24 | September/October 2023 | BAEC Bulletin Death & Taxes
Matter of the Estate of Richard N. Panella, 2023 WL 4836921(4th Dept., 2023) Richard N. Panella (Decedent) died in 2017 leaving a 2016 Will which left his entire estate to his second wife. At his death, the decedent was also survived by his two adult children from a prior marriage, who are the Petitioners in this proceeding. The Petitioners signed waivers of process and consented to the probate of the 2016 Will. After a decree granting probate was entered, the Petitioners’ mother (“mother”) happened to review the decree. The mother informed Petitioners that she and the decedent had signed a separation agreement in 1989 agreeing to execute Wills which left their entire estates to Petitioners, who were minors at the time. Petitioners brought a proceeding before the Oneida County Surrogate seeking to enforce the terms of the separation agreement as the intended third-party beneficiaries of the agreement. Various Motions for Summary Judgment were brought and denied and a two- day bench trial was held. The Surrogate ultimately found in favor of the Respondent holding that because the mother did not request the Will provision as promisee, the Petitioners were unable to enforce the provision. Petitioners appealed the Surrogate’s decision and the Appellate Court upheld the decision albeit for a different reason. The Appellate Court held that the Surrogate erred in determining that agreement was unenforceable by Petitioners because the mother was the sole promisee. The Appellate Court held that both the mother and the decedent were promisees and that the promisee at issue was the decedent, who requested the provision be inserted. However, despite agreeing with the Petitioners that the Surrogate erred in its reasoning, the Appellate Court held that the Surrogate’s dismissal was proper. The separation agreement had multiple provisions which were beneficial to Petitioners, but which terminated upon Petitioners’ emancipation or reaching the age of majority. While the estate planning provisions did not include a termination clause, the Appellate Court held that the evidence offered by Petitioners at trial established that it was the intent of the decedent and the mother to leave their assets exclusively to their children when they were minors. Matter of Article IV Trust, 78 Misc.2d 1240(A) (Surr. Ct., 2023) This was a proceeding brought in the Erie County Surrogate’s Court, seeking to move the situs of five trusts under a decedent’s Will to South Dakota, in order to convert income trusts to 3% unitrusts. The decedent’s Will created trusts for each of the decedent’s brother’s five children. The trustee was directed while a beneficiary child was under 21, to distribute so much of the net income to the support, education and maintenance of the child as the trustee shall see fit, and to accumulate the balance. After the child attained 21, the entire income was to be paid to the child.
PETER J. BREVORKA Partner, Hodgson Russ LLP
JILLIAN E. BREVORKA Partner, Hodgson Russ LLP
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