Opinion
No. 2009–683.
05-11-2012
Proceeding by VINCENT T., as Temporary Administrator, with the Will annexed of the Estate of Gloria B., Deceased, Petitioner, v. VIRGINIA G., David G., and Brent B., Respondents.
Stephen T. Bauman, Esq., for Vincent T., Petitioner and Administrator c.t.a. Alan J. Pope, Esq., counsel for Virginia G., David G. and Brent B ., the Respondents.
Stephen T. Bauman, Esq., for Vincent T., Petitioner and Administrator c.t.a.
Alan J. Pope, Esq., counsel for Virginia G., David G. and Brent B ., the Respondents.
Opinion
DAVID H. GUY, J.
Gloria B. (decedent) died a resident of Broome County, New York, on November 16, 2007. On December 2, 2009 a petition for Letters Testamentary was filed in the Broome County Surrogate Court by Vincent T., brother of the decedent. Petitioner was not the nominated executor and the petition was amended on December 28, 2009 to request Letters of Administration c.t.a. All necessary parties were duly served. Objections to probate were filed by the named executor, the decedent's niece, Virginia G., et al, on March 8, 2010. This Court (Eugene E. Peckham, Surrogate) issued a discovery scheduling order on June 10, 2010. On September 1, 2010, Vincent T. petitioned the Court for temporary Letters of Administration for the limited purpose of commencing a discovery proceeding under SCPA § 2103. Letters of Administration c.t.a. for that limited purpose were issued to Vincent T. on September 7, 2010, which letters were extended nunc pro tunc by the Court and remain in effect.
The petitioner made a motion for summary judgment on or about January 20, 2012 asserting that the decedent's accounts at Visions Federal Credit Union (Visions) were not joint and survivor accounts of the decedent and respondent Virginia G., but assets of the decedent's estate. Petitioner's motion is supported by affirmations and a memorandum of law. Respondents, Virginia G., David G. and Brent B. answered with affirmations and a memorandum of law. The motion was argued orally before the Court on March 30, 2012.
FACTS
Before moving to Broome County in late 2004, at the age of 77, decedent resided in Pound Ridge, Westchester County, New York. Decedent was clearly in good mental health at this time, although she had some physical ailments; she was on dialysis from 2002 until her death. Decedent had a warm, long term relationship with her niece, to whom she had historically been generous. She also had a good relationship with her brother, but admittedly less warm and generous.
By late 2003 at least, decedent was considering selling her home, which had become too much for her to manage, and relocating to where she could receive more assistance. She contacted Pound Ridge, New York, attorney C. Stewart Dickert in contemplation of the sale and also retained him to prepare a will and power of attorney for her. The initial meeting between attorney Dickert and the decedent was at the decedent's home; the execution of the will and power of attorney on January 24, 2004 took place at his office in Pound Ridge. Virginia G. was in attendance at all the meetings between attorney Dickert and decedent. Virginia G. is named as executor in the instrument offered for probate in this Court. Vincent T. is a ½ residuary beneficiary of decedent's will. The other half of the residuary is divided among Virginia G. and her family, the issue of decedent's predeceased sister, with Virginia G. receiving a 1/8 share. Virginia G. is also the sole agent named in the power of attorney, which did not include any power to make gifts.
Later in 2004, decedent relocated to Broome County and moved in with Virginia G. and her husband, David G. After the move, decedent's home in Pound Ridge was sold. The closing documents were mailed to decedent, executed in Broome County, and sent back to decedent's Pound Ridge attorney, who delivered the documents at closing. The closing on the property took place on or about November 15, 2004, with net proceeds of approximately $750,000 flowing to decedent. The funds were initially deposited in a Fleet Bank account in Pound Ridge, jointly titled to Virginia G. and decedent, and transferred within a week thereafter to decedent's individual account at Visions Federal Credit Union in Broome County, New York. Decedent's account at Visions included multiple sub-accounts, all under the same account number, with each sub-account designated by a two digit suffix. Two checks were drawn on the Fleet account to Visions and deposited into decedent's account there, as the initial deposits into two of her sub-accounts.
Between November 22, 2004, when the proceeds were received into the Visions account, and decedent's death on November 16, 2007, the sub-accounts were converted to joint accounts of decedent and Virginia G. It is the conversion of these sub-accounts to joint ownership which is the subject of petitioner's discovery proceeding and summary judgment motion.
The documentary evidence gathered by petitioner in document discovery and identified and confirmed by Virginia G. in her deposition establishes the following time line with respect to the Visions account:
1. On November 15, 2004, decedent's account was opened at Visions in her individual name. Decedent physically went to Visions to open her account and her signature appears on the signature card. The initial sub-accounts were titled “Primary Share Money Manager” (suffix 01), “Pacesetter Plus” (suffix 05) and “3½ Year Variable Certificate” (suffix 98).”
2. The Visions account statement for the period ended November 30, 2004 shows all three of the sub-accounts under decedent's name. The only name on the statement is decedent. The listed address is that of Virginia G. and David G., where decedent was then living.
3. On May 5, 2005 Virginia G. executed a Visions “Agreement and Signature Card” as power of attorney for decedent, by which she converted the 3½ Year Certificate from decedent's individual name to joint ownership of decedent and herself. Decedent's signature does not appear on this signature card. There is no evidence she was at Visions on that date.
4. On Wednesday, October 5, 2005 Virginia G., again as power of attorney for decedent, executed a “Membership Application, Agreement and Account Signature Card” form, which added a new sub-account to decedent's account at Visions. The added sub-account was a VisionsPlus Checking account (suffix 08). That sub-account was opened as a joint account of decedent and Virginia G. Decedent's signature does not appear on this form and there is credible unrebutted evidence from a health aide that she was not present at Visions at that time.
5. The Visions account statement for decedent for the period ended October 31, 2005 shows the additional checking sub-account. Even though the checking account and the 3½ year certificate were by this time joint accounts, decedent's name is still the only name that appears on the statement and there is no reference on any of the sub-accounts that they are in fact joint. Decedent's Visions statements for the periods ending January 31, 2006, March 31, 2006 and December 31, 2006 continue to show her name and no indication of any of the sub-accounts being joint accounts.
6. Virginia G. executed a Visions transfer form as power of attorney for decedent on August 9, 2006, transferring $10,500 from decedent's PaceSetter Plus Account to a Visions account in the name of Virgina G.'s husband, David G.
7. Also on August 9, 2006, Virginia G. executed another Visions transfer form, transferring $81,600 from decedent's Pacesetter Plus account to a Visions account in the name of Virginia G. This form is executed by Virginia G. in her own name, although the documentary evidence does not establish that decedent's Pacesetter Plus account was in fact a joint account on this date.
8. On May 25, 2007, Virginia G. executed a Visions form, as power of attorney for decedent, authorizing a wire transfer in the amount of $40,000 from decedent's PaceSetter Plus account to an E–Trade Bank account in the name of Virginia G.'s son, Brent B.
9. On July 24, 2007, Virginia G. executed another Visions Membership Application, Agreement and Account Signature Card (the same form as at 4 above) as power of attorney, converting decedent's Pacesetter Plus account to a joint account. A Visions representative wrote on the top of this form “to add existing jt owner to S05” (05 is the suffix of the Pacesetter Plus account). Decedent's signature is not on this form and there is no evidence she was present at its execution.
10. On August 2, 2007, Virginia G. executed another wire transfer form (the same form as at 8 above) to transfer the amount of $25,000 from decedent's Pacesetter Plus account to Brent B.'s E-trade Bank account. This form was signed by Virginia G. individually, this sub-account having been converted to a joint account by her execution of the new signature card set forth at 9 above.
11. The check register for decedent's Visions checking account was identified by Virginia G. in her deposition. Virginia G. confirmed that she managed this account for decedent and also confirmed her issuance of a check from it in the amount of $60,000 to her son, Brent B., on November 8, 2007. This check is identified in the check register and testified to by Virginia G. as a loan to Brent B.
12. Decedent passed away on November 16, 2007, one week after Virginia G. wrote the above check to Brent B.
DISCUSSION
Petitioner seeks summary judgment that the transfers from decedent's Visions accounts executed by Virginia G. as power of attorney are invalid as unauthorized gifts to the agent or others. He also seeks summary judgment that the conversions of decedent's individual sub-accounts to joint accounts by Virginia G. as power of attorney are invalid. Virginia G. asserts that all the payments from and changes in ownership of these accounts were requested or ratified by decedent and that Virginia G. should have the opportunity to prove that at a plenary hearing.
Summary judgment is a drastic remedy, not to be granted where there is any doubt as to the existence of a triable issue of fact. Alvarez v. Prospect Hospital 68 N.Y.2d 320 (1986) ; Carey v. Campbell, 93 A.D.2d 923 (3rd Dept., 1983) ; Andre v. Pomery, 35 N.Y.2d 361 (1974). The Court's responsibility on a motion for summary judgment is to determine if fact issues exist, not to resolve such issues. Zuckerman v. City of New York, 49 N.Y.2d 557 (1980). In deciding a motion for summary judgment, the Court must view the evidence in a light most favorable to the party opposing the motion. Negri v. Stop & Shop, Inc., 65 N.Y.2d 625 (1985) At the same time, a summary judgment motion may be granted where the movant has made a prima facie showing of entitlement to judgment as a matter of law and the party opposing the motion has failed to tender admissible evidentiary material showing that a triable issue of fact exists. Alvarez v. Prospect Hospital, supra; In re Dissolution of Rencor Controls, Inc., 263 A.D.2d 845 (3rd Dept.1999).
The Court of Appeals set the legal standard for gift giving by a power of attorney, holding that even where the principal grants the agent the authority to make gifts, including gifts to herself, such gifts can only be made if they are in the best interests of the principal and carry out the principal's financial, estate or tax plans. Matter of Ferrara, 7 NY3d 244 (2006). The attorney-in-fact must act in the utmost good faith and with undivided loyalty towards the principal. Semmler v. Naples, 166 A.D.2d 751 (3rd Dept.1990), appeal dismissed 77 N.Y.2d 936 (1991). Here, the power of attorney from decedent to Virginia G. did not include any gift giving powers. In such a case, gifts by the agent to herself or others carry a presumption of impropriety and self-dealing and can be upheld only upon the clearest showing of intent on the part of the principal to make the gift. Semmler v. Naples, Id.; Estate of Curtis, 83 AD3d 1182 (3rd Dept., 2011) —gift power in power of attorney overcame presumption; Anderson Marszal v. Anderson, 9 AD3d 711 (3rd Dept., 2004) —summary judgment setting aside transfer where power of attorney had no gifting powers.
Virginia G. was present at the meetings where the power of attorney provisions were explained and acknowledges both that decedent understood her planning documents and that Virginia G. was aware she had no gift giving power. There is no disagreement that decedent was a competent and strong willed individual, who knew what she wanted with respect to her estate planning and put that planning in place with the assistance of counsel. It is also clear that decedent had a warm long-term relationship with her niece, who did much for her aunt, including taking her into her home and caring for her for more than three years.
The undisputed evidence is that decedent's only relevant trip to the Visions Federal Credit Union was to initially establish her account and set up the first three sub-accounts, which she did in her individual name. On three subsequent occasions, Virginia G. went to Visions and alone converted three of decedent's sub-accounts to joint accounts, utilizing her power of attorney. To the extent that Virginia G. used her power of attorney to make transfers other than to or for the benefit of decedent, she made gifts which were unauthorized and therefore invalid. Her creation of joint accounts with the decedent using her power of attorney is invalid as unauthorized gifting, to the extent of any current or future interest; and invalid as inconsistent with decedent's established testamentary plan, to the extent of the resultant survivorship interest to Virginia G. alone. Anderson Marszal v. Anderson, supra; Ferrara, supra.
In response to this summary judgment motion, Virginia G. has failed to offer any admissible evidence that decedent intended to make gifts to her, or to her family, by directing or authorizing these transactions. As a fiduciary who transferred the principal's funds to herself (both currently and as a beneficiary), Virginia G. needs to overcome the presumption of impropriety and come forth with clear and convincing-and admissible-evidence that decedent intended to make the questioned gifts. In re Clinton, 1 Misc.3d 913(A) (Surr. Ct. New York County, 2004) ; Mantella v. Mantella, 268 A.D.2d 852 (3rd Dept., 2000). Virginia G. relies exclusively on her unsupported statement that decedent requested these transfers and changes, but this self-serving statement would not be admitted over objection pursuant to the Dead Man's Statute. CPLR § 4519.
The issue for the Court is not if or could the principal have made these transfers and changes, or authorized and ratified them after the fact, but can the agent prove that, consistent with the standard of the Ferrara case. The answer is that here she simply cannot. Even though evidence excludable under the Dead Man Statute may be utilized to defeat a summary judgment motion, where it is “the only proof in support of the opposing party's claim, it is deemed insufficient.” Anderson Marszal v. Anderson, supra at 713, quoting Mantella v. Mantellla, supra.
The lack of an offer of admissible evidence from respondent compels the result in this case and completes the legal analysis. Nonetheless, all respondent's proffered arguments will be reviewed.
Respondent raises the presumption of Banking Law § 675, that the creation of a joint account reflects an intention by the original depositor to create a joint interest, with the resultant current and survivorship benefits. However, as respondent notes, the presumption arises only when the account has been formed in accordance with the statute. Here the respondent was without authority, as a matter of law, to create a current or future interest in herself, pursuant to the terms of the power of attorney and Ferrara. The joint accounts were never validly established. See Matter of Brock, NYLJ, May 10, 2011, page 39, column 2 (Surrogate's Court, Kings County), an analogous decision holding a Totten Trust was not revoked by the agent who closed the account without the legal authority under the power of attorney in question and Ferrara.
Respondent also raises that decedent had other joint accounts which were distributed in conformity with the testamentary plan expressed in decedent's will, arguing that this confirms the decedent's awareness of her ability to use joint accounts in lieu of her will. The fact that the other joint accounts were consistent with decedent's testamentary plan reinforces that plan. The only distribution inconsistent with decedent's testamentary plan was the Visions account, which was converted by Virginia G. using her admittedly limited power of attorney.
Respondent asserts that the deposit of the proceeds of the house sale into the joint Fleet account reflects decedent's intention to make the proceeds of sale joint assets of herself and Virginia G., implicitly authorizing Virginia G. to later convert the Visions sub-accounts to joint accounts. However, a tracing of the funds does not support that position. The house was decedent's individual asset. While there is no detailed evidence of her period of ownership, there is undisputed testimony that she owned it (possibly with her husband, who predeceased her) since at least 1997. The proceeds checks from the sale of the home were issued to decedent and deposited on her behalf (decedent did not attend the closing) into the Pound Ridge joint account on or about November 15, 2004, taking the balance in that account from about $7,000 to about $750,000. The two checks to Visions, which closed the Fleet account, cleared on or about November 22, 2004. The Visions accounts were in decedent's individual name and never changed by her act to joint accounts. The presence of the closing proceeds in a joint account for one week in an otherwise unbroken chain of individual ownership covering more than ten years does not come close to giving rise to a presumption that decedent intended to create a joint interest by allowing the deposit of those funds into the Fleet account.
The power of attorney used by Virginia to create the joint accounts contained no gift giving power. Ferrara stands for the proposition that Virginia G. was without authority as agent to modify decedent's testamentary plan. Thus, the only “joint” account Virginia G. had the legal authority to create with decedent was a convenience account. Virginia G.'s testimony as to her use of decedent's Visions account-that decedent wanted Virginia G. to write all the checks and handle all the banking, because she could not be bothered and did not want to deal with it-is completely consistent with a convenience account and inconsistent with a change of donative intent.
The respondent also makes much of the fact that decedent had access to all the banking records, right up to her death. However, the Visions change forms executed by Virginia G. as power of attorney were internal Visions documents, with no evidence presented that decedent saw any of those. Moreover, the statements from Visions continued to show only decedent's name and had no indication that any of the sub-accounts had been made joint, even after that occurred. No knowledge of a change to the account ownership can be imputed to decedent.
Some of the transactions made in decedent's account by Virginia G. are alleged to be loans to members of her family. Petitioner does not dispute that some of these transactions were in fact loans, nor that they were at least partly repaid, albeit after decedent's death and to the surviving listed owner, Virginia G. Again, the only evidence that respondent presents that these loans were authorized or ratified by decedent is her own self-serving statement, inadmissible as evidence pursuant to the Dead Man's Statute. Even if these were loans, the issuance of loans to family members is a breach by the power of attorney of her fiduciary duty to avoid self-dealing. See Application of Mel S., 15 Misc.3d 1037 (Ostego Co. Supreme Court, 2007) holding loans by a Mental Hygiene Law Article 81 Guardian to be a breach of fiduciary duty. The same standard of fiduciary duty applies to an agent under a power of attorney. GOL § 5–1501(2)(a). The burden is on Virginia G. to show the loans were repaid to decedent or her estate on fair and appropriate terms, or be subject to surcharge.
The petitioner's motion for summary judgment is granted, but there remains the issue of what transactions from the accounts were gifts, or loans, or otherwise not shown to be to or for the benefit of decedent.
This matter will be set down for a hearing on the transactions in the Visions account. To facilitate the inquest, Virginia G. is directed to provide a record of all receipts, disbursements and transactions entered into by her as agent on behalf of decedent (including, but not limited to cash transactions [e.g. ATM withdrawals]; Matter of Gershenoff, 2 Misc.3d 847 [Sup.Ct., New York Co., 2003] ) and to make such record available to the Court and petitioner, as temporary administrator c.t.a. of the Estate of Gloria B. General Obligations Law § 5–1505(2)(a)(3)(vii). Such record is to be provided within 30 days of the date of this Decision.
Pending the results of the hearing, Virginia G. is hereby ordered to deliver to the Estate of Gloria B. the sum of $277,277.70, being the balance transferred from decedent's Visions account to Virginia G.'s Visions account on March 18, 2008, the date decedent's account was closed after her death.
A conference of the attorneys will be set upon the Court's receipt of the agent's record of transactions, at which time any further discovery and the hearing will be scheduled.
This Decision constitutes the Order of the Court.