These strict requirements were imposed in 1997 in recognition that adherence to formality "reduces substantially the potential for foul play." Fasano v. DiGiacomo, 49 A.D.3d 683, 685 (2d Dept. 2008) (quoting Senate Introducer Mem. in Support, Bill Jacket, L. 1997, ch. 139, at 8). If the formalities are not observed, a valid trust is not formed, and subsequent transactions entered into by the invalid trust may be declared null and void.
To show the existence of a trust at that time, the trustee was not required to sign the trust agreement. With the enactment of EPTL 7โ1.17 in 1997, however, certain formal requirements were imposed for the creation, amendment and revocation of lifetime trusts ( Matter of Fasano, 49 A.D.3d 683, 853 N.Y.S.2d 657 [2d Dept. 2008], lv. denied11 N.Y.3d 710, 868 N.Y.S.2d 602, 897 N.E.2d 1086 [2008] ). The court in Fasano noted that:
In general, if a trust is not properly formed, it cannot enter into a contract. See , e.g. , Fasano v. DiGiacomo , 49 A.D.3d 683, 685, 853 N.Y.S.2d 657, 659 (2d Depโt 2008). Lincoln argues that the Trust was not compliant with New York law because Fischerโs signature establishing the Trust was a forgery.
The New York legislature established formal requirements for lifetime trusts in 1997, including that a lifetime trust in personal property be in writing. See Fasano v. DiGiacomo, 49 A.D.3d 683, 853 N.Y.S.2d 657, 659 (2d Dep't 2008) ( citing Practice Commentaries to EPTL 7โ1.17); see alsoRestatement (Third) of Trusts ยง 20 (2003). In affidavits submitted in support of the motion to impose a constructive trust, the Debtor and Defendant allege that the Defendant โallowedโ title to the Vehicle to be in the Debtor's name โon [the] basis of a relationship of trust and confidence,โ and that Defendant โfully performed his end of the agreement, having made ALL payments for the purchase of the Vehicle and having fully paid the Note on the Vehicle.โ
Decided October 28, 2008. Appeal from the 2d Dept: 49 AD3d 683. Motion for Leave to Appeal denied.
The motion court correctly denied the motion, because decedent's failure to complete the formalities associated with setting up the SNT prior to her death was fatal to the SNT's existence. Neither decedent nor the putative trustee executed or acknowledged the proposed trust agreement, and the SNT was never properly funded with the settlement proceeds (see EPTL 7โ1.17, 7โ1.18 ; Fasano v. DiGiacomo, 49 A.D.3d 683, 684โ685, 853 N.Y.S.2d 657 [2d Dept.2008], lv. denied 11 N.Y.3d 710, 868 N.Y.S.2d 602, 897 N.E.2d 1086 [2008] ; see also Matter of Bishop v. Maurer, 73 A.D.3d 455, 455, 899 N.Y.S.2d 612 [1st Dept.2010] ). Accordingly, a valid SNT was never created.
When a grantor fails to complete the formalities associated with setting up a trust, a valid trust is not created (see Gaines v City of New York et.al, 137 AD3d 673,674 [1st Dept 2016]). Where no valid trust was created, any transfer into or out of the putative trust is null and void (Fasano v DiGiacomo, 49 AD3d 683,685 [2d Dept 2008]).
DiscussionThe Attorney General is correct that, in New York, determinations concerning the scope of authority and the procedure to amend or revoke a trust are governed by the terms of the trust indenture and state law (see Matter of Goetz, NYLJ, Aug 2, 2005, at 1, col 1 [Sur Ct, Westchester County]). The statutory provisions addressed by the parties on the instant application, EPTL 7-1.16 and 7-1.17, were enacted in 1997, along with several other sections relating to lifetime trusts (L 1997, ch 139). Prompted by the increased use of lifetime trusts in estate planning, the Legislature recognized that "[s]ome degree of formality helps the parties involved realize the serious nature of the instrument being executed and reduces substantially the potential for foul play" (Senate Introducer Mem in Support, Bill Jacket, 1997 Senate Bill 4223; Fasano vDiGiacomo, 49 AD3d 683 [2d Dept 2008]). Pursuant to EPTL 7-1.17, "[a]ny amendment or revocation authorized by the trust shall be in writing and executed by the person authorized to amend or revoke, and except as otherwise provided in the governing instrument, shall be acknowledged or witnessed in the same manner required [to execute the trust]" (EPTL 7-1.17[b]).
A lifetime trust must be in writing; be executed by the person establishing the trust and by at least one trustee, unless the grantor is the sole trustee; and be acknowledged in the manner required for recording a conveyance of real property or be executed in the presence of two witnesses who sign the trust instrument. N.Y. Est. Powers & Trusts Law ยง 7-1.17(a); Fasano v. DiGiacomo, 49 A.D.3d 683, 684-85 (2d Dep't 2008); Will of D'Elia, 40 Misc. 3d 355, 360 (Surr. Ct. N.Y. Co. 2013).