Opinion
File No. 2021-5529/B
09-25-2023
APPLICATION OF Ahron N. FOLLMAN for a Construction of Article 15A of the Lazar Follman 2011 Family Trust; 15 A of the Esther Follman 2011 Family Trust; and Article 13th of the Lazar Follman 2017 Revocable Trust, Estate of Lazar Follman, a/k/a Lazar D. Follman, Deceased.
Joseph Y. Balisok, Esq. and Frank Seddio, Esq. for petitioner, movant Ahron N. Follman, Esq. David A. Bambdad, Esq. and Avrom V. Vann, Esq. for respondent, cross movant, Avraham Follman
Joseph Y. Balisok, Esq. and Frank Seddio, Esq. for petitioner, movant Ahron N. Follman, Esq.
David A. Bambdad, Esq. and Avrom V. Vann, Esq. for respondent, cross movant, Avraham Follman
Peter J. Kelly, S.
This is a proceeding seeking a construction of articles in three separate inter vivos trusts allegedly established by the decedent and his wife, Esther Follman ("Esther"). Petitioner, Ahron N. Follman ("Ahron") now moves for summary judgment seeking a ruling that the in terrorem clauses contained in said trusts will not be triggered by his filing of a petition seeking, among other things, information and/or accountings concerning decedent's trusts and assets. Ahron also seeks reimbursement of his legal fees and expenses in bringing this petition.
Respondent Avraham Follman ("Avraham") opposes the motion in its entirety and cross-moves for summary judgment finding that Ahron has, in fact, already triggered the in terrorem clauses. Insofar as is pertinent to the Court's decision, the underlying facts can be summarized as follows.
Decedent and his wife created various trusts in the years 1996 and 2011 in which all five, or minimally four of their children and issue, had an interest as named trustees and beneficiaries. Those trusts were funded with interests in various LLC's which owned parcels of income producing property.
However, in 2016 and 2017 decedent's numerous trusts, as well as his wife Esther's testamentary instruments, were reportedly replaced by new trusts and a will in 2017 that greatly favored Avraham and his children over petitioner and his siblings. Apparently, petitioner contends the assets once held by the 1996 and 2011 trusts were at that time improperly transferred into the 2017 trusts. The decedent died in 2018 and Esther post-deceased in 2021.
According to petitioner, the departure from decedent's prior estate plan and the transfer of decedent's assets and those of the earlier trusts were the result of Avraham's undue influence over the decedent and his misuse of a power of attorney in the final years of decedent's life. It is unclear whether any assets remain in the 2011 trusts.
While apparently Avraham and his other siblings have resolved any prior differences that had existed between them, he and Ahron are still at odds. Avraham has purportedly refused petitioner's requests for information which has prompted Ahron's contemplation of discovery and/or accounting proceedings. Ahron's immediate concern is the fact that Article Fifteenth(A) of the 2011 trusts and Article Twenty-First (A) of the 2017 trusts include the following in terrorem clause:
Any person who directly or indirectly opposes (i) the probate of the Grantor's Will , or any of its provisions, (ii) any transfer made by the Grantor during [his/her] life, whether in his or her individual capacity or as Trustee of any trust, including, but not limited to the transfers made by the Grantor on the date hereof, or (iii) the validity or administration of the trust created by this instrument or any other trust created by the Grantor, or any provisions of such trusts, shall forfeit all rights to receive any property bequeathed hereunder
Although afforded the opportunity to do so, Ahron's counsel did not conduct examinations pursuant to SCPA 1404 concerning decedent's Will dated March 24, 2017 and as a result, a probate decree was signed September 23, 2022. Ahron's new attorney has filed a notice of appeal regarding said decree.
[and] all rights to receive any property bequeathed hereunder [and] all rights to act as a Trustee hereunder, and any appointment of a successor or additional Trustee made by such person shall be void and ineffective.
Additionally, Article Thirteenth of the Lazar Follman 2017 Revocable Trust provides, in part, that:
Any person who directly or indirectly opposes ... (ii) any transfer made by the Grantor or the Grantor's wife during his or her life, whether in his or her individual capacity or as trustee of any trust, or (iii) the validity or administration of any trust created hereunder, or any other trust created by the Grantor or the Grantor's wife or any provisions of such trusts, shall forfeit all rights to receive any property disposed of hereunder and to act as a Trustee hereunder...
Ahron asserts the Court should find the above language will not be triggered by the commencement of:
A) an inquiry pursuant to SCPA 2103 concerning what properties were held by the 1996, 2011, and 2017 trusts and their subsequent transfers;
B) a compulsory accounting of Avraham as attorney-in-fact; and
C) a compulsory accounting of various LLC's of which decedent was a member.
He posits these proceedings only seek information and do not oppose, directly or indirectly, the probate of decedent's will or any provisions in decedent's will, any transfer made by decedent or Esther, nor the validity or administration of any trust or LLC.
Specifically Ahron claims he seeks "(i) disclosure concerning certain trusts, (ii) a record of all receipts, disbursements, and transactions entered into by Avraham M. Follman ... as attorney-in-fact for their father, Lazar D. Follman ... under a power of attorney, and (iii) an equitable accounting of certain LLC entities."
In opposition thereto Avraham cross-moves for summary judgment contending not only that the petition should be denied as essentially seeking advice and direction without the necessary showing of extraordinary circumstances under SCPA 2107[2], but that the Court should also issue a ruling that the interrorem clause has already been triggered. Additionally, Avraham contends that Ahron does not have standing to seek much of the relief sought in the proposed petition and he opposes the grant of attorney's fees and the expenses of this proceeding, arguing that Ahron is essentially "pushing his own interests."
"In terrorem clauses, although not favored and strictly construed, are enforceable. The cardinal rule of construction of a will or trust and, concomitantly, of an in terrorem clause, is to carry out the intent of the testator" ( In re Estate of Ellis , 252 A.D.2d 118, 683 N.Y.S.2d 113 [2d Dept. 1998] [internal citations omitted]). "The instrument must be examined as a whole, with particular attention to the decedent's testamentary plan ... At the same time, "[w]here the language and meaning of a will or trust agreement is clear and unambiguous, the courts will not seek the assistance of the principles of construction or extrinsic evidence to determine the testator's intent" (Matter of Kotler Family Trust, 2017 N.Y. Misc. LEXIS 2048 [Surr. Ct., Nassau County 2017] [internal citations omitted]).
The language of Article Fifteenth (A) of each of the 2011 trusts and Article Thirteenth of the Lazar Family 2017 Revocable Trust is clear and unambiguous, and there appears to be no reason for the necessity of a court's opinion regarding the supposed effect of these clauses; although the Court notes that portion concerning the "administration" of the trusts might be problematic.
Any attempt to totally preclude a beneficiary from questioning a fiduciary's conduct by way of an accounting or from filing objections thereto will result in a finding that the pertinent language is void as contrary to public policy (see Matter of Egerer, 30 Misc.3d 1229(A), 2006 WL 6670806 [Surr. Ct., Suffolk County 2006] ).
Despite the wording of this petition, Ahron argues in this motion that he is not actually seeking a construction of these terms, but rather a determination from the Court that the filing of a "proposed" petition, would not trigger the in terrorem clauses in the three trusts. If true, petitioner is seeking the Court's opinion on a hypothetical question regarding a proposed and unfiled proceeding.
Although the Appellate Division, First Department has affirmed a New York County Surrogate's finding that a will's in terrorem clause would apply if a proposed proceeding was brought to revoke letters testamentary and letters of trusteeship ( Hallman v. Bosswick , 72 A.D.3d 616, 899 N.Y.S.2d 233 [1st Dept. 2010] ), the relief sought in that proposed petition was specific, clearly defined, and very limited in scope.
On the other hand in Matter of Merenstein , another New York County Surrogate declined to engage in a determination of a hypothetical question of whether an in terrorem clause would be triggered by the institution of a proceeding to remove a fiduciary if she was found to have engaged in alleged misconduct as described in the petition (see 2018 WL 11593246, 2018 NY Misc. LEXIS 4400 [Surr. Ct., N.Y. County 2018] ).
The proposed petition at issue in this proceeding seeks multiple forms of relief. The first branch seeks an inquiry under SCPA 2103 concerning property held by the 1996 trust, the 2011 trusts, and the 2017 trusts and "... whether that property was transferred to another trust of which Avraham is the sole trustee and beneficiary."
Aside from the issue of whether Ahron has the standing to bring such a proceeding, SCPA 2103 proceedings, unlike proceedings instituted under SCPA 2102, are brought by fiduciaries to return property to an estate or trust. While initially there is an inquisitorial stage (and although the instant proposed petition does not contain turnover language) almost universally such proceedings become turnover proceedings after an inquiry is held and an answer is filed. Fundamentally, the Court's function in a SCPA 2103 proceeding is to determine if assets should be delivered to a petitioner.
Although the Lazar 2011 Trust names Ahron as a trustee of the trust, Avraham alleges Ahron never signed the trust agreement before a notary public to accept his appointment, as required by EPTL § 7-1.17[a].
The second branch of the proposed petition seeks to compel Avraham to account as attorney-in-fact for the decedent. Ahron claims he has standing to bring such a proceeding as a child of the decedent irrespective of his other status ( NY GOL 5-1510[3] ). By their nature, accountings are rarely used simply for informational purposes.
The third branch of the proposed petition seeks "equitable accountings" of Flushing Walworth LLC, Box Street LLC, and Clifton Place LLC. Avraham alleges that Clifton Place and Box Street are "irrelevant" to this proceeding as these entities are owned by the 1996 Trust, which does not have an in terrorem clause, and the 2017 Trust in which Ahron has no interest.
Laying aside whether the proposed petition would ever be entertained in the form submitted as it combines several different proceedings in one pleading, it is not the obligation of this Court to preliminarily opine on the propriety of any number of legal stratagems that may be employed by a potential litigant. Although a construction proceeding is appropriate to determine if certain conduct is violative of an in terrorem clause (see e.g. , In re Estate of Ellis , 252 A.D.2d 118, 683 N.Y.S.2d 113 [2d Dept. 1998] ), the instant application is not seeking an opinion on a discrete issue, but rather appears to be more in the nature of a proceeding for advice on how to draft a pleading to obtain information from Avraham without triggering the terrorem clauses. On the facts before it, the Court declines the opportunity to offer such legal advice.
Accordingly, Ahron's motion for summary judgment is denied and Avraham's cross-motion for summary judgment is granted solely to the extent that the petition is dismissed in its entirety, but denied in all other respects, as the mere consideration of taking legal action cannot be a basis for triggering an interrorem clause and there is no basis for the imposition of counsel fees.
Settle order.