Our inaugural post covers two recent decisions of the New York State Surrogate’s Court. The first decision holds that a trustee with “working control” over a trust-owned entity as an officer or general partner may have to account for actions taken in her corporate capacity. (Matter of Skoutelas, 2024 NY Slip Op 51508(U) [Queens Surrogate’s Court, November 8, 2024]). The second decision is a reminder for joint bank account owners to review how their accounts are titled when reviewing estate plans. (Matter of Estate of Wojcik, 84 Misc 3d 1247(A) [Broome Surrogate’s Court, December 16, 2024]).
A Fiduciary, By Any Other Name, Still Owes Fiduciary Duties
Matter of Skoutelas, 2024 NY Slip Op 51508(U)
(Queens Surrogate’s Court, November 8, 2024).
The ironically named 1st Kindred, LLC was owned equally by Sophia, Fay, and John. Sophia died in 2009. Her Will bequeathed her interest in 1st Kindred to a Trust established for her spouse and children. Sister Fay served as Trustee and Managing Member of 1st Kindred. Brother John served as Executor of Decedent’s Estate.
Between 2009 and 2023, Fay made quarterly distributions from 1st Kindred to the Estate, which, in turn, distributed the funds to Decedent’s husband and children. Decedent’s spouse and children sought an accounting from Fay when distributions from 1st Kindred stopped.
Fay opposed the petition. She argued that Decedent’s husband and children could not compel her to account for her conduct as Managing Member of 1st Kindred. The Court disagreed, stating “although [Fay] takes great pains to sever her role as a trustee from that of managing member of the corporation, where, as here, the trustee holds ‘working control’ of a corporate entity, the fiduciary may be called upon to account in the Surrogate’s Court for actions taken in the capacity of a corporate officer or general partner.”
The takeaway: Fiduciaries cannot cling to titular distinctions to shield themselves from providing information relevant to determining whether they have properly served their beneficiaries’ interests.
An Inconvenient Account
Matter of Estate of Wojcik, 84 Misc 3d 1247(A)
(Broome Surrogate’s Court, December 16, 2024)
Frances died in 2023 and was survived by three children Ken, Eileen, and Diane. Her Will leaves her home and personal property to Ken and equally splits the remainder of her estate between her three children.
The Court named Ken as the executor of Frances’ Estate. He commenced a proceeding against Eileen to compel her to turn over the proceeds of a joint account she held with Frances. Frances and Eileen opened the account more than 40 years earlier in 1981, and they signed agreements with the bank stating the account was a joint account with rights of survivorship in 1981 and 1987.
Pursuant to Banking Law § 675, Courts presume that a decedent intends the joint owner of a bank account to receive all proceeds upon decedent’s death where the account agreement contains right of survivorship language. A party challenging the title of a joint account with survivorship rights bears the burden of establishing through clear and convincing evidence that the joint account was opened in that form as a matter of convenience only.
Here, Ken sought to carry his burden based on the following undisputed facts: (1) that Frances was the sole source of funds for the account, (2) that Eileen made no withdrawals from the account during Frances’ life, and (3) that Frances had exclusive possession of the passbooks.
The Court granted Eileen’s motion for summary judgment, holding the undisputed facts did not establish by clear and convincing evidence that Frances had opened the joint account in 1981 solely for her own convenience. Among other things, the Court highlighted: (1) that Frances had signed multiple agreements over the course of a decade stating that the account was joint with rights of survivorship, (2) that Frances had experience with joint accounts with survivorship rights before opening this account in 1981, and (3) that Frances’ estate plan never treated her children equally.
The takeaway: Banking Law § 675 creates a strong presumption that a joint account with right of survivorship language is property of the survivor. In reviewing their estate plan, joint bank account owners should ensure their accounts are titled in a way that accomplishes their overall estate planning goals.
