Dwyer v. Valachovic

was granted letters testamentary for the limited purpose of discovering any assets owned by decedent at the time of her death. Petitioners commenced this proceeding pursuant to SCPA 2103 against respondent, seeking information about a vehicle, bank deposits and rental income alleged to be assets of the estate.^[1] Respondent denied that she possessed any estate assets, and petitioners submitted a reply. Surrogate’s Court determined that petitioners had neither demonstrated that respondent was in possession of estate assets nor shown reasonable grounds for further inquiry, and, accordingly, denied the request for a hearing and dismissed the petition. Petitioners appeal.

SCPA 2103 establishes a discovery procedure by which a fiduciary can identify and recover estate assets held by a third party (see Matter of Van Patten, 190 AD2d 322 , 326 [1993]; Margaret Valentine Turano, Practice Commentaries, McKinney’s Cons Laws of NY, Book 58A, SCPA 2103 at 295). The fiduciary bears the burden to prove that property held by a respondent is an estate asset; only when that obligation has been satisfied does the burden shift to the respondent to prove the proper disposition of the disputed property (see Matter of Voyiatgis, 110 AD3d 911 , 912 [2013]; Matter of Rappaport, 66 AD3d 1032 , 1032-1033 [2009]). We agree with Surrogate’s Court that petitioners did not satisfy this initial burden and failed to establish grounds for further inquiry.

First, petitioners submitted no proof whatsoever to support their claim that decedent owned or had an interest in bank deposits totaling approximately $90,000. The only substantial financial asset in which decedent was shown to have an interest was a sum of $9,000 that respondent was holding for decedent’s benefit at the time of her death. Petitioners acknowledge that these funds were duly distributed following decedent’s death.^[2] This sum originated from a savings account that decedent closed in September 2009. Respondent placed these funds in her own name to protect them in the event that decedent needed long-term care, and she testified that she held them solely for decedent’s benefit. Petitioners contend that the fact that respondent admittedly placed these funds in her own name indicates that she may have also done so with other funds and used them for her own benefit. Specifically, petition

related to decedent’s joint checking account with respondent. This account was opened in August 2010 with a balance of roughly $1,500; it was funded by decedent’s Social Security payments and held approximately $600 at the time of her death. Petitioners make no claim that this balance was improperly withheld by respondent. Instead, they assert that respondent could have taken advantage of the fact that she was named on the account to divert other account funds to herself. The only proof offered to support this speculative claim, however, is monthly account statements, which reveal that several small checks were written each month without indicating the names of the check payees, or whether they were endorsed by decedent or respondent. Respondent asserts that these payments covered decedent’s routine expenses; there is no evidence that any such payments were made improperly, or made either to or by respondent. The fact that respondent was the only one of decedent’s children listed on the account, while others had also been listed on previous joint accounts, does not shift the burden of proof in the absence of any showing that respondent exerted undue influence or transferred funds to herself (see Matter of Graeve, 113 AD3d 983 , 984-985 [2014]).

Next, petitioners assert that respondent should account for rental income due to decedent under a September 2010 lease that decedent entered into with her grandson—respondent’s son—and his wife.^[3] Decedent’s bank records fail to reveal that she ever received these rent payments. However, as previously noted, petitioners have neither claimed nor shown that decedent lacked capacity to handle her financial affairs, and the record does not reveal that respondent handled any transactions relative to this lease on decedent’s behalf, nor that she was responsible for collecting the rent. Decedent signed the lease with the tenants, in which the tenants agreed to make monthly rent payments to decedent. Decedent thereafter executed lease extensions in 2011 and 2012, and, again, respondent was not a signatory. Whether decedent forgave the rent payments, or whether she collected them and made some disposition that is not reflected in her bank records, is irrevelant in the absence of any evidence that respondent ever possessed the payments or was in any manner responsible for collecting and accounting for them.

Finally, petitioners argue that further inquiry is required regarding decedent’s 2003 Buick Century automobile, which respondent asserts that decedent transferred to her as a gift in