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New York Executrix Ordered to Return Estate Funds

New York estate planning lawyers are often tasked with advising their clients as to how to choose the proper people to administer their estates. The people they designate are put in positions of immense trust and responsibility. Whether the client is designating an executor/executrix, a trustee, or a power of attorney, the client must exercise extreme caution as to whom they entrust with these duties.

In many cases, the natural choices for these estate administration positions are the family members of the decedent. After all, the decedent’s family members are most likely to be in touch with the decedent’s wishes and to have an idea as to the decedent’s assets. It is not uncommon, however, for a decedent’s own family member to abuse his or her position of power over the estate administration. As the following case demonstrates, impropriety is always possible where there is a financial gain at stake, even amongst family.

In re Goodwin, NYLJ, Apr. 10, 2012, at 31 (Sur. Ct. Suffolk County) involves a dispute between a brother and sister over the administration of their mother’s will. Mildred Goodwin, the decedent, appointed her daughter, Maureen Burns, as executrix of her estate and executed a durable power of attorney to entrust Burns with acting in the best interest of the estate’s finances. Before Mildred Goodwin died, Burns opened several bank accounts that were jointly titled in hers and Mildred’s names. Burns consulted a New York elder law estate planning attorney to help execute an inter vivos transfer of estate assets from Mildred’s estate to the jointly titled bank accounts. The transfers were characterized as gifts, and there was little doubt that Burns was to be the sole beneficiary of the funds.

Sensing impropriety, Mildred Goodwin’s son and Burns’ brother, Robert Goodwin, filed a petition with the Suffolk County Surrogates Court to compel Burns, as executrix of the Goodwin estate, to disclose the assets and affairs of the estate. Included with Robert’s petition was the contention that Mildred Goodwin was suffering from dementia at the time the inter vivos gifts were executed. Robert submitted medical records as evidence of his contention. He also contended that the purpose of the wealth transfers were to help Mildred qualify for certain government programs, and that Burns’ access to the funds before the decedent’s death was inconsistent with a Family Agreement they had previously executed. The Agreement, signed by Burns, expressly stated that the same funds were to be dispersed as part of the decedent’s will, and not inter vivos.

The Surrogates Court agreed. The Court noted the long standing principle that one who has power of attorney initiating inter vivos transfers to him- or herself is presumed to be acting with impropriety unless he or she can overcome the presumption with a showing that the principal was of sound mind and had the requisite intent to make the gift. Additionally, the purpose of any such gift may not be for the financial benefit of the attorney in fact. The gift must further some type of financial, estate, or tax plans.

Here, Maureen Burns was the attorney in fact. There was evidence that Burns initiated the gift transfers for personal gain, all while Mildred Goodwin was not of sound mind to object to the transfers. Evidence rules barred Burns from testifying on her behalf because Mildred Goodwin was no longer alive to either corroborate or contravene Burns’ account of Mildred’s capacity and intent at the time of the gifts. Accordingly, the Surrogates Court entered summary judgment on behalf of the petitioner, and the funds were returned to the estate.

New York estate planners see a similar refrain all too often; not even family can be trusted sometimes.

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