Hot Topics in Trusts and Estates
August 20, 2010
The summer has seen a multitude of significant decisions impacting practice and procedure in the Surrogate’s Court. Aside from the decisions rendered by the Court of Appeals in Matter of Schneider, 2010 N.Y. Slip. Op. 05281 and Matter of Hyde, 2010 N.Y. Slip. Op. 05676, both of which have been the subject of recent postings on this site, consideration should be given to the following decisions of interest.
Life Tenancy versus Right of Occupancy
The distinction between a life tenancy and a right of occupancy has been the subject of numerous Surrogate’s Court opinions. This past June, the court in In re Saviano, N.Y.L.J., 6/4/10, p. 42 (Sur. Ct., Suffolk County) had occasion to determine whether a beneficiary under the decedent’s Will was devised a life estate or merely a right to occupy the decedent’s former residence. The court opined that a life estate conveys exclusive ownership of the land during the lifetime of the life tenant, subject to certain limitations or duties. By comparison, a right of occupancy is a lesser interest in realty, conveying to the recipient a “personal privilege” in the property without the benefits of a life estate.
In reviewing the terms of the Will, the court noted that the beneficiary was devised “the right, during his lifetime, to reside in” the subject premises. The provisions of the Will were otherwise silent as to the nature of the bequest. Nevertheless, the court found it significant that the decedent did not use the words “life estate”, nor the descriptive words “use and occupancy” in making the subject bequest, phrases which are traditionally used to denote a life tenancy, although not dispositive.
Further, there was no language in the instrument defining the duties or limitations imposed upon the beneficiary.
Accordingly, in view of the foregoing, the court held that the beneficiary’s interest in the subject property consisted solely of a right of occupancy.
The Advocate Witness Rule
The issue of whether counsel for a litigant should be disqualified due to his possible role as a witness at the trial of the matter was recently addressed by the Surrogate’s Court, Westchester County in Matter of Popkin, N.Y.L.J., 6/4/10, p. 42 (Sur. Ct., Westchester County). This was a contested probate proceeding in which the objectant moved to disqualify petitioner’s counsel from representing the estate. The record revealed that the decedent died survived by his spouse, who was the petitioner and primary beneficiary under the propounded instrument, and a son from a prior marriage, who was the recipient of a $25,000 bequest. Objections to probate were filed by the decedent’s son
In support of his motion to disqualify petitioner’s counsel, objectant maintained that counsel would be called as a witness in the Will contest; that he had a unique knowledge as to decedent’s mental capacity and the possible exertion of undue influence at the time he executed the propounded Will, and that as one of the two attesting witnesses to the instrument, he could offer key testimony as to due execution. The petitioner opposed the application claiming that it was premature, that nothing had been shown by the objectant to substantiate that his testimony was necessary, and that the advocate-witness rule did not preclude him from representing petitioner in connection with the administration of the estate.
The court opined that the provisions of Rule 3.7 prohibit, inter alia, an attorney from acting as an advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact. The burden of proof on the issue of disqualification is on the party requesting it, who must demonstrate that the expected testimony of the attorney is necessary and prejudicial to the attorney’s client. Because disqualification impacts upon a party’s right to counsel of his own choosing, disqualification should not be applied mechanically.
Within the foregoing context, the court acknowledged that it had consistently adhered to the majority view that allowed the attorney draftsman in a contested probate proceeding to serve as counsel for the petitioner up until the time of trial. Finding that the language of the new advocate witness Rule was substantially the same as the provisions of the prior disciplinary rule on the subject, the court concluded that established case law authorizing this pre-trial representation continued to be applicable.
Accordingly, the court denied the motion to the extent that it allowed the attorney draftsman of the propounded Will to represent the petitioner up to the point of trial, and otherwise granted the relief requested.
Appointment of Limited Fiduciary to Resolve a Deadlock
The appointment of a limited fiduciary under the SCPA can prove an effective means of resolving hostility between co-fiduciaries. In In re Cushing, N.Y.L.J. 7/7/10 p.34 (Sur. Ct., New York County) (Webber, S.) the court invoked the provisions of the statute in a contested discovery proceeding in which the petitioner moved for summary judgment on the on the issue of the appointment of a third fiduciary for the limited purpose of resolving disputes between the co-executors with respect to the sale of real property.
The said realty was the principal asset of the decedent’s estate. The executors agreed that the property had to be sold, and actively marketed the premises through several real estate brokers since 2004, successively lowering the asking price, though to no avail. In order to cover the cash deficit of the estate, and more particularly the costs of maintaining the property, the fiduciaries, who were also the sole beneficiaries of the estate, entered into an interim agreement to cover the charges from their own funds.
Thereafter, cooperation between the co-fiduciaries broke down, and they were unable to agree on a broker to list the property, the price at which it was to be offered, or payment of the carrying costs. The court found the deadlock between the co-executors to be detrimental to the estate, most particularly to the sale of the real property. While it noted that it had the authority to require a fiduciary to comply with such directions as it may make whenever fiduciaries disagree with respect to any issue affecting the estate (SCPA 2102(6)), it concluded that the sale of the subject property would require active decision-making that a single order could not necessarily address.
Under such circumstances, the court held that the appointment of a third fiduciary was appropriate to break any deadlock through the rule of the majority.
Accordingly, the application of the petitioner was granted.