BACKGROUND

Jacques Lipson ("the Settlor") executed a revocable trust known as the Jacques M. Lipson Living Trust on August 19, 1999 ("the Trust"). The Trust was subsequently amended five times by the Settlor, most recently by the Fifth Amendment executed on April 19, 2013. The Trust names the Settlor as the sole trustee and sole beneficiary. Upon the Settlor's death or incapacity, the Settlor's spouse, Dawn Lipson ("the Petitioner") would become Successor Trustee. Upon the death of the Settlor, the Successor Trustee was to make specific distributions of trust assets to individuals and charitable organizations, and then distribute the remainder to the Settlor's family members: one-third to spouse Dawn Lipson, one-third to daughter Elaine Dwyer, one-ninth to daughter Judith Tamblin, one-ninth to granddaughter Maria Tamblin, and one-ninth to grandson Richard Tamblin

In November, 2013, the Settlor was determined by two physicians to be incapacitated. Upon his incapacity, the Petitioner became both Successor Trustee and attorney-in-fact for the Settlor. The Settlor executed a Power-of-Attorney on April 19, 2013, and on December 13, 2013, the Respondent formally became the Successor Trustee of the Trust. On May 12, 2015, the Settlor died. At the time of the Settlor's death, there was significantly less held in the Trust than in the Wells Fargo joint account with the Petitioner ("the Joint Account"). After the satisfaction of the specific dispositions in the Trust, there were no funds remaining to disburse to the remainder beneficiaries, notably the Objectants. The Objectants have alleged that the Settlor divested the Trust in favor of the Joint Account at some point prior to his death, potentially under the undue influence of the Petitioner while suffering from diminished capacity.

The Settlor's daughters and grandchildren ("the Objectants") filed a Petition to Compel the Account of Dawn Lipson as Successor Trustee of the Trust, and as attorney-in-fact for the Settlor. Pursuant to a prior Decision and Order of this Court, dated November 29, 2017, Petitioner was directed to prepare and file her accounting as Successor Trustee commencing on December 13, 2013, and to prepare and file her accounting as Attorney-in-Fact under a statutory [*2]power of attorney dated April 19, 2013 pursuant to the General Obligations Law. This Decision and Order has not been appealed and is the law of the case. On October 15, 2018, Dawn Lipson filed a Petition for Judicial Settlement of Account as Trustee and Attorney-in-Fact. The Objectants have not yet filed any objections to the Accounts.

On February 22, 2019, the Objectants sent a First Request for Production of Documents. On March 21, 2019, the Petitioner produced certain documents and objected to the production of others. On June 21, 2019, the Objectants filed the intstant Motion to Compel Production of Documents, returnable July 18, 2019, seeking to compel the Petitioner to produce the remaining documents requested. Generally stated, the Petitioner refuses to produce any documents related to her joint accounts with the Settlor, or that pre-date her becoming Successor Trustee of the Trust on December 13, 2013. The Petitioner also refuses to provide unredacted estate tax returns for the Settlor's estate.

The Objectants' Demand number 7 requests, "[a]ll federal and New York estate tax returns, if any were filed for the Decedent, and all communications from either the Internal Revenue Service or New York State Department of Taxation and Finance concerning any such returns." The Petitioner objected to this demand on the grounds that such documents are not relevant to the proceeding and are outside of the scope of the proceeding.

The Objectants' Demand number 18 requests, "[a]ll documents concerning any joint account titled in the name of the Decedent and the Petitioner at the time of Decedent's death." The Petitioner objected to this demand on the grounds that it is overly broad, seeks information not relevant to the proceeding, and seeks documents outside of the temporal scope outlined in the Court's Decision and Order.

The Objectants' Demand number 19 requests, "[w]ith respect to any such joint account that the Petitioner determined was not an asset of the Estate or Trust, all documents and communications concerning such joint account that the Petitioner considered in making such determination." The Petitioner objected to this demand on the grounds that it is overly broad, seeks information not relevant to the proceeding, and seeks documents outside of the temporal scope outlined in the Court's Decision and Order.

I. The Estate Tax Returns

The Objectants argue that the Settlor's estate tax returns are relevant because they will reveal information about lifetime gifting, and whether charitable pledges reported on the return were reported as joint and several obligations with the Petitioner, and whether the Petitioner contributed toward such pledges individually.

The Petitioner has offered to provide the Objectants with a redacted copy of the Estate tax returns containing information related to charitable pledges. The Objectants are not entitled to anything more in this proceeding, for the reasons more fully stated in this Court's Decision and Order dated November 29, 2017. The Petitioner is under no legal obligation to account for her and the Settlor's finances outside of the Trust, or to account for the Settlor's lifetime gifting in the context of this proceeding. The requested discovery is overly broad, and not relevant to the Petitioner's accounting as Successor Trustee of the Trust.

II. The Joint Account

The Objectants argue that information regarding the Joint Account is relevant because it will allow the Objectants to determine whether assets in the Joint Account at the time of the Settlor's death should have been in the Trust. As explained by counsel to the Objectants, "[t]he timing and source of contributions and deposits to the Joint Account will be important to understanding whether monies were transferred into the Joint Account from Trust assets by Ms. Lipson, or perhaps by Decedent at a time when he lacked capacity or was improperly influenced by Ms. Lipson." Attorney Affirmation of Martin W. O'Toole, Esq., June 21, 2019, at ¶22. Further, the Objectants wish to ascertain whether the Petitioner paid her share of joint charitable pledges out of Trust assets.

However, while the requested discovery may well be relevant to the Objectants' investigation of the Petitioner, it is not relevant to this proceeding, and this Court has already held that they have no legal right to it in the context of this proceeding. The arguments advanced by the Objectants in support of the instant motion are substantially the same arguments proffered prior to the November 29, 2017 Decision and Order in the compel account proceeding. Within the instant proceeding, the Petitioner is only obligated to account as Successor Trustee back to the date of her appointment, December 13, 2013, and as attorney-in-fact back to the date of the execution of the statutory power of attorney, April 19, 2013. For a full recitation of the reasons for this, please refer to this Court's Decision and Order dated November 29, 2017.

Prior to the Petitioner becoming the Successor Trustee, the Objectants were remaindermen of the Trust, with no present interest in the Trust, and no standing to compel an accounting. It is well settled that remainder beneficiaries of a revocable trust lack standing to object to an accounting of the settlor's period of trust administration. See, Matter of Malasky, 290 AD2d 631 [3d Dept 2002]. The Settlor remained the trustee, and could have changed the terms at any point. Upon the Petitioner becoming the Successor Trustee, on December 13, 2013, the Objectants became permissive discretionary principal beneficiaries, with standing to compel an accounting. The requested discovery is both overly broad, and outside of the temporal scope of the proceeding, and was properly refused by the Petitioner.

The Objectants argue that the Petitioner must produce the requested documents because the common law obligates a trustee to "redress a breach of trust known to the trustee to have been committed by a former trustee." Restatement [Third] of Trusts §76, Comment d. This tenet of common law, they argue, obligates the Petitioner to provide extensive financial information for both herself and the Settlor, in unlimited temporal scope, as an accounting trustee. This logic taken to the proposed result would create a burden on any trustee to investigate all dealings of the settlor and those close to the settlor for a period of years prior to the trustee's appointment, and to provide a report of such investigation to any beneficiaries upon request. This is unreasonable, particularly in light of this Court's prior Decision and Order.

The Objectants are looking for proof that the Settlor transferred funds from the Trust to the Joint Account in the twenty months between March, 2012, when he suffered a stroke, and November, 2013, when physicians determined that he lacked capacity. However, the Objectants have not commenced a proceeding to invalidate the Fifth Amendment of the Trust, executed by the Settlor on April 19, 2013. Were the Settlor to be found to have lacked capacity to make bank transfers during that period, the Fifth Amendment would also necessarily be invalidated. Such a proceeding would have additional interested parties who are not joined in the instant motion. [*3]This limited accounting proceeding may not be used as a vehicle for information gathering relating to potential additional actions.

Therefore, in accordance with the above decision, it is hereby

ORDERED, ADJUDGED and DECREED that the Motion of the Objectants to Compel Production of Documents is hereby denied.