A07750 Summary:

BILL NOA07750
 
SAME ASNo Same As
 
SPONSORLavine
 
COSPNSR
 
MLTSPNSR
 
Add 1510, SCPA
 
Provides a mechanism for establishing the existence of a writing creating or amending a lifetime trust which was either lost or destroyed.
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A07750 Actions:

BILL NOA07750
 
06/06/2023referred to judiciary
01/03/2024referred to judiciary
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A07750 Floor Votes:

There are no votes for this bill in this legislative session.
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A07750 Memo:

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the manner required by New York law, or by the applicable law of the situs at the time of execution; The trust has not been revoked; and All of the provisions of the trust are established by a copy or draft of the trust proved to be true and complete, or in the absence of copy or draft of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persons seeking to challenge the validity of the trust shall have the burden of proof to establish that the trust has been revoked; and The person or persons seeking to prove the validity of the trust shall have the burden of proof on the requirements contained in paragraphs (a) (1) and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.
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A07750 Text:



 
                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.
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