pedigree declarations are admissible in evidence, the trier of fact must still weight these declarations to determine their truthfulness.

To support his claim, the contestant also submitted the testimony of the decedent’s younger siblings, a brother and a sister. The brother testified that his sister had been born in Brooklyn, NY in 1904 and was about 70 years of age at the time of her death. He further testified that her maiden name was Esther Do, but that she was also known as Estelle Do or Du. In 1928 or 1929, she had married George M, a real estate broker and traveling salesman of novelties, a profession that required frequent out-of-state travel. He was often accompanied by his wife. Esther conducted a tax preparation business from her husband’s real estate office. Over objection, the brother testified that Esther has told him that the contestant was her son.

The sister, an attorney, testified that her law office was located close to her deceased sister’s home and that she saw her sister frequently. She further testified of her sister’s pregnancy in 1946, and that in December of 1946 her sister and George M had closed their office had gone to Florida. She had learned of the birth of her nephew from George M.

It is clear from the record that Esther suffered at least one miscarriage. At issue was whether she ever experienced a live birth and whether the contestant was indeed her son. Conflicting evidence on this point was presented to the court. George M conceded that the contestant had been held out as the son of the deceased and himself. However, he also testified that the contestant was neither the natural nor the adopted son of the deceased and thus should not be a distributee under the Will. To support this claim, he submitted a certified hospital record from North Shore Hospital dated 29 May 1970 containing Esther’s medical history that stated she had experienced one miscarriage and no live children, as well as her blood transfusion record that indicated her blood type was O-RH +.

George M also submitted into evidence a certified copy of a hospital record dated 5 March 1947 from the Atlantic City Medical Center for a certain Estelle Du. Her blood type was AB-RH +. Estelle had given birth there to a child whose footprint was part of the hospital record. Upon recross-examination, the contestant admitted that his blood type was A+.

Because blood typing cannot change, the court determined that the contestant was not the son of the deceased and George M. He was the son of Estelle Du who was 19 years old at the time of his birth, while Esther was 43 years old at the time of his birth. As such, he was not a distributee under the decedent’s Will.

Interestingly, the court noted that George M had not submitted any proof that he was the decedent’s surviving spouse and thus the decedent’s sole distributee. He was ordered to produce proof of his marriage to Esther within 10 days. Absent this proof, Esther’s surviving brother and sister and any children of predeceased siblings would become distributees under the Will if admitted to probate, or intestate heirs should the Will not be admitted to probate.

While pedigree declarations are an exception under New York’s Dead Man’s Statute, they are not automatically admitted as true statements. As the Matter of the Estate of Esther T illustrates, pedigree declarations can sometimes open a Pandora’s box of closely held family secrets.

If you would like to discuss your own personal situation with me, review your current legal life plan, or put together a legal life 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 “Sign me Up” on the left-hand side of the page or the “Subscribe” button at the top of the page so that you can receive a notification when the next blog post has been published.   Thank you.

New York’s Dead Man’s Statute: Some Preliminary Considerations

New York is in the minority of states that still have a Dead Man’s Statute.  New York’s Dead Man’s Statute, also known as CPLR § 4519, came into law in 1851.  The legislative concern at the time was over perjury:  that self-interest would prevail when a person testified in a civil matter involving conversations with a now-deceased person where the witness had a pecuniary interest in the outcome of the case.  That concern persists today and is particularly evident in the area of Wills and trusts.

New York’s Dead Man’s Statute codified what had been common law practice since the time of Elizabeth I of England.   It is intended to protect the decedent’s estate against claims of conversations or interactions that cannot be verified.  What a Dead Man’s Statute does is make a witness legally incompetent to testify about conversations that the witness had with a deceased person in a case where s/he could benefit financially if the trier of fact found that evidence to be materially determinative.   Since the deceased/legally incompetent person’s lips are forever sealed, so must the lips of the other conversant with respect to the matter in contest.  In New York, the statute has been invoked in cases involving such matters as bequests in Wills; trust provisions;  requests for specific performance; and lack of testamentary capacity. 

There are also interesting cases where the Dead Man’s Statute intersects with the competency of a witness exception of the Federal Rules of Evidence (FRE) Rule 601, at which point the Dead Man’s Statute supplies the state law .  At times, the Dead Man’s Statute serves as a statutory exception to the hearsay rule.  At other times, the hearsay exception in the Federal Rules trumps the Dead Man’s Statute.  Establishing pedigree for either the witness or the decedent in a Wills contest is one such example (FRE 804(b)(4)).

In New York, there are three exceptions to the Dead Man’s Statute:

  1. in a tort action for negligence involving a car, boat, or plane, an interested witness can testify to the general facts and results of the accident;
  2. in estate cases where the estate “opens the door” by offering evidence or questioning an interested witness about conversations or transactions with the deceased;  
  3. where the estate of the deceased does not lodge a timely objection during a Wills contest or trial, then the estate waives it right to object based on the Dead Man’s Statute.

The first exception is an important one in vehicular negligence actions because New York does not have a guest statute.  Thus New York’s interest is to allow a New York State domiciliary the right to recover damages against a negligent driver.  The next two exceptions can be triggered during an estate contest, for instance, where a  substantial “gift” is concerned.

In future posts, I will examine specific cases in which the Dead Man’s Statute figured prominently.  Each case presents an interesting set of facts that prepares the stage for the application of the Dead Man’s Statute. 

If you would like to discuss your own personal situation with me, review your current legal life plan, or put together a legal life 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 “Sign me Up” on the left-hand side of the page or the “Subscribe” button at the top of the page so that you can receive a notification when the next blog post has been published.   Thank you.

The Carvel Soft-Serve Empire: Avoiding an Estate Meltdown

When I was growing up, one of my favorite treats was a Carvel chocolate-dipped vanilla soft-serve cone.  And no birthday party was complete without a Carvel ice cream cake.  Tom Carvel was able to parlay my sweet tooth and millions of others into an empire at one time valued at $250 million.  When he died in 1990, he left behind his wife, the former Agnes Stewart, who had once loaned her future husband $15 to begin his ice cream business.  It proved to be a spectacular investment.

Tom Carvel owed his spectacular good fortune to a flat tire.  When Carvel began his business in Hartsdale, New York in 1929, he used a truck to bring his homemade confection to his clients.  One day, a tire blew in the proximity of a pottery store parking lot.   With his ice cream quickly melting, Carvel decided to start selling right from his parked truck.  Thus began the idea for soft serve ice cream, which Carvel refined over time.  He then worked out a deal with the pottery store so that he could sell his ice cream in the parking lot by running an electrical wire to keep his confection refrigerated.  His sales took off.

In 1936 Carvel purchased the pottery store and formed the Carvel Brand Corporation.  Carvel realized that there was money to be made from real estate as well.  Having established a successful business model, Carvel proceeded to map out a plan to franchise his business.  As part of his franchising model, Carvel purchased the properties upon which his franchisee’s store would be located, leasing back the space to the franchisee as part of the license agreement.  Thus the expansion of the Carvel brand also meant the expansion of the Carvel real estate holdings.

A known control freak, Carvel fought for years with the Federal Trade Commission against antitrust charges.  He required his franchisees to attend a three-month intensive training program, and the purchase of all supplies were to come directly from the Carvel Brand Corporation.  While this mentality may have served him well in business, the Will that he executed reflected his need to control from the grave.  The Will became the fodder for controversy and chaos.

His estate planning needs were relatively simple.  He and Agnes had no children, and his intent was to provide for Agnes during her lifetime and after her death the estate would go to charity.  There were several simple ways to accomplish this.  One way would have been to purchase a non-probate asset, such as an annuity, with Agnes as the beneficiary.  She could then have received structured payments immediately after his death.

By naming a disinterested executor (he would instead name seven interested executors), such as a bank or law firm, Carvel could have assured the continuity needed to administer his large postmortem estate without controversy.  And while there are fees associated with this option, it may be a wiser course of action than the litigation costs associated with squabbling executors and beneficiaries.

His Will would still have provided for the statutory spousal elective share.  Under New York Estates, Powers and Trusts Law (EPTL) § 5-1.1, a surviving spouse has the option of taking the the greater of $50,000 -or- 1/3 of the net estate.

The rest of the estate could have been given to charity through an irrevocable charitable remainder trust. §664 of the Internal Revenue Code of 1986 as amended provides for either the payment of a fixed amount through a charitable remainder annuity trust (§664(d)(1)(D)), or a percentage of trust principal through a charitable remainder unitrust (§664(d)(2)(D)).  Carvel would have received two immediate benefits.  He could have claimed a charitable income tax deduction.  And given his sizable real estate portfolio, the estate would not have had to pay immediate capital gains taxes as the trust disposed of the trust property in its portfolio.

What Tom Carvel left behind instead when he died of a heart attack in 1990 was a chaotic estate.  Nine years later, the estate was still in litigation.  A lawsuit filed by his niece Pamela Carvel against the Thomas and Agnes Carvel Foundation in 1999 before the Second Circuit Court of Appeals (188 F.3d 83 (2nd Cir. 1999)) revealed that Tom and Agnes had executed “mirror wills,” or two separate but identical Wills, each naming the Foundation as the beneficiary of their entire residuary estate.  At the same time, they executed a reciprocal agreement agreeing to refrain from changing their Wills or making certain transfers.

In addition to the Foundation, Carvel had created at least five other entities:  a Florida trust for his wife, a charitable remainder unitrust, two real estate holding companies, and the estate created by the mirror Will containing the statutory spousal election share and bequests to 83 different beneficiaries.

A year before his death, Tom Carvel sold his 700 stores to Middle East investors for a reported $80 million.  In the years following his death, a good portion of that sum was spent on litigation over the estate.  His widow Agnes, one of seven named original executors of his estate,  stepped down as executor and Foundation board member and fled to London in the wake of a call for a capacity hearing.  She died in London in 1998, having herself litigated against the estate to received the $600,000 quarterly payments stipulated in her husband’s Will.  A well thought-out estate plan could have avoided this strife and achieved Tom Carvel’s postmortem goals.

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.

Can’t Touch This: In Terrorem Clauses in Wills

Family squabbles over the estate of a decedent are the stuff of tragedy and of farce. For this reason, testators often include in terrorem clauses that penalize with forfeiture of their testamentary gift any beneficiary of the Will who unsuccessfully contests its provisions in any court. In terrorem clauses are also designed to safeguard carefully crafted estate plans from disruption.

New York law, however, provides some limits on in terrorem clauses in order to prevent fraud, undue influence, or gross injustice. These safe harbor provisions are found in Surrogate’s Court Procedure Act (SCPA) § 1404 and Estates, Powers and Trusts Law (EPTL) § 3-3.5. The purpose of these safe harbor provisions is to allow a beneficiary to inquire into the circumstances surrounding the drafting of a Will without risking forfeiture of the bequest. Because courts must strictly construe in terrorem clauses, such safe harbor challenges are the only means a beneficiary has of evaluating the risk of contesting the Will.

EPTL § 3-3.5 provides for “[t]he preliminary examination, under SCPA 1404, of a proponent’s witnesses, the person who prepared the will, the nominated executors and the proponents in a probate proceeding” (EPTL 3-3.5 [b] [3] [D]). SCPA 1404 [4] states that these persons “may be examined as to all relevant matters which may be the basis of objections to the probate of the propounded instrument.” Did the Legislature intend that the safe harbor provisions apply only to those persons expressly mentioned in the companion statutes, or did the Legislature merely provide examples of the types of persons who could be examined and not an exhaustive list?

The New York Court of Appeals addressed the issue of safe harbor provisions as they relate to in terrorem clauses in Matter of Singer, 2009 NY Slip Op 09265 [13 NY3d 447]. On 15 April 2003 Rabbi Joseph Singer executed a Will leaving his Brooklyn home, much of his personal property, and $200,000 to his daughter Vivian who had given up her life to take care of her father’s needs. To his son Alexander he left half of the remaining estate (to be shared with Vivian who was also her father’s executor), less the outright gifts of $15,000 to each of Alexander’s two sons.

The Will contained an in terrorem clause addressed specifically at Alexander. “I specifically direct that my son, Alexander I. Singer, not contest, object to or oppose this Will or The Joseph Singer Revocable Trust Agreement, or any part of my estate plan or any gifts made by me, and I specifically direct that my son not take my daughter, Vivian S. Singer, to a Bet Din (religious court) or to any other court for any reason whatsoever; and I specifically direct that if my son takes any such action or brings on any such proceeding, neither my son nor any of his issue shall receive any share of my estate, whether passing under this Will, under The Joseph Singer Revocable Trust Agreement or otherwise.”

On 5 March 2004 Rabbi Singer died and Vivian submitted the Will for probate shortly thereafter. Alexander then served a notice of discovery seeking, among other things, to depose Joseph Katz, Rabbi Singer’s previous attorney who had drafted seven Wills for the Rabbi but not the one in question. Mr. Katz was subsequently deposed by Alexander’s attorney. Thereupon, it was revealed that Rabbi Singer had inserted an in terrorem clause in a prior 2002 Will drafted by Katz. Alexander did not challenge the Will.

Was the deposition of Mr. Katz sufficient cause to trigger the in terrorem clause? After all, Katz did not belong the the class of persons expressly mentioned in the safe harbor statutes. The safe harbor provisions do not include a former attorney. Or was the testator’s intent, that Alexander not challenge the Will in any way, satisfied because Alexander never challenged the Will?

The Court of Appeals balanced the testator’s intent with the public policy concern that Wills be valid and authentic before being admitted to probate. The court reasoned that only by examining Katz could Alexander properly conclude that he lacked a basis for a successful Wills contest. “A broader construction of these clauses as manifesting testator’s intent to preclude the examination of this witness would essentially cut off all other persons from being asked for information, no matter the potential value or relevance of that information—even as to the medical or psychological condition of the testator at the time the will was executed. Interpreting these clauses narrowly will allow surrogates to address on a case-by-case basis whether the conduct undertaken is in keeping with the testator’s intent.”

With Matter of Singer, the Court of Appeals set a standard for the case-by-case construction of in terrorem clauses: whether the conduct undertaken is in keeping with the testator’s intent. Had the court ruled in Vivian’s favor, then Alexander and his sons would have been stripped of their bequests. Clearly, that was not Rabbi Singer’s intent with the in terrorem clause. He merely wished to protect Vivian’s bulk share from a challenge. He did not wish to disinherit his son or his grandsons.

Matter of Singer is an object lesson about the use (and possible misuse) of in terrorem clauses. As Judge Graffeo noted in his concurrence, “in terrorem clauses are not favored since they may result in a total forfeiture of a bequest and—because of this serious consequence—they must be strictly construed to conform to the testator’s expressed intent.” An in terrorem clause must be drafted very carefully to reflect the testator’s intent. Your attorney can advise you as to whether an in terrorem clause is the best strategy based upon your unique 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.

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.