NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A7750
SPONSOR: Lavine
 
TITLE OF BILL:
An act to amend the surrogate's court procedure act, in relation to
proof of lost or destroyed trusts
 
PURPOSE:
Provides statutory provisions for proving and establishing lost or
destroyed lifetime trusts.
 
SUMMARY OF PROVISIONS:
§ 1510: Proof of lost or destroyed trust.
A lost or destroyed trust may be proved in a proceeding only if:
Execution of the trust and any amendments thereto are proved in the
manner required by New York law, or by the applicable law of the situs
at the time of execution; The trust has not been revoked; and
All of the provisions of the trust are established by a copy or draft of
the trust proved to be true and complete, or in the absence of copy or
draft of the trust, by establishing the following: the designated trus-
tee of the trust; the designated beneficiary or beneficiaries of the
trust; the diapositive provisions of the trust; and that identifiable
assets were transferred to and are held in the trust.
There shall be a presumption of due execution where it is established
that assets were transferred to the trust.
There shall be a presumption that the trust was not revoked.
In any proceeding to prove a lost or destroyed trust: The person or
persons seeking to challenge the validity of the trust shall have the
burden of proof to establish that the trust has been revoked; and The
person or persons seeking to prove the validity of the trust shall have
the burden of proof on the requirements contained in paragraphs (a) (1)
and (a) (3).
Process must issue to the following persons, if not petitioners, in a
proceeding to establish or challenge the validity of a lost or destroyed
trust: All nominated trustees of the trust; All persons designated as
beneficiaries of the trust; All distributees of the settlor, unless the
court dispenses with such process; The fiduciary of the settlor's estate
as defined in SCPA 103 (21); if any;
The beneficiaries under the will of the settlor admitted to probate or
offered for probate in any court of competent jurisdiction; The Attorney
General if the trust is a charitable trust or if there are persons
unknown; and All such other persons as the court in its discretion may
determine.
 
JUSTIFICATION:
There are currently no statutory provisions for proving and establishing
lost or destroyed lifetime trusts under the SCPA. New York law contains
provisions for proving and probating lost or destroyed wills and testa-
mentary trusts established thereunder (see SCPA § 1407), however, there
are no parallel provisions for proving and establishing lost or
destroyed lifetime trusts. The need for a clear mechanism to establish a
lost lifetime trust has become increasingly important with the use of
lifetime trusts as will substitutes becoming more prevalent. Further-
more, many lifetime trust instruments were destroyed in the devastating
attacks on September 11, 2001. Practitioners have reported situations in
which only an unsigned copy, abstract or other secondary evidence of a
trust agreement could be found, but bank accounts, securities, real
property or other assets are registered in the name of those trusts.
There is some New York case law that provides a mechanism to deal with
lost trusts.1 However, clear statutory guidance is needed. It is essen-
tial that assets held in a lifetime trust continue to be held and admin-
istered for the trust beneficiaries if the existence of the trust can be
properly established. Simply because the physical document evidencing
the trust has been lost or destroyed does not and should not extinguish
the assets of that trust and the rights and interests therein. When a
potential grantor/testator wishes to establish a trust, he or she should
be given the same measure of comfort that his or her wishes will be
honored, whether the trust is created under a Will or under a separate
trust instrument.
The New York legislature has not directly addressed the issue of lost or
destroyed lifetime trusts. However, the enactment of SCPA § 1407 - Proof
of Lost or Destroyed Will - clarified this issue with regard to testa-
mentary trusts, giving practitioners clear guidance as to how to probate
a will that has been lost or destroyed, including one that creates a
testamentary trust. Once the proponent has established each of the
elements of SCPA § 1407, a lost or destroyed will may be admitted to
probate, thus allowing for the creation and administration of a testa-
mentary trust created under a lost or propounded will. The absence of a
parallel statute for lost or destroyed lifetime trusts creates a point-
less dichotomy where testamentary trusts established in lost wills have
a set procedure to be created while none exists for lost lifetime
trusts.
Despite the absence of a statute, there is some New York case law on
point. Such case law has consistently held that the absence of the
executed original of an agreement pursuant to which a lifetime trust has
been established does not prevent a finding that a valid trust exists
(see e.g. Matter of Marcus Trusts, 191 Misc 2d 497, 499 (Sur Ct, Nassau
County 2003), affdin part, appeal dismissed in part, 2 AD3d 640 (2d Dept
2002)).3 This line of cases continues to be followed and applied by the
Surrogate's Court (see e.g. Matter of Greene, NYU, Apr. 1, 2013 at. 23,
col. 3 (Sur Ct, Kings County 2013)). In all cases, the party seeking to
prove a trust must prove the existence of designated trustee(s), the
designated beneficiary, clearly identifiable res, and delivery of the
res by the grantor to the trustee with the intent of vesting legal title
in the trustee (see e.g. Brown v Spohr, 180 NY 201,209 (1904); see also
Martin v Funk, 75 NY 134, 142-143 (1878); Matson v Abbey, 24 NYS 284
(1893); Greene v Greene, 125 NY 506 (1891)). Where the presence of all
four of the elements has been demonstrated, New York courts have found
that a valid lifetime trust existed, despite a lack of the original or
copy of the trust document (see Matter of Ma rcus Trusts, 191 Misc 2d
497,499 (Sur Ct, Nassau County 2003), affd in part, dismissed in part 2
AD3d 640, 641 (2d Dept 2003); see also Matter of Doman, 68 AD3d 862, 863
(2d Dept 2009)).
 
LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
7750
2023-2024 Regular Sessions
IN ASSEMBLY
June 6, 2023
___________
Introduced by M. of A. LAVINE -- read once and referred to the Committee
on Judiciary
AN ACT to amend the surrogate's court procedure act, in relation to
proof of lost or destroyed trusts
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. The surrogate's court procedure act is amended by adding a
2 new section 1510 to read as follows:
3 § 1510. Proof of lost or destroyed trust
4 1. A lost or destroyed trust may be proved in a proceeding only if:
5 (a) Execution of the trust and any amendments thereto are proved in
6 the manner required by New York law, or by the applicable law of the
7 situs at the time of execution;
8 (b) The trust has not been revoked; and
9 (c) All of the provisions of the trust are established by a copy or
10 draft of the trust proved to be true and complete, or in the absence of
11 copy or draft of the trust, by establishing the following:
12 (i) the designated trustee of the trust;
13 (ii) the designated beneficiary or beneficiaries of the trust;
14 (iii) the dispositive provisions of the trust; and
15 (iv) that identifiable assets were transferred to and are held in the
16 trust.
17 2. There shall be a presumption of due execution where it is estab-
18 lished that assets were transferred to the trust.
19 3. There shall be a presumption that the trust was not revoked.
20 4. In any proceeding to prove a lost or destroyed trust:
21 (a) The person or persons seeking to challenge the validity of the
22 trust shall have the burden of proof to establish that the trust has
23 been revoked; and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11385-01-3
A. 7750 2
1 (b) The person or persons seeking to prove the validity of the trust
2 shall have the burden of proof on the requirements contained in para-
3 graphs (a) and (c) of subdivision one of this section.
4 5. Process must issue to the following persons, if not petitioners, in
5 a proceeding to establish or challenge the validity of a lost or
6 destroyed trust:
7 (a) All nominated trustees of the trust;
8 (b) All persons designated as beneficiaries of the trust;
9 (c) All distributees of the settlor, unless the court dispenses with
10 such process;
11 (d) The fiduciary of the settlor's estate as defined in subdivision
12 twenty-one of section one hundred three of this chapter, if any;
13 (e) The beneficiaries under the will of the settlor admitted to
14 probate or offered for probate in any court of competent jurisdiction;
15 (f) The attorney general if the trust is a charitable trust or if
16 there are persons unknown; and
17 (g) All such other persons as the court in its discretion may deter-
18 mine.
19 § 2. This act shall take effect immediately.