New York Law Review

Tag: Elective Share

  • In re Estate of Agioritis, 40 N.Y.2d 646 (1976): Surviving Spouse’s Elective Share and Totten Trusts

    In re Estate of Agioritis, 40 N.Y.2d 646 (1976)

    When a decedent deposits money into a Totten trust account after August 31, 1966, that money is subject to the surviving spouse’s right of election under EPTL 5-1.1, regardless of the source of the funds, even if the funds were transferred from pre-existing Totten trust accounts.

    Summary

    This case concerns the extent to which a surviving spouse can claim an elective share against funds held in Totten trust accounts created by the deceased spouse. The decedent had established numerous Totten trusts for collateral relatives, funded both before and after August 31, 1966 (the effective date of EPTL 5-1.1). The surviving spouse sought to include in her elective share funds deposited after that date, even if those funds originated from older, pre-1966 Totten trust accounts. The Court of Appeals held that any money deposited into Totten trusts after August 31, 1966, is subject to the surviving spouse’s right of election, regardless of its origin, overruling the prior holding in Matter of Halpern. The court reasoned that this interpretation aligns with the Legislature’s intent to protect the surviving spouse and expand the assets subject to the elective share.

    Facts

    The decedent, Nicholas Agioritis, died intestate in 1973, leaving a gross estate of approximately $800,000. A significant portion, over $650,000, was held in Totten trust savings accounts for various relatives in Greece. The decedent retained complete control over these accounts during his lifetime, and the beneficiaries did not contribute to the funds. Florence Agioritis, the surviving spouse, had been married to the decedent since 1950. She filed a notice of intention to take her elective share of the estate under EPTL 5-1.1.

    Procedural History

    The Surrogate’s Court initially ruled against the surviving spouse’s claim regarding funds transferred from pre-1966 accounts. The Appellate Division reversed this decision, holding that all deposits made after August 31, 1966, are subject to the right of election. The case then proceeded to the New York Court of Appeals.

    Issue(s)

    Whether money deposited in Totten trust savings accounts after August 31, 1966, from funds previously held in similar accounts before that date, is subject to the surviving spouse’s right of election under EPTL 5-1.1.

    Holding

    Yes, because the Legislature intended to expand the rights of the surviving spouse by including Totten trust bank accounts as testamentary substitutes. A change of either the beneficiary or the depositary bank constitutes a new deposit of money within the meaning of the statute.

    Court’s Reasoning

    The court examined the legislative history of EPTL 5-1.1, noting that it was enacted to address the inadequacy of prior law in protecting surviving spouses from disinheritance through inter vivos transfers, particularly Totten trusts. Prior to the enactment of EPTL 5-1.1, the case of Matter of Halpern (303 N.Y. 33 (1951)) held that Totten trusts were not illusory and could be used to defeat a spouse’s elective share. The Legislature, in enacting EPTL 5-1.1, explicitly overruled the Halpern doctrine.

    The court emphasized that the statute’s language explicitly states that all “[m]oney deposited, after August thirty-first, nineteen hundred sixty-six…in a savings account in the name of the decedent in trust for another person” is a testamentary substitute subject to the surviving spouse’s right of election. The court reasoned that a “change of either beneficiary or depositary bank constitutes a new deposit of money within the meaning of the statute.”

    The Court drew an analogy to Matter of Greenberg (261 N.Y. 474 (1933)), where a codicil executed after the effective date of a statute subjected an entire will to the statute’s provisions, even though the original will predated the statute. Similarly, the court reasoned that re-depositing money after August 31, 1966, subjects it to EPTL 5-1.1.

    The Court also held that withdrawals should be accounted for using a first-in, first-out (FIFO) method, meaning that withdrawals are deemed to come from the oldest deposits first. This method further supports the legislative intent to increase the assets subject to the elective share. The Court stated: “[W]e would apply a first-in— first-out method since it fosters the Legislature’s intention to increase the assets subject to elective rights. A contrary holding would preserve an exemption despite the decedent’s intentional withdrawal of the funds.”

  • Matter of Rosenzweig, 19 N.Y.2d 92 (1967): Satisfaction of Elective Share When Spouse Renounces Will Benefits

    Matter of Rosenzweig, 19 N.Y.2d 92 (1967)

    When a surviving spouse exercises an absolute right of election to take against a will, renouncing benefits conferred by the will, the elective share is satisfied by prorata contributions from all beneficiaries, not first from the renounced bequest.

    Summary

    This case addresses how to satisfy a widow’s elective share when she renounces a bequest in a will and elects to take her intestate share outright. The will created a trust for the widow, terminable upon remarriage, which gave her the right to elect against the will. The court held that because the widow exercised her absolute right of election, her share should be satisfied by prorata contributions from all beneficiaries, including a brother who was to receive the widow’s trust income if she remarried or died. The Court of Appeals reasoned that the widow’s renunciation divested her of any interest in the trust, and therefore the general rule of first applying the bequest to satisfy the elective share did not apply.

    Facts

    Samuel Rosenzweig’s will bequeathed personal effects to his widow, Aranka, $10,000 to his brother, Emanuel, and the balance to a residuary trust for his daughter, Erica. The trust income was to be distributed: 15% (but not less than $300/month) to Aranka, terminable upon remarriage or death, with Emanuel to succeed to that interest; and 70% (but not less than $300/month) to Erica. The will allowed invasion of the principal if the income was insufficient. Aranka was named executrix and cotrustee.

    Procedural History

    Aranka elected to take against the will because the trust benefit was not “for life.” She petitioned for construction of the will to determine the disposition of the income intended for her. The Surrogate held that Emanuel should succeed to Aranka’s interest and the Appellate Division affirmed. Later, in an accounting proceeding, the Surrogate held Aranka’s elective share should be satisfied by prorata apportionment between Emanuel’s legacy and the residuary trust. The Appellate Division reversed, holding Aranka’s interest under the will should first be applied to satisfy her elective share. Emanuel appealed to the Court of Appeals.

    Issue(s)

    1. Whether, when a surviving spouse exercises an absolute right of election and renounces a bequest under the will, the elective share is satisfied first from the renounced bequest or by prorata contributions from all beneficiaries.

    Holding

    1. Yes, the elective share should be satisfied by prorata contributions from all beneficiaries because when the right of election is absolute, the spouse loses any benefits of the will and all legatees contribute ratably to her share.

    Court’s Reasoning

    The Court of Appeals reversed the Appellate Division, reasoning that the prior construction proceeding conclusively determined that the testator intended for Emanuel to succeed to Aranka’s interest if she exercised her right of election. Therefore, Aranka was divested of any interest in the trust, and her intestate share should be satisfied by prorata contributions from each of the legacies.

    The court distinguished between an absolute right of election (where the spouse receives nothing or an illusory trust) and a limited right of election (where the spouse receives a benefit less than the intestate share). In the former case, the elective share is satisfied prorata; in the latter, the bequest is first applied, with the difference made up prorata. The court noted the will’s terms should, as far as possible, remain effective. Since the trust was not for Aranka’s life, evaluating her interest as if it were a life estate was illogical. The court quoted the Third Report of the Temporary State Commission on Modernization, Revision and Simplification of Law of Estates, stating that the rule should be that where the right of election is absolute, the spouse loses any benefits of the will and all legatees contribute ratably to her share.

    The court further explained, “if the trust benefits had been conferred upon the spouse, subject to termination only by her death, and a right of election arose by virtue of the fact that the capital value of the trust was not equal to what would have been her intestate share, each legatee would have been required to contribute pro rata to make up the difference between the capital value of the corpus and the intestate share. The remainder of her elective right would then have been satisfied by the life benefits given her under the terms of the trust (Decedent Estate Law, § 18, subd. [f]).”