Opinion
2020-698
07-29-2021
MATTER OF MORTEN RUBIN FAMILY TRUST, to compel the "final distribution" of the Trust Principal and Income, and to terminate the Trust.
Attorney for Petitioner: Pergolizzi & Associates, LLP, Stephen R. Pergolizzi, Esq., 911 Avenue U, Brooklyn, NY 11223 Attorney for Respondent: O'Hare Parnagian LLP, Robert A. O'Hare, Esq., 20 Vesey Street, Suite 300, New York, NY 10007
Attorney for Petitioner: Pergolizzi & Associates, LLP, Stephen R. Pergolizzi, Esq., 911 Avenue U, Brooklyn, NY 11223
Attorney for Respondent: O'Hare Parnagian LLP, Robert A. O'Hare, Esq., 20 Vesey Street, Suite 300, New York, NY 10007
Margarita López Torres, S. In this miscellaneous proceeding, Barbara Notterman (petitioner), a beneficiary of the Morten Rubin Family Trust, filed a petition to compel the trustee Abbie Tamber (trustee) to make a final distribution of the trust principal and income to the petitioner. Pursuant to CPLR 511 and SCPA 207, the trustee moved by order to show cause to change venue, or in the alternative, dismiss the petition. The petitioner opposes the motion. For the following reasons, the motion to change venue is granted solely to the extent of changing venue of this proceeding from Kings County to Chenango County where venue properly lies.
Background
The petitioner is a beneficiary of the Morten Rubin Family Trust (trust), created by a trust agreement signed on May 19, 2004. Morten Rubin (grantor) died on May 22, 2007. Pursuant to the trust agreement and several amendments that followed, upon the grantor's death, the trustee was to distribute 65% of the principal and income to the petitioner's sister Laura Zellman, and 35% of the principal was to be held in the trust and the income to be distributed to the petitioner. The trustee was also granted absolute discretion to distribute any amount of the principal necessary for the petitioner's care, support and maintenance. Upon the petitioner's death, the remaining principal and income were to be distributed to the petitioner's issue.
In July 2018, the petitioner and her sister signed agreements that provided that the grantor's outstanding tax debts were to be paid out of the trust estate. The agreements further stated, "I agree that final distributions to me from the Trust shall be made upon resolution of the tax matters." The petitioner contends that the trustee is bound by these agreements and that final distribution of 35% of the trust estate and income must be made to the petitioner. However, the trustee has refused, contending that she is abiding the grantor's intent that the trust principal be withheld and that the petitioner receive only the income during her lifetime. Final distribution has been made to the petitioner's sister of her share.
The petitioner further states that she has no issue and will never have issue. Thus, the remaining trust principal, in the amount of approximately $603,000.00, will eventually go to the petitioner's sister or her sister's issue. The petitioner further states that she receives $10,261.62 income per year from the trust principal, while the trustee earned in excess of $9,000.00 in commissions and the trustee's attorney was paid legal fees in excess of $10,000.00. The petitioner asserts that withholding the trust principal, while the trustee and her attorney earn double the income distributed to the petitioner, is wasteful and contrary to the grantor's intent.
Relevant to the issue of venue, the grantor was a resident of Kings County when the trust agreement was signed. The trust assets are held in a Morgan Stanley investment account located in Florida. The trustee resides in Chenango County in upstate New York.
Motion to Change Venue
As a preliminary matter, a motion to change venue on the ground that venue is improper must be preceded by a written demand, served with the answer or before the answer is served, that the proceeding be tried in the proper county. CPLR 511(B). Thereafter, the demanding party must move to change venue within 15 days after service of the demand, unless the adverse party consents to the change of venue within 5 days of the demand. Id. Here, the trustee served a demand to change venue dated March 15, 2021 prior to the time an answer was due and moved by order to show cause to change venue on May 29, 2021. As such, the demand and motion were timely made.
The trustee argues that the petition was brought in an improper county, contrary to SCPA 207, which provides that the proper venue for proceedings related to lifetime trusts is the county where "(a) assets of the trust estate are located, or (b) the grantor was domiciled at the time of the commencement of a proceeding concerning the trust, or (c) a trustee then acting resides, or, if other than a natural person, has its principal office." SCPA 207(1). The petitioner argues that pursuant to CPLR 503(b), however, a trustee is "deemed a resident of the county of [her] appointment as well as the county in which [s]he actually resides." Petitioner asserts that since the trust agreement and amendments were executed while the grantor was a resident in Kings County, the trustee is deemed a resident of Kings County where she was "appointed."
While there is a dearth of caselaw on this specific point, there is one Appellate Division decision that is decisive and controlling. That decision held that while a trustee appointed by a court is deemed a resident of the county in which the trustee was appointed, a trustee named as one in the trust document itself is not deemed a resident of the county where the trust document was executed. In re Kelly, 17 A.D.3d 791, 792, 794 N.Y.S.2d 458 (3d Dept. 2005) (citing CPLR 503(b) ). Accordingly, the trustee herein is a resident of Chenango County only for purposes of venue. Further, where a grantor is deceased, his domicile prior to death is of no relevance. Id. Lastly, there is no dispute that no trust assets are located in Kings County. Therefore, proper venue lies in Chenango County where the trustee actually resides.
Accordingly, the trustee's motion to change venue is granted solely to the extent of changing venue and transferring this proceeding to Chenango County Surrogate's Court. The portion of the motion alternatively seeking dismissal of the petition is denied without prejudice to renew upon transfer to Chenango County; and it is
ORDERED, that the Clerk of the Surrogate's Court, Kings County shall transfer this proceeding to the Surrogate's Court, Chenango County.