24 | Fall 2021 | BAEC Bulletin Death & Taxes
Matter of Keough, 196 A.D.3d 160 (4th Dept., 2021) This is an interesting case involving disposition of benefits to a former Iranian hostage under the Justice for United States Victims of State Sponsored Terrorism Act (the “Act”). William Keough was one of the Iran hostages from 1979 to 1981. William died in 1985. He had three children, including son Steven, and a wife, Katherine, who was not Steven’s mother. Katherine died in 2004 leaving a Will which left her estate to her stepson Steven. Katherine’s sole intestate distribute was her brother Fred, who has since died. The Administrator of Fred’s estate is the Petitioner in this case, Eleanor Beamer. So, if Katherine died with a Will, why do we mention Katherine’s intestate heir Fred, and why is his Administrator the Petitioner in this case? In 2015 Congress enacted the Act. Under the Act, William was entitled to $4.4 million, and his spouse Katherine was entitled to $600,000. The Act provides that if a person entitled to compensation is deceased, the payment from the fund is to be made to the personal representative of the estate of the deceased person. Fred’s Administrator filed a petition in Katherine’s estate seeking declaratory relief, and naming as interested parties Katherine’s executor and stepson Steven. Petitioner argued that the Act benefit received by Katherine’s estate after her death is not property which Katherine was entitled to dispose of at her death, and that such after-acquired assets pass by intestacy to the estate of her brother Fred. The executor of Katherine’s estate moved to dismiss the Petition, which motion the Surrogate’s Court granted. Petitioner appealed to the Fourth Department which reversed and declared that the payments to Katherine’s estate under the Act must be distributed pursuant to the laws of intestacy to Fred’s estate. The Appellate Division cited EPTL 3-31, which provides a Will “. . . passes all property [the testator] was entitled to dispose of at the time of [her] death.” The Court held that while law regarding after-acquired property was sparse, that which there is holds that such property does not pass under a Will, but rather passes by intestacy. One of the cases cited for that proposition involved a dispute over the ownership interest in Marilyn Monroe’s right of publicity after her death (Shaw Family Archives Ltd. v. CMG Worldwide, Inc., 486 F. Supp. 2d 309 [SDNY 207]) The Court noted that when determining whether a testator possessed testamentary capacity, the courts should determine whether the testator understood the nature and consequences of executing a Will, and whether the testator know the nature and extent of what she was disposing of, and the natural objects of her
Peter Brevorka
Jillian Brevorka
bounty.
The Court stated, “Here, Katherine did not have the testamentary capacity to dispose of assets she did not own at the time of her death because she could not have known the nature and extent of such assets at that time.” The Surrogate had relied upon a case involving a dispute over an award made by the Austrian General Settlement Fund to the beneficiary under the Will of her late mother who was a victim of Nazi persecution. The Appellate Division held that the case was not applicable to the matter before the Court because that award of damages was made by a foreign entity, and the US courts upheld the award to the beneficiary under the Will on the basis of international comity. In Re McGuire, 2021 NY Slip Op 50817(U) [Erie Co. Surr. Ct., 2021] The Executors of the estate of Francis J. McGuire filed a petition in Erie County Surrogate’s Court, seeking advice and direction under SCPA 2107 with regard to the decedent’s interest in a parcel of real property, and the decedent’s interest in three corporations and a partnership. The Executors alleged that they had received offers which they wished to accept, but that if the assets are sold for those prices there may be an insufficient amount in the estate to satisfy fully all of the bequests in the decedent’s Will. Surrogate Mosey declined to entertain the Petition, holding that accepting a price for the sale of estate assets is a matter of business judgment, and that SCPA 2107 does not empower the Court to substitute its judgment for that of the executors. The Surrogate went on to state: “Because of my review of the executors’ petition now before me discloses no ‘extraordinary circumstances’ which would warrant the invocation of SCPA 2017. . . I conclude it would not be proper to entertain the petition on the merits. . . .” Matter of Powell, 2021 NY Slip Op 21210 (Erie Co. Surr. Ct, 2021) This decision involves the Right of Election and extending the time for filing the Notice of Election. Decedent died intestate January 2019, survived by her husband and her son of an earlier marriage, and a sister. Letters of Administration were issued to the husband in June 2019. On November 3, 2020, the husband filed a Petition seeking an order of the Court extending the time to file his Notice of Election.
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