| Matter of Masterson |
| 2007 NY Slip Op 09865 [46 AD3d 1091] |
| December 13, 2007 |
| Appellate Division, Third Department |
| In the Matter of the Estate of Caroline Masterson, Deceased.Thomas W. Masterson, as Executor of Caroline Masterson, Deceased, Respondent; PhyllisMcKay, Appellant. |
—[*1] McNamee, Lochner, Titus & Williams, P.C., Albany (Richard D. Cirincione of counsel), forrespondent.
Crew III, J.P. Appeal from a decree of the Surrogate's Court of Schenectady County (Kramer,S.), entered September 12, 2006, which, among other things, judicially settled the account ofpetitioner as executor of decedent's estate.
Caroline Masterson (hereinafter decedent) died testate in February 2001, survived by her twoadult children, petitioner and respondent. Prior to her death, in or about 1980, decedent executeda durable power of attorney designating petitioner as her attorney-in-fact. In 1997, whendecedent's severe arthritis progressed to the point that she was unable to write legibly, petitionerbegan handling decedent's finances. To that end, petitioner closed decedent's account at KeyBank and, on January 16, 1997, opened three accounts at Hudson River Bank and Trust with theproceeds thereof—a checking account containing $7,910, an account in trust forrespondent containing $5,000 and an account in trust for petitioner containing approximately$78,000. Petitioner thereafter paid decedent's bills with checks drawn on the Hudson Riverchecking account. All bills and bank statements were sent directly to decedent's residence, andpetitioner testified that decedent remained very involved with her finances and, in essence, [*2]supervised his check-writing activities. In addition to payingdecedent's bills, petitioner, at decedent's request, wrote checks to himself and to respondent asChristmas gifts.
Upon decedent's death, petitioner was appointed as executor of her estate. In addition to theforegoing accounts at Hudson River, decedent had an account at Fleet Bank in joint trust forpetitioner and respondent in the amount of $51,938, 768 shares of General Electric stock worthnearly $36,000, an annuity in the amount of $63,735 naming petitioner as the beneficiary and anannuity in the amount of $38,618 naming respondent as the beneficiary. As executor, petitionerdistributed these assets, with the exception of the proceeds from the Fleet Bank account, whichhe used to pay expenses related to decedent's funeral and the administration of her estate, andthereafter filed his accounting with Surrogate's Court.
Respondent filed various objections in response thereto alleging, among other things,improper gift giving and conversion. Following a trial, Surrogate's Court concluded that whilepetitioner improperly established the trust accounts at Hudson River, such conduct did not rise tothe level of conversion. Accordingly, Surrogate's Court judicially settled petitioner's final accountand directed that he be awarded his executor's commission. This appeal by respondent ensued.
We affirm. As to the issue of gift giving, the case law indeed makes clear that "[a]bsent aspecific provision in the power of attorney document authorizing gifts, an attorney-in-fact, inexercising his or her fiduciary responsibilities to the principal, may not make a gift to himself ora third party of the money or property which is the subject of the agency relationship" (Marszal v Anderson, 9 AD3d 711,712-713 [2004] [citations and internal quotation marks omitted]; see Matter of Naumoff,301 AD2d 802, 803 [2003], lv dismissed 100 NY2d 534 [2003]). "Such a gift carrieswith it a presumption of impropriety and self-dealing, a presumption which can be overcomeonly with the clearest showing of intent on the part of the principal to make the gift"(Semmler v Naples, 166 AD2d 751, 752 [1990], appeal dismissed 77 NY2d 936[1991] [citations and internal quotation marks omitted]). Here, there admittedly was no specificprovision in the underlying power of attorney permitting petitioner to make gifts and, hence, thepresumption of impropriety attaches. In our view, however, the testimony adduced at trial morethan demonstrated decedent's clear intent to make such gifts. Notably, respondent conceded thatshe had received monetary gifts from decedent for a number of years prior to decedent's deathand, to that end, did receive some checks signed by petitioner. Respondent testified that when shequestioned decedent about this, decedent advised that she instructed petitioner to write thechecks, and respondent acknowledged that the checks bearing petitioner's signature wereconsistent with prior amounts received from decedent. Under such circumstances, we agree withSurrogate's Court that no improper gift giving occurred.
We reach a similar conclusion with regard to respondent's claim of conversion. As to thejoint Fleet Bank trust account, petitioner admittedly transferred the proceeds thereof into hispersonal checking account following decedent's death in order to pay expenses associated withdecedent's funeral and the administration of her estate. Petitioner testified, however, withoutcontradiction, that he advised respondent of his intent to do so ahead of time and that she voicedno objections thereto. Of the approximately $51,000 used to fund the account initially, roughly$40,000 remained at the time of trial, and petitioner testified that it was his intent to divide theremaining proceeds with respondent equally. Under such circumstances, no conversion occurred.
Finally, with regard to the three accounts at Hudson River, there indeed appears to be an[*3]issue as to decedent's execution of the signature cards forthose accounts, which ultimately led Surrogate's Court to conclude that the accounts had beenimproperly established and the proceeds thereof must be returned to decedent's estate. We agreewith Surrogate's Court that the circumstances surrounding the creation of those accounts, whilesomewhat questionable, do not definitively establish that a conversion took place. Hence, wehave no quarrel with the court's rejection of respondent's claim on this point. Respondent'sremaining arguments, including her assertion that Surrogate's Court erred in awarding petitionerhis commission and denying her request for statutory interest and counsel fees, have beenexamined and found to be lacking in merit.
Spain, Carpinello, Rose and Lahtinen, JJ., concur. Ordered that the decree is affirmed,without costs.