BAEC Bulletin - May/June 2023

30 | May/June 2023 | BAEC Bulletin

Death & Taxes

Matter of Maika, 2022 N.Y. App. Div. LEXIS 3577 (4th Dept., 2022), aff’d 2023 NY Slip Op 02092 (2023)

This case appears to be another example of how hard cases make bad law.

This was a proceeding under SCPA 2103 to recover property into a decedent’s estate. In 2010 the decedent executed a Power of Attorney, authorizing five of his 12 children to act on his behalf with respect to various transactions, including real estate transactions. But a majority of the named agents had to agree to the propose transaction. The Power of Attorney did not authorize the agents to make major gifts. The decedent’s son, Philip, and another child, Anne, were the primary caregivers for the decedent, who suffered from severe disabilities for the years preceding decedent’s death. The decedent died in July 2017. In March 2017, Philip and two of his siblings, acting as decedent’s attorneys-in-fact, conveyed decedent’s house to Philip and Anne as joint tenants, retaining a life estate in decedent. Following decedent’s death, one of the other children was named Administrator of decedent’s estate, and commenced this proceeding to set aside the deed. Philip and his co-joint tenant claimed that the transfer of the house to them was compensation for the care they rendered to the decedent. The trial court concluded that the transfer was an improper gift, relying on the presumption that “where parties are related, . . . services were rendered in consideration of love and affection, without expectation of payment”. The Appellate Division Fourth Department reversed, and concluded that there was “clear, convincing and satisfactory evidence that there was an agreement . . . that the services would be compensated”. This finding was based upon the affidavits of the two attorneys-in-fact, who voted with Philip, that the transfer was intended to compensate for services rendered. Justices Smith and Peradatto dissented: In contrast to the majority, it is our view that, when an attorney-in- fact child, whose action or vote is necessary to approve a transfer of property allegedly as compensation for services rendered to a parent, is an interested party who stands to receive such alleged compensation, the attorney-in-fact child must rebut the presumption with evidence of the parent’s intent to transfer the property as compensation. The Administrator appealed to the Court of Appeals, which affirmed the order of the Appellate Division by a 4-2 majority: The determinative question presented on appeal is whether this transfer was a gift or compensation under the terms of the power of attorney. There is unrebutted evidence that the two children had repeatedly asked for compensation for their services and the request was met with approval. However, only one child was initially able to receive nominal payment due to decedent’s lack of liquid assets. We agree with the

PETER J. BREVORKA Partner, Hodgson Russ LLP

JILLIAN E. BREVORKA Partner, Hodgson Russ LLP

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