OF TESTAMENTARY TRUST CAN NOT ATTACK TRUSTEE’S DIVERSIFICATION
PLAN WHEN THE BENEFICIARY COULD HAVE PREVIOUSLY DONE SO BUT
FAILED TO RAISE ISSUES AT EARLIER ACCOUNTINGS.
a fiduciary acted as an executor and as a testamentary trustee,
and where that executor filed one or more accountings in those
capacities, and where the chief beneficiary of the trust and
the estate failed to raise an objection to the investment
plan(s) of the fiduciary, the beneficiary may not at a later
date seek to review the very same issues determined in a previous
accounting filed. Under the doctrine of res judicata,
once a matter is decided on the merits, the court, in the
interest of judicial economy, will not again review the matter
when ample opportunity to do so has been given in prior proceedings
before the court. In the instant case, there were allegations
of a lack of diversity of investments, and possibly a legitimate
claim at that, but one can not sit back and fail to call into
question the matter of lack of diversification without suffering
consequences. Matter of Hunter, 4 NY 3d 260, 794
NYS 2d 286 ( Ct. of Appeals, March 24, 2005).
1750-b AUTHORIZING GUARDIAN TO END LIFE SUPPORT IS NOT TO
BE APPLIED RETROACTIVELY WITHOUT A FURTHER DETERMINATION OF
County Surrogate was reversed by the 2nd Department on the
issue of whether SCPA 1750-b should be applied retroactively
so that guardians appointed prior to the effective date of
the statute could indeed withhold or withdraw life support.
The 2nd Department concluded that the statute requires that
there be a determination by the Surrogate that the mentally
retarded person lacks sufficient capacity to make such decisions.
Matter of M.B., 797 NYS 2d 510 (2nd Dept., June 13, 2005).
ORAL DECLINATION OF TRUSTEESHIP NOT BINDING
In a proceeding
brought under CPLR Article 77 to determine the status of a
co-trustee under an inter vivos trust, P claims that he became
a successor trustee upon the settlor’s death. The other
co-trustee, the settlor’s daughter, refused to acknowledge
his status, claiming that at a dinner party 10 days after
the settlor’s death P orally declined the trusteeship.
While neither an acceptance or rejection of a trusteeship
established by an inter vivos trust is required to be in writing,
P’s informal declination was not binding where P had
an immediate change of heart. Court is required to give effect
to the settlor’s intent unless the evidence strongly
suggests the trustee’s unwillingness to serve in that
capacity. Sankel v. Spector, N.Y.L.J. page 18 (April
FATHER CANNOT MAINTAIN A CLAIM AGAINST HIS CHILDREN FOR BREACH
OF CONTRACT BY THEIR FAILURE TO TURN OVER TO HIM MONIES GIFTED
TO THEM UNDER A COURT APPROVED GIFT GIVING PLAN FOR THEIR
co-guardians of an incapacitated elderly woman were authorized
to make annual gifts to the IP’s children and grandchildren
in a manner consistent with the testamentary provisions of
the IP’s will. Her son-in-law commenced an action against
his children claiming they orally contracted to turn over
the monies they received under the gifting plan to him. The
court ruled that since a gift giving plan is an ongoing distribution
program that cannot be performed in a year, the purported
oral contract is in violation of the Statute of Frauds. Lipshie
v. Lipshie, N.Y.L.J., page 18 (May 5, 2005).
ALLOWED TO REMAIN AS HEALTH CARE AGENT BUT WAS NOT ALLOWED
TO MAKE DECISIONS REGARDING MOTHER’S NUTRITION AND HYDRATION
person’s daughter refused to have a PEG inserted into
her mother. Instead, she wanted her mother to continue to
receive hydration and nutrition through a nasogastric tube,
which are generally indicated for temporary use. The IP’s
sister sought to have the health care proxy voided and have
herself appointed as guardian. At the hearing, the IP’s
sister claimed that the IP was becoming increasingly observant
of her Judaism and would, therefore, want to opt for the optimal
life-sustaining treatment so she could live as long as possible.
The daughter withdrew her objection to the insertion of the
PEG. The court denied the IP’s sister’s application
to void the health care proxy because it did not find the
daughter acted in bad faith. However, the court withdrew her
authority to make decisions regarding hydration and nutrition.
Borenstein v. Simonson, N.Y.L.J., April 12, 2005,
p. 18, col. 1.
OF LIMITED PARTNERSHIP INCOME AND PROPERTY TO PAY PERSONAL
EXPENSES OF LIMITED PARTNERS CONSTITUTED A RETAINED ESTATE
INTEREST SUBJECT TO SECTION 2036 INCLUSION
May 10, 2005 Tax Court decision, a decedent and spouse transferred
property to a limited partnership, the general partner of
which was a revocable living trust controlled by the decedent.
The decedent did not retain any substantial assets and could
easily anticipate based on medical needs that the assets of
both the trust and the partnership would need to be employed
to satisfy his personal obligations and expenses. The use
of the funds of the partnership and the trust to satisfy the
obligations of the decedent constituted an implied agreement
which in turn justified the inclusion of the assets of the
partnership in the estate of the decedent under IRC Section
2036 as a retained interest. See Estate of Korby v. Commissioner,
T.C. Memo 2005-102.
INTERESTS IN A FAMILY LIMITED PARTNERSHIP CAUSE INCLUSION
IN GROSS TAXABLE ESTATE UNDER SECTION 2036
2036 has a way of bringing back into a gross taxable estate
a retained interest in property where the transferor retained
some interest in the transferred property. That retained interest
could be documented or based on an expectation or understanding.
In one case which made its way to the 1st Circuit Court (decided
May 26, 2005), the decedent transferred properties to family
limited partnerships. The partnerships received income-producing
real property. As decreed in a guardianship proceeding, the
income generated was to be used for the support of the decedent
and the balance was to be distributed to the other partners.
Testimony established that there was an understanding that
all income could be used for the decedent’s support.
Thus the partnerships' assets were included in the decedent's
taxable estate. It is difficult to see why the estate thought
it could win this case when the facts were clearly unfavorable.
This and other decisions, however, may be used for the proposition
that when deeding a residence from parent to child(ren) with
an understanding that parent may continue to reside in the
residence certainly gives rise to the expectation that the
property will be includible in the gross taxable estate and
thus entitled to a stepped-up basis. See Estate of Abraham,
No. 04-1886 (1st Circuit., May 26, 2005).
A VALUE TO BE GIVEN TO A LIFE ESTATE UNDER RECENT SSI RULING?
recent decision issued by the Social Security Administration,
an 81 year-old woman who was an SSI recipient moved from a
residence in which she owned a life estate to an adult home.
The issue was how and whether to value the life estate for
purposes of determining whether the woman retained an asset
having a value in excess of $2,000 (which would make her ineligible
for SSI). The administrative law judge concluded that the
life estate had no value because it could not be liquidated
in short order. The Social Security Appeals council vacated
the ALJ decision suggesting that the basis for the exclusion
of the life estate was not whether the life estate could be
liquidated but rather whether the life estate constituted
a home to which the SSI recipient could return. The ALJ obtained
a Statement of Intent to Return Home and the matter was resolved.
But what does this decision and approach mean if a Medicaid
recipient owns a life estate in real property which is not
a residence? Does that mean that a value must be assigned
to it for Medicaid purposes? For NY Medicaid purposes, the
Department of Health appears to follow the rule that life
estates have no value-whether or not the real property constitutes
a residence. Could this position change in the near future?
(Note: this item was taken from another publication and the
matter was privately ruled on at the SSA level).
NEW TRANSFER ON DEATH SECURITY REGISTRATION ACT
Part 4 has been added to Article 13 of the EPTL which has
been named the “Transfer-on-Death Security Registration
Act.” The legislation deals with the registration of
a security in “Beneficiary Form.” Effective for
security owners dying on or after January 1, 2007, it is possible
for owners of securities or owners of security accounts (e.g.,
at brokerage houses) to designate a beneficiary upon the death
of the owner provided that the issuing entity and the state
laws under which it was created permit such a designation.
The statute provides a great deal of registration flexibility.
are examples: (1) A (the owner) can designate B as beneficiary,
(2) A1 and A2 can hold between themselves as joint tenants
with right of survivorship, as tenants by the entirety, or
as owners of community property in survivorship form. The
registration form may provide the following language to effect
the kind of registration: “Transfer on Death,”
“TOD,” Pay on Death,” and “POD.”
The beneficiary designation has no legal effect until the
owner’s death, and the registration may be cancelled
or changed by the owner(s) at any time before death.
change in the registration may be effected by the owner’s
Will by a specific reference to the registration.
On the death of
the sole owner or the last to die of multiple owners, ownership
passes to the beneficiaries who survive all of the owners.
Multiple beneficiaries surviving the death of all owners hold
their interests as tenants in common. If no beneficiary survives
the death of the last of the owners to die, the security belongs
to estate of the last owner.
The entity may
establish rules of its own to effect transfers including the
providing of proof of death and other matters. Under the statute
there is the possibility the certificate of registration may
provide that if a beneficiary predeceases the owner(s), the
interests of the deceased beneficiary may pass to the beneficiary’s
lineal descendants per stirpes or by representation. The statute
also provides examples of how the beneficiary form may be
prepared including the use of abbreviations to effect ownership
Executive Committee meeting held on April 28, 2005, then Chair
Howard S. Krooks created three committees. The first committee
is chaired by Stephen Silverberg and Amy O'Connor and is investigating
whether the Elder Law Section should support the passage of
a living will statute in New York. The second committee is
chaired by Mickey Haggerty and is following burial rights
legislation recently proposed in the New York State legislature
(A. 1238), which would amend the public health law to provide
rights to domestic partners, spouses, parents, siblings, and
court-appointed administrators to control the disposition
of a decedent's remains in the absence of written directions
provided by the decedent. The third committee is chaired by
Robert Kruger and was formed to comment on proposed changes
to the power of attorney forms that are being suggested by
the Law Revision Commission.
Working Group (Howard S. Krooks and Vincent J. Russo, Co-chairs;
Michal Amoruso, Howard Angione, Daniel Fish, Louis Pierro
and Gail Holubinka), Working Group members are working continually
to develop the Compact proposal contained in the Section's
Long Term Care Reform Report (February 2005). A detailed review
of this proposal will be sent to you in a special edition
of the eNews in early September.