Death and Passwords: Estate Planning for Your Digital Assets, Part 1

If you are reading this, it is because you have Internet access. With Internet access comes a host of services, including online banking, online businesses, and online access to pension savings and other investments.  All of these services require you to create a user name and a password.  Many have challenge questions as well.  What is your plan for these digital assets if you should become incapacitated or die?

With the exception of Oklahoma, state laws that control the disposition of your estate have not been enacted to keep up with this massive societal change in the way we transact our financial lives. For instance, if a family member has given you a power of attorney over their financial affairs, a bank will work with you with respect to their non-virtual accounts. But if that family member schedules payments and transactions through their online account, the power of attorney may be ineffective to gain access to that online account. You must have  at least the password.

But you or your family members may not want to give out passwords to online banking or investment accounts. The possibilities for fraud or mismanagement are large. In addition, many people do not want to reveal the full extent of their financial lives. Access to passwords provide that full view.

On the other hand, there are good reasons to give access to passwords to these trusted sites. Mental incapacity due to illness can rob the individual of the ability to manage their online financial life. At the same time, mental incapacity prevents a person from legally drafting a Will or trust. Thus, estate planning for our digital assets becomes a priority for anyone with anyone who manages their financial life online.

Even if you have a Will, you probably did not make provisions in this document for your digital life. In any case, a Will is not the proper place to list your passwords. If you include your passwords as part of your Will,  a probated Will is   a public document, exposing your digital assets to prying eyes.  These user names, passwords, challenge questions, and other online account identifiers are best protected in a digital assets trust. Trusts, in contrast to Wills, are private documents and a safe way of communicating your online passwords to your trusted family members and advisers.

So who is a candidate for digital asset estate planning? If you can answer “yes” to any of the following questions, then you need an estate plan for your digital assets.

— Do you do online banking?

— Do you regularly schedule payments through your online banking accounts?

— Do you use an online password to access your retirement accounts?

— Do you use an online password to reach your investment accounts?

— Do you have an online business?

— Do you sell items on eBay or other online auction sites?

— Do you have a PayPal account?

— Do you have a business website?

— Do you have a blog or other social media site associated with your business?

In the next part of this series, we will look at why a digital asset trust may be a good solution for your estate planning needs.

If you would like to discuss your own personal situation with me, or how a digital assets estate plan can be tailored to 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.

Protecting Individual Wealth in New York with Prenuptial Agreements

Prior to 1980, New York’s statutory regime for the distribution of property at divorce was a simple one.  The property in question was awarded to whichever spouse held title to it.  Given that women had recently begun entering the labor force as a result of the feminist movement, few women had accumulated much wealth before marriage or even after marriage.  Most husbands still held title to the property shared by the couple.  More often than not, the title system of property division at divorce left the wife in financially difficult circumstances.  A wife could be awarded alimony, but courts were reluctant to do so.  Thus divorced women easily slipped into poverty, at times becoming wards of the State.

Then in 1979 the United States Supreme Court in Orr v. Orr (440 U.S. 278 (1979)) declared that divorce laws that only provided alimony for wives and not husbands were unconstitutional because these laws violated the Equal Protection Clause of the Fourteenth Amendment.  The New York law was thus unconstitutional under Orr, and the State legislature was pressured to act to reform New York’s divorce law.

The enactment of Domestic Relations section 236 part B, known as the equitable distribution law, was the result of the redrafted law.  Equitable distribution means that a court can look at the totality of the marital assets acquired jointly or separately during the marriage and divide them fairly between the spouses.  In practice and under the law, this means that no two marriages are alike.  Under equitable distribution, the goal is fairness and judges have latitude and discretion to assess each spouse’s economic and non-economic contributions to the marriage.

In New York, marriage is viewed by the courts as an economic partnership and not solely as a sacred bond.  The judge determines the dollar value of a spouse’s non-economic activities, such as housework and child-rearing, and then adds that figure to the totality of the assets to be divided equitably.  Equitable distribution replaces alimony in New York.  Thus, a spouse’s post-marriage economic welfare often depends upon the size of the equitable distribution award.

Since the passage of New York’s equitable distribution law in 1980, an individual’s ability to earn a living and to create wealth prior to marriage has vastly increased.  Women and men are earning college and professional degrees in increasing numbers.  Career and professional women are also delaying marriage and child-bearing, factors that contribute to wealth-building.   Both men and women are saving for retirement in their own savings vehicles.

As a result, each person’s personal wealth acquired prior to a marriage may need to be protected in case of a termination event (divorce, separation, and death).  It is possible that one spouse entering a marriage may have substantially more assets than the other spouse and that one person’s ability to earn money may far outstrip the wage-earning capacity of his/her spouse after the marriage.  Should the couple divorce at a later time, absent a prenuptial agreement the court under equitable distribution will look to the couple’s standard of living during the marriage, among other things.

In order to be valid, each person engages separate legal representation so that the prenuptial agreement can be negotiated at arms length, as with any contract negotiation.  In addition, each party must fully disclose all assets and liabilities.   Like any other contract, it must be a signed writing that clearly states that the parties understand and intend to circumvent equitable distribution.

Therefore, a couple about to enter marriage and wishing to protect their separate future earnings and capital investments from equitable distribution in the event of a divorce or separation may want to budget for the legal fees associated with the drafting of a prenuptial agreement.

If you would like to discuss your own personal situation with me, or put together a prenuptial agreement 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.

Costly Drafting Errors and the Rule Against Perpetuities: The Case of Symphony Space

There’s a saying in New York that every building tells a story.  In the case of Symphony Space, that story is a fascinating legal story with an unforgettable lesson.  Symphony Space is a cultural landmark on New York’s Upper West Side, located on Broadway and 95th Street.  I walk by it every day.  And yet I did not know its legal story until I was doing some research recently on New York’s Rule Against Perpetuities contained in EPTL § 9-1.1(b).

Simply stated, the Rule Against Perpetuities (RAP) works this way: “No interest is good unless it must vest, if at all, no later than twenty-one years after some life in being at the creation of the interest” (John Chipman Gray, The Rule Against Perpetutities § 201 at 191 [4th ed. 1942]).

At one time, Symphony Space’s theater and commercial space was owned by Broadwest Realty Corporation.  Broadwest also owned Pomander Walk and a commercial building, the Healy Building, named after nightclub impresario Thomas J. Healy who had built Pomander Walk in 1921.  Pomander Walk was granted landmark status by New York City in 1982.

In 1978, the New York real estate market was experiencing a severe downturn.  Broadwest needed to sell its properties, but was looking for a way to postpone a final sale of it properties until the market conditions were more favorable.   Broadwest set about looking for a short-term solution to its economic problems by looking for a buyer for its theater and commercial space.

Symphony Space, Inc, a non-profit arts organization, became the perfect candidate for two reasons.  First, the organization had an immediate need for the theater space.  Secondly, and equally important for Broadwest, Symphony Space’s non-profit status meant that the entire building — the theater and the commercial space — would benefit from a property tax exemption. 

So in 1978 Symphony Space purchased the building housing the theater and the commercial space from Broadwest for $10,010.  The deal included the following parts.  Broadwest would continue to pay the $243,000 mortgage on the property.  Symphony Space, Inc. would lease back the commercial space to Broadwest for $1 per year.  Because of Symphony Space’s non-profit status, its use of the theater would grant a property tax exemption for the entire building, including the commercial space.  Finally, as a condition of the sale, Symphony Space granted Broadwest the option to repurchase the building in exchange for $10 consideration.

The option to repurchase the building granted to Broadwest by Symphony Space was a covenant running with the land, meaning that the option could be exercised by Broadwest and its heirs, successors and assigns.  The contract specified four exercise periods for the option:  “$15,000 if (…) on or before December 31, 1987; $20,000 if on or before December 31, 1993; $24,000 if on or before December 31, 1998; and $28,000 if on or before December 31, 2003.”  Symphony Space, Inc. v. Pergola Properties, Inc., 669 N.E.2d 799, 801 (N.Y. 1996).

In 1981, Broadwest sold all of its interests, including the option to repurchase, to a nominee who then transferred to rights to Pergola Properties, Inc., Bradford N. Swett, Casandium Limited, and Darenth Consultants as tenants in common.  A year later, Pomander Walk received landmark status, thereby increasing the value of the entire block front to $27 million, assuming that the option to repurchase from Symphony Space was enforceable.  Without the enforceable option, the appraised value decreased to $5.5 million.  It thus became in the new owners’ best interest to exercise the repurchase option.

Alleging that Symphony Space had defaulted on the mortgage, Swett served Symphony Space with notice in January 1985 that Swett was exercising the option to repurchase on behalf of all the defendants.  Symphony Space countered that the option agreement might be invalid and in March of 1985 Symphony Space began an action for a declaratory judgment against the defendants.  At issue was whether the option agreement violated New York’s Rule Against Perpetuities.

In the case of the Broadwest repurchase option, it was created in 1978.  If RAP was applicable to option agreements, then the latest year during which the option could have been exercised would have been 1999.  Accordingly, if RAP applied, then only three exercise periods were legitimate.  The fourth option exercise period, on or before 31 December 2003,  was outside of the statutory period for RAP.  If RAP were applicable to commercial options, then the entire repurchase option with Symphony Space was invalid and unenforceable by the defendants.  Without a valid option, the value of their properties would decrease by around $21 million.

For the next eleven years, the case wound its way through the courts.  The trial court  ruled that RAP applied to commercial options, that the repurchase option in question violated RAP, and that Symphony Space was entitled to redeem the mortgage.  The defendants appealed and the Appellate Division certified the question to  the Court of Appeals, New York’s highest court.  At issue was the novel question of whether options to purchase commercial property are exempt from RAP.

Citing Buffalo Seminary v. McCarthy (86 AD2d 435, affd 58 NY2d 867), the court ruled that RAP did indeed apply to commercial real estate options and that the New York State Legislature had intended for the prohibition against remote vesting to apply to commercial purchase options.  The reason for the legislature’s prohibition against remote vesting was to encourage land use and development.

Moreover, the court cited the following defects with the purchase option.  First, the option involved the entire building, the theater and the commercial space, even though the defendants were leasing only the commercial space.  This created a disincentive for Symphony Space to invest in maintaining the property since the option holder would reap the benefit of its investments.  Secondly, the option was not drafted as part of the lease itself, but as a separate agreement.  The purchase option exceeded the term of the lease, meaning that under the terms of the option the defendants could force Symphony Space to sell them the property even though they were no longer tenants of the commercial space.

Nor could the “saving statute” (EPTL 9-1.3), a rule of construction meant to avoid frustrating the creator’s intention “unless a contrary intention appears,”  be invoked in this case.  Here the plain language of the option rendered it unambiguous and thus not subject to a rule of construction.

In practical terms, a drafting error in the original repurchase option had neglected to take into account RAP.  During the time of their purchase from Broadwest, the defendants could have caught the error with a thorough legal review of the original documents.  These two failings combined had ultimately cost the defendants over $21 million.

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 Basquiat Estate: Trumping The Dead Man’s Statute with The Federal Rules of Evidence?

Jean-Michel Basquiat was one of the most gifted artists of the late 20th century, raising graffiti art from its street roots to the pinnacle of fine art and in the process redefining Neo-Expressionism.  His untimely death from a drug overdose in 1988 stunned the art world.  He was 27 years old.  According to Phoebe Hoban in her book Basquiat:  A Quick Killing in Art, the auction house Christie’s determined that the artist had left behind a prodigious collection of  917 drawings, 25 sketchbooks, 85 prints, and 171 paintings.

Basquiat died without a Will (intestate).  At the time of his death, his parents Gerard and Matilde were estranged, but not divorced.  New York’s EPTL § 4-1.1 (a) (4) states that, where a person dies without a Will and is survived by one or both parents, the whole of the estate goes to the surviving parent or parents.  Gerard Basquiat began the long process of probating the estate, a process slowed by a number of lawsuits against the estate.  Matilde Basquiat died in November of 2008, leaving Gerard as the sole administrator of their son’s valuable collection.

In 1993, an art dealer named Michelle Rosenfeld sued the Basquiat Estate for allegedly failing to deliver three paintings that had been purchased from Jean-Michel pursuant to a partly written and partly oral purchase agreement.   At trial, defense counsel for the Basquiat Estate affirmatively waived his objection based on New York’s Dead Man’s Statute (CPLR  § 4519) to Michelle Rosenfeld’s testimony concerning her conversations with the deceased Basquiat.  This affirmative waiver came after the judge in the case said that he would instruct the jury about the Dead Man’s Statute if Basquiat chose to invoke it.    Rosenfeld proceeded to testify about her conversations with Basquiat. 

Rosenfeld testified that she had met Jean-Michel Basquiat at his apartment on 25 October 1982.  She said that during their meeting, Jean-Michel had agreed to sell her three paintings, identified in her complaint, for $4,000 each.  Jean-Michel then asked her for a 10% deposit.  Rosenfeld returned ten days later with $1,000 in cash whereupon she asked for a receipt.  According to Rosenfeld, Jean-Michel then set upon writing a “contract” in crayon that identified the three paintings and recited the agreed-upon price and the deposit.  The dated document was signed by both Basquiat and Rosenfeld (Rosenfeld v. Basquiat, 78 F.3d 84).

That trial ended in a hung jury. Rosenfeld filed for a new trial in the United States District Court for the Southern District of New York.  In a pretrial conference, the parties were asked to brief the court regarding the threshold question as to the applicability of the Dead Man’s Statute (Rosenfeld v. Basquiat, 866 F. Supp. 790; 1994 U.S. Dist. LEXIS 15662).  The court had to decide three preliminary questions:

“1. Does Basquiat’s waiver of his objection based on CPLR 4519 at the first trial, allow Rosenfeld to testify about her transactions with the decedent at the retrial?

2. Is Rosenfeld entitled to a jury instruction concerning the effect of CPLR 4519, if I exclude her live testimony?

3. Is Rosenfeld’s prior trial testimony admissible in evidence at the retrial?” Id. at 792.

The district court judge reasoned that the Federal Rules of Evidence (FRE) and specifically FRE 804(b)(1) governed hearsay, and not the Dead Man’s Statute. FRE 804(b)(1) “provides that a declarant is ‘unavailable’ if ‘exempted by ruling of the court on the ground of privilege from testifying concerning the subject matter of the declarant’s statement.'”  Id. at 793.  As a result, the judge ruled that if Basquiat asserted the Dead Man’s Statute, which the judge termed a “privilege” (FRE 804(a)(1)),  then Rosenfeld would become “unavailable” within the meaning of FRE 804(b)(1).  The judge would then admit Rosenfeld’s prior testimony, and so instruct the jury.

At the second trial, the trial court allowed the reading of Rosenfeld’s prior testimony from the first trial to the jury.  The jury found in Rosenfeld’s favor:  “The jury in the second trial reached a verdict in favor of Rosenfeld, returning answers to special interrogatories as follows: Basquiat entered into a written agreement in October 1982 to sell the three paintings to Rosenfeld for $12,000; although there was no initial agreement establishing a delivery date, they made a separate oral agreement approximately ten days later setting the delivery date; a reasonable delivery date was October 1987; Rosenfeld first learned of the breach in August 1988, when Jean-Michel Basquiat died; and the market price of the three works at that time was $395,000.” (Rosenfeld v. Basquiat, 78 F.3d 84).  The jury awarded Rosenfeld $384,000, the market value of the paintings minus the remainder of the purchase price, plus $217,301.92 in interest.  The Basquiat Estate appealed to the Second Circuit Court of Appeals.

The Second Circuit Court of Appeals distinguished the hearsay exceptions under the Federal Rules of Evidence from the Dead Man’s Statute.  The court said that the hearsay rule (Rule 802) is a rule of exclusion that makes certain out-of-court statements inadmissible as evidence.  FRE 804 lists several exceptions to the exclusionary rule for when a witness is “unavailable” to testify.  FRE 804 (a) defines “unavailability,” one instance of which is that the declarant “is exempted by ruling of the court on the ground of privilege from testifying concerning the subject matter of the declarant’s statement.” The District Court had ruled that New York’s Dead Man’s Statute was such a privilege, thus making Rosenfeld “unavailable” and her prior testimony admissible if the Basquiat Estate asserted the Dead Man’s Statute.

But the Second Circuit declined to follow the District Court in its definition of the Dead Man’s Statute as a “privilege” under the FRE.  Instead the Second Circuit defined the Dead Man’s Statute as a statute regarding witness competency.  But the court went on the say that even if Rosenfeld’s prior testimony could have been brought in under an exception to the hearsay rule of the FRE, that testimony would still have been barred by the Dead Man’s Statute.  The Federal Rules of Evidence are not independent of state statutes  While FRE 804(b)(1) does not bar the admission of prior testimony of a witness who is now “unavailable,” it does not resolve the threshold issue of whether that testimony is admissible in the first place.  New York’s Dead Man’s Statute made Rosenfeld legally incompetent as a witness.  Therefore, the FRE was irrelevant in this case.  Absent a compelling federal interest, federal courts may not ignore state statutes in their rulings unless the statute is unconstitutional.  The judgment of the district court was reversed a new trial was ordered.

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.

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 and Oral Promises

Oral promises concerning property made by one family member to another can have devastating consequences after the promisor’s death if these promises are not memorialized in writing.  That is because New York’s Dead Man’s Statute (C.P.L.R. 4519) prohibits the admission of such oral promises by an interested party (in this case, the promisee) in the case of a Wills contest or other litigation.  The family strife that results due to the absence of a writing concerning the future ownership of the property in question can be easily avoided by consulting an attorney. 

Consider the case of Elizabeth Connelly Payne and her brother F. Henry Connelly (Payne v Connelly (1969, 3d Dept) 32 App Div 2d 693, 299 N.Y.S.2d 1013).  At issue in this case was whether Elizabeth could prove that she had been induced to relinquish a present benefit in return for her brother Henry’s promise of future gain.  Elizabeth and Henry’s aunt owned quite a bit of stock in the National Dairy Products Corporation.  Elizabeth Payne alleged that she was persuaded by her brother to dissuade their aunt from changing her will and leaving all of her stock holdings to Elizabeth (the original will left all of the stock to Henry), in exchange for Henry’s promise to give Elizabeth one half of the stock after their aunt’s death.

In due course, their aunt passed away leaving Henry as the sole beneficiary of the stock in question.  And then something unexpected happened:  Henry died as well, but without a Will (intestate).  All of his assets were distributed under New York’s intestacy law to his spouse, Phyllis (the respondent in this case) and their children.   Henry also left behind significant assets in the Valley Coal and Supply Company to his heirs.  The only people present during the conservations concerning the aunt’s will had been Elizabeth and Henry.  The Dead Man’s Statute now prohibited Elizabeth from bringing in those conversations as evidence at trial. 

But what about her sister Florence and her brother-in-law’s assertions concerning statements that Henry made during a Labor Day family gathering in 1962 during which he purportedly said that Elizabeth was to receive half of the National Dairy Product Corporation stock?  The court found that, while it was clear that the parties were discussing the aunt’s Will, Henry’s statement still did not go to the issue of whether the aunt had been induced to not make changes in her Will in favor of Elizabeth in return for Henry’s promise to give Elizabeth half after their aunt’s death.  As a result, Elizabeth’s claim was denied by the court.

When it comes to our family, we want to believe that family members have our best interests at heart.  That is the case more often than not.  However, as in the case of Henry, unexpected events such as a sudden death and legal or mental incapacity can rob the best of intentions of their desired impact.  And once the unexpected happens, New York’s Dead Man’s statute prohibits the testimony of these oral promises with the deceased.

The best course of action when it comes to oral promises between family members or close associates is to memorialize them in writing.  You should consult an attorney to make sure that the proper legal documents are drafted and then properly executed under New York law.  Both parties will then have the assurance that the intentions expressed in oral promises will be carried out no matter what happens to either party.

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.