Opinion
2014-3456/B/C/D
11-19-2018
In the MATTER OF the TRUST FOR the BENEFIT OF Andrew R. HETTRICK Created Under Article SIXTH of the Last Will and Testament of Suzanne M. Hettrick, Deceased.
THE WHITING LAW FIRM, P.C., Appearing for Petitioners Andrew R. Hettrick, and Edward L. Hettrick, Jake M. Whiting, Esq., of Counsel WILLIAMS MULLEN, P.C., Appearing for Petitioners Andrew R. Hettrick, and Edward L. Hettrick, Adam L. Farnsworth, Esq., of Counsel BREVORKA LAW FIRM, P.C., Appearing for Respondents David B. Hettrick, and Elizabeth C. Hettrick, Peter J. Brevorka, Esq., of Counsel
THE WHITING LAW FIRM, P.C., Appearing for Petitioners Andrew R. Hettrick, and Edward L. Hettrick, Jake M. Whiting, Esq., of Counsel
WILLIAMS MULLEN, P.C., Appearing for Petitioners Andrew R. Hettrick, and Edward L. Hettrick, Adam L. Farnsworth, Esq., of Counsel
BREVORKA LAW FIRM, P.C., Appearing for Respondents David B. Hettrick, and Elizabeth C. Hettrick, Peter J. Brevorka, Esq., of Counsel
Acea M. Mosey, J.
Suzanne M. Hettrick died at age 73 on August 8, 2014, a resident of Erie County, New York. She was survived by three children, David B. Hettrick [David], Andrew R. Hettrick [Andrew] and Elizabeth C. Hettrick [Elizabeth]. Decedent's Will, dated January 30, 2008, was admitted to probate by this Court on October 16, 2014. Also on October 16, 2014, letters of trusteeship were issued to Elizabeth and David [hereafter collectively referred to as respondents], as the nominated trustees of a trust set up for Andrew under the Will.
(A)
(i)
Article SIXTH of decedent's Will establishes a supplemental needs trust [hereafter, the Trust] for Andrew in accordance with § 7.1-12 of the New York Estates, Powers and Trusts Law [EPTL], which currently has in excess of $1,500,000 in it . Under the terms of the Trust, the trustees in their discretion may apply the net income of the Trust, or any part of the Trust principal, to or for Andrew's benefit, without regard to the interests of any remainder beneficiaries. As Article SIXTH (A) states, "I direct that my trustees' primary concern shall be for the welfare of ANDREW, without regard to the interests of the remainder persons of the trust."
It is alleged in respondents' memorandum of law that Andrew is 52 years old, "suffers from arthritis, and from anxiety and depression", and "receives Social Security Disability Insurance (SSDI) benefits and is on Medicare." See also Andrew's July 23, 2018 affidavit and the June 15, 2018 affidavit of Andrew's sister, Elizabeth.
The Trust also provides that:
"The trust assets shall be used to supplement, but not supplant, impair or diminish, any benefits or assistance of any federal, state, county, city or other governmental entity for which ANDREW may otherwise be eligible or which he may be receiving. In exercising the discretion given to my trustees hereunder, my trustees shall take into consideration all other resources available to ANDREW , including any benefits to which he may be entitled under or through any federal, state, county or municipal public assistance program. My trustees shall endeavor to maximize the collection of such benefits and to facilitate the distribution of such benefits to or for the benefit of ANDREW. My trustees shall have no power or authority, discretionary or otherwise, to pay over or apply any part of the net income or any part or all of the principal of this trust for costs or other expenses, including, without limitation, institutional care, which would otherwise be payable by or through any federal, state, county or municipal public assistance program. In exercising the discretion here in granted, my trustees are authorized to make such payments or applications of income or principal in such a way that ANDREW's life will be in enriched and made more enjoyable, and so that ANDREW may receive more sophisticated medical or dental treatment or private rehabilitative training than might otherwise be available to my son " (emphasis added).
Finally, the Trust provides that, upon Andrew's death, the trustees shall pay the remaining assets of the Trust to Andrew's then-living descendants in equal shares per stirpes. If there are no descendants of Andrew then living, the trustees shall pay over the remaining assets of the Trust to decedent's then-living descendants per stirpes (see EPTL 1-2.10 ).
Pursuant to Article TWELFTH of the Will, Edward L. Hettrick, Andrew's cousin, was appointed Trust Protector of Andrew's trust. The Will authorizes the Trust Protector to remove the trustees of the Trust, with or without cause, and to appoint a successor trustee:
"The trust protector may at any time with or without cause, remove a trustee and designate another trustee in place of the removed trustee. Such removal of a trustee and designation of a new trustee shall be made in writing with signatures acknowledged before a notary public, shall be served upon the trustee being removed in person or by mail, and shall include the consent to serve of the successor trustee. Upon receipt of such document, the trustee being removed shall forthwith turn over the trust assets to the successor trustee, and shall be relieved of all further liability with respect to the trust, other than the duty to account" (emphasis added).
(ii)
Andrew has resided in the State of Virginia since late 2014 and, at this time, he has no descendants. In November, 2017, the Trust Protector exercised the authority granted to him under the Will and conditionally removed respondents as trustees of the Trust. Under the Removal of Trustee and Appointment of Successor Trustee instrument [hereafter, the Removal Instrument], dated November 21, 2017, the Trust Protector appointed Virginia Estate and Trust Law, PLC, a State of Virginia professional limited liability company, as successor trustee of the Trust. Significantly, the Removal Instrument also provides as follows:
Andrew had resided in Massachusetts for more than 20 years prior to moving to Virginia after his mother's death.
"Effective Date. The Effective Date of the foregoing removal and appointment shall be the later of : (a) the date that the Circuit Court of the County of Henrico, Virginia enters an order accepting jurisdiction over the Trust for Andrew, approving the appointment of Virginia Estate & Trust Law, PLC, as successor Trustee of the Trust for Andrew, and modifying its terms to grant certain powers to the Virginia trustee; and (b) the date the Surrogate's Court of Erie County, New York enters its final order removing the existing Trustees and releasing jurisdiction of the Trust for Andrew to the Circuit Court of the County of Henrico, Virginia " (emphasis added).
On January 24, 2018, Andrew and Edward [hereafter, petitioners] filed a petition, verified November 21, 2017, seeking to have this Court (a) approve the removal of respondents as trustees of the Trust, and (b) transfer jurisdiction of the Trust to Virginia, with the intent that the "successor trustee located in Virginia shall administer the assets of the Trust in accordance with Virginia law and the terms of the Will and the Trust, as modified by [the Virginia] court." Petitioners request that this Court relinquish jurisdiction because, since Andrew currently resides in Virginia, the transfer there, so they allege, would facilitate administration of the Trust. Petitioners also request that, upon this Court's approval of the removal of the co-trustees, this Court direct that a final accounting be filed by them.
Respondents filed a verified answer opposing the petition on June 8, 2018. In their answer, the following objections, inter alia , have been raised:
"Paragraph C of the WHEREFORE clause of the Petition filed herein requests that judicial oversight and jurisdiction of the subject trust be released and transferred to a foreign court upon condition that Petitioners file a Petition in form substantially similar to Exhibit B attached to the Petition, and that the foreign court accept jurisdiction and appoint Virginia Estate & Trust Law PLC as successor Trustee of the subject trust.
Respondents allege that the Will of the decedent requires application of New York law to the Will and to the subject trust. Further, said Will does not authorize the change of the situs of the subject trust to any state other than New York.
Exhibit B attached to the Petition prays that the foreign court modify the subject trust, to permit the new trustee to retain an investment advisor and to delegate the investment responsibility of the trustee to that investment advisor. The modification requested also seeks to [relieve] the trustee from any liability for any loss resulting from the making or retention of any investment pursuant to the director of the investment advisor.
Said Exhibit B further states in Paragraph 23: ‘If the Court does not grant the Proposed Modifications, Virginia Estate & Trust Law, PLC, would be unable to serve as successor Trustee of the Trust as it does not have New York trust powers and is not familiar, with New York law relevant to trust administration. ’ (Emphasis supplied.)"
The proposed petition being referred to in respondents' answer is a petition Edward and Andrew propose that they would file in the Circuit Court of Henrico County, Virginia, asking that court accept jurisdiction of the Trust and for related relief.
Respondents have now moved for summary judgment, seeking dismissal of the petition to transfer the Trust to Virginia. Petitioners have cross-moved for summary judgment requesting that this Court confirm the removal of respondents as trustees and approve the transfer of the Trust to the appropriate court in Virginia. This matter has been finally submitted, and I find and decide as follows.
(B)
Petitioners set forth no specific reasons in the petition for removal of respondents based on any improper conduct by respondents as trustees, nor is the Trust Protector required to do so. However, in the papers opposing respondents' dismissal request, and in cross-moving for affirmative relief themselves, petitioners allege that "the current trustees are placed in an inherently conflicted role: should we distribute income and principal for the benefit of our brother? Or, should we add income to principal and preserve principal in order for us to have another bite at the apple?"
The affidavits submitted by co-trustee Elizabeth Hettrick, sworn to June 15, 2018 and August 3, 2018, give extensive details of how Andrew's trust has been managed since its inception. None of this affidavit material has been refuted or called into question in any evidentiary way, and there is nothing which even remotely suggests that respondents have acted in any inappropriate manner.
Regardless of the validity of petitioners' entirely theoretical concern, the Trust Protector exercised his power to remove respondents as trustees, as he is authorized to do under Article Twelfth of the Will. However, that removal is contingent upon this Court's transfer of jurisdiction of the Trust to Virginia, the rationale for which comes down in petitioners' papers to the following:
"Andrew R. Hettrick wants to be able to make requests to a local trustee and have those requests fulfilled without hassle or second-guessing."
(i)
It is well-settled that a court has the authority to change the situs of a trust subject to its jurisdiction ( Matter of Rockefeller , 2 Misc 3d 554 [2003] ; Matter of Beneditto , 83 Misc 2d 740 [1975] ). If the trust instrument specifically authorizes a change in situs, or does not expressly or impliedly prohibit it, courts may approve the change if it can be shown to have some beneficial effect (Matter of Weinberger , 21 AD2d 780 [1964] ; Matter of Matthiessen , 195 Misc 598 [1949] ). On the other hand, a court is without authority to change the situs of a trust simply because the parties request it (Matter of Rockefeller, supra , at 556).
Here, the language of the Will does not specifically authorize, nor does it expressly prohibit, transferring jurisdiction of the Trust. The lack of a specific prohibition, however, is not reason enough to authorize a change (id. ).
Petitioners have offered no rationale beyond the general assertion of administrative convenience, arguing that having the trustee in close proximity to the beneficiary and a Virginia court will facilitate administration of the Trust. These general allegations are little more than conclusory statements with no support in the record here. Andrew points to no facts which would demonstrate that moving the situs of the Trust to Virginia would actually facilitate administration of the Trust.
Petitioners have urged that "the distance between the trustees of the trust and Andrew prevents regular visits and welfare check ups on Andrew, oversight of his living conditions and other accommodations, and otherwise adds complexity to the administration of the trust" . I find no requirement in the Trust for such "oversight", and Andrew himself, in his July 23, 2018 affidavit, not only does not request such "oversight" but appears to expressly reject it.
Elizabeth resides in Massachusetts and David resides in Erie County, New York.
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Moreover, as pointed out by co-trustee Elizabeth Hettrick:
"Andrew claims he wants a trustee with whom he may have face-to-face contact.
Andrew has a computer and a cell phone, and is quite tech-savvy. He could use Skype or Facetime or Zoom to have face-to-face contact with me or any other New York trustee. In fact, I used Zoom with him in February to help him look at hotels in the Ft. Lauderdale area."
Furthermore, if, as appears from some of petitioners' assertions, the transfer request is sought to provide Andrew with a trustee who will never question his requests, or evaluate those requests as to their inherent merits, such purpose is completely at odds with the responsibilities of a trustee:
"It is well settled that a trustee of a supplemental needs trust has a statutory obligation to act impartially with respect to all beneficiaries (see, EPTL 11-2.1 ; Matter of Goldberg Irrevocable Trust , 159 Misc 2d 1107 [Sur Ct, NY County 1994] ). EPTL 11-2.1 (a) requires that with regard to receipts and expenditures, a trust shall be administered with due regard to the respective interests of income beneficiaries and remaindermen. Thus, any violation of such fiduciary duty would subject the trustee to a surcharge (see, Matter of Stillman , 81 Misc 2d 747 [1975] )" (Matter of Pace, 182 Misc 2d [1999] ).
Here, even though the trustee of Andrew's trust is required , in all decision-making, to give primary consideration to Andrew's interests, how a trustee of the Trust handles Andrew's requests is still subject to a determination that the requested distribution would truly "be for the welfare of ANDREW" (emphasis added), as article SIXTH(A) of decedent's Will requires. A corporate, non-relative, trustee might actually be less sensitive and be more stringent in evaluating Andrew's requests than a family member who had greater in-depth knowledge and understanding of Andrew and his needs.
I see nothing in the record before me to suggest that respondents have not utilized Trust assets for Andrew's benefit as permitted by the terms of the Trust and New York law, nor is there any evidence that respondents have ever put their potential remainder interests before Andrews' current needs and interests. For example, the record demonstrates that respondents, while serving as trustees, purchased a townhouse for Andrew in Virginia in 2015 where he now resides and presently intends to remain:
"The Trust pays the expenses of that condo such as taxes, condo fees, utilities and insurance, and makes a monthly distribution of $1,100 to Andrew for spending money. This is in addition to the $1,100 per month Andrew receives in SSDI benefits."
A blanket rule prohibiting all relatives who are remainderpersons under a trust from serving as trustees would violate New York's public policy of appointing relatives rather than strangers to administer a disabled person's assets (see Matter of Pace, supra ), such as those assets held under the testamentary supplemental needs trust involved here.
Thus, I find that the reasons being advanced to transfer situs of this Trust from New York to Virginia are without merit.
Additionally, the fact that the successor trustee nominated by the Trust Protector "does not have New York trust powers and is not familiar with New York law relevant to trust administration", a fact presumably known to the Trust Protector at the time the Removal Instrument was executed, and that the intent in a transfer to Virginia is to have Virginia law apply to administration of the Trust, militate against a transfer of jurisdiction. I find that the entire tenor of the Trust provisions of decedent's Will indicate that New York law is to apply in the handling of Andrew's trust.
Petitioners have advanced no compelling reason to warrant transfer of the situs of this Trust. Andrew was residing outside New York State when his mother executed her Will, so she was well aware that Andrew's place of residence should not be a factor in (a) the situs of the Trust, (b) whether the trustees should be located where Andrew resided, or (c) whether New York law should govern the operation of the Trust.
Under all the circumstances I find and conclude that the situs of the Trust must remain in New York State, and should not be transferred to the State of Virginia.
Accordingly, I hereby grant respondents' motion for summary judgment, I deny the petition in all respects, and I likewise deny petitioners' cross-motion.
This decision shall constitute the Order of this Court and no other or further order shall be required.