NEW YORK COUNTY LAWYERS ASSOCIATION ESTATES, TRUSTS AND SURROGATE S COURT PRACTICE SECTION

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1 Faith Louise Carter, Esq. Sylvia E. Di Pietro, Esq. Chair Vice Chair Estates, Trusts and Surrogate s Court Practice Section Estates, Trusts and Surrogate s Court Practice Section NYCLA NYCLA 14 Vesey St. 14 Vesey St. New York, NY New York, NY October 15, 2013 NEW YORK COUNTY LAWYERS ASSOCIATION ESTATES, TRUSTS AND SURROGATE S COURT PRACTICE SECTION Comments re: Legislative Proposal by NYSBA Trusts and Estates Law Section The New York County Lawyers Association s Estates, Trusts and Surrogate s Court Practice Section (the Section ) 1 submits the following comments regarding a May 3, 2013 legislative proposal by the Trusts and Estates Law Section of the New York State Bar Association (the Proposal, annexed hereto as Exhibit A). I. The Proposal The Proposal recommends that EPTL be amended so as to extend that statute s safe harbor provisions to protect beneficiaries of inter vivos trust instruments in addition to testamentary instruments. Specifically, the Proposal recommends that EPTL be amended to read as follows: (a) A condition qualifying a disposition of property is operative despite the failure of the testator or grantor to provide for an alternative gift to take effect upon the breach or nonoccurrence of such condition. (b) A condition, designed to prevent a disposition from taking effect in case the validity of a will or trust is contested by the beneficiary, is operative despite the presence or absence of probable cause for such contest, subject to the following: (1) Such a condition is not breached by a contest to establish that the will or trust is a forgery or that it was revoked by a later will or trust, provided that such contest is based on probable cause. (2) An infant or incompetent may affirmatively oppose the probate of a will or contest the validity of a trust without forfeiting any benefit thereunder. (3) The following conduct, singly or in the aggregate, shall not result in the forfeiture of any benefit under the will or trust: (A) The assertion of an objection to the jurisdiction of the court in which a will was offered for probate. 1 The views expressed are those of the Estates, Trusts and Surrogate s Court Practice Section only, have not been approved by the New York County Lawyers Association Board of Directors, and do not necessarily represent the views of the Board.

2 (B) The disclosure to any of the parties or to the court of any information relating to any document offered for probate as a last will, any document constituting a trust, or any document relevant to the validity thereof. (C) A refusal or failure to join in a petition for the probate of a document as a last will, or to execute a consent to, or waiver of notice of a probate proceeding. (D) The preliminary examination, under SCPA 1404, of a proponent s witnesses, the person who prepared the will, the person who prepared a trust in the case of a pour over will, the nominated executors and the proponents in a probate proceeding and, upon application to the court based upon special circumstances, any person whose examination the court determines may provide information with respect to the validity of the will that is of substantial importance or relevance to a decision to file objections to the will or to petition to determine the validity of a trust in the case of a pour over will. (E) The institution of, or joining or acquiescence in a proceeding for the construction of a will, a trust, or any provision thereof. The Proposal recommends that the foregoing shall be effective upon enactment and shall apply to all testamentary and inter vivos trust instruments on or after the effective date. II. Recommendation For the following reasons, this Section recommends that no amendment be made to EPTL 3-3.5(b)(3)(D), and otherwise endorses the amendments recommended in the Proposal. This Section agrees that, as set forth in the Proposal, inter vivos trusts are gaining prevalence in estate planning. Further, such trusts may be drafted to include in terrorem clauses. This Section, therefore, agrees that in order to balance the interests of trust grantors wishing to forestall challenges to their trusts on one hand, and the interests of beneficiaries seeking to make informed decisions as to whether to risk triggering in terrorem clauses contained in such trusts on the other hand, a legislative extension of EPTL s safe harbor provisions to protect the beneficiaries of lifetime trusts is warranted under certain circumstances. Moreover, as set forth in the Proposal, New York case law appears to support such a legislative extension. See Oakes v. Muka, 31 A.D.3d 834 (3d Dept. 2006); Matter of Shamash, 6/16/2009 N.Y.L.J. 38, (col. 2) (Surr. Ct. N.Y. Cty.). SCPA 1404 s applicability, however, is limited to probate proceedings. See SCPA 1404(4): Any party to the proceeding [for probate of a will], before or after filing objections to the probate of the will, may examine any or all of the attesting witnesses, the person who prepared the will, and if the will 2

3 contains a provision designed to prevent a disposition or distribution from taking effect in case the will, or any part thereof, is contested, the nominated executors in the will and the proponents. Further, a proceeding for probate of a testamentary instrument does not bring up for review the validity of an inter vivos trust in the case of a pour over will. III. Conclusion It is this Section s position that the safe harbor provision under EPTL 3-3.5(b)(3)(D), providing that a beneficiary under a will offered for probate may conduct the preliminary examinations of, inter alia, the witnesses, attorney draftsperson, nominated executors and proponents of such will without triggering an in terrorem clause under such will, should not be extended to beneficiaries of an inter vivos trust in the case of a pour over will. Subject to this exception, the Section supports the Proposal. 3

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