|Common as a clause may be, drafters of matrimonial agreements need be forward thinking to the time when terms are effectuated. Custom does not always result in best practices and contract terms do not necessarily guarantee the desired result.|
|“Speak now or forever lose your piece …”
Case in point is the mandatory provision of the Domestic Relations Law § 236 B (3) frequently ignored in the execution of matrimonial agreements. In order for an agreement to be valid, it must be signed by each party and acknowledged in the form such as that required for a deed to be recorded. The acknowledgement has two components and is not simply the written statement of the notary or official reciting that the party executing the document appeared on a given day before them and signed the document. The party must make an oral declaration to the statutorily authorized officer that he signed the document.
Though seemingly a ceremonial tempest in a teapot, failure to make the oral declaration serves as the basis for a will contest brought on by the surviving spouse seeking to assert a right of election. The right of election (EPTL § 5-1.1A) is a statutory right acquired upon marriage whereby upon the death of a spouse, the surviving spouse is entitled to the greater of one third of the estate of the decedent spouse or $50,000. Frequently, this right is waived in prenuptial agreements as well as final settlement agreements. A valid waiver must comply with the provisions of the EPTL § 5-1.1-A(e)(2), that is:
Some litigants have successfully argued that there is “substantial compliance” with the acknowledgement re-quirement even absent the oral declaration. The Nassau Surrogate’s Court in Matter of Cerrito upheld the validity of the prenuptial agreement for this proposition. Whether this decision and its progeny will survive a review by the Court of Appeals is unknown, in the meantime, best practices would have the practitioner err on the side of caution: observe ceremony and have both parties make the oral declaration to ensure validity of the agreement and the waiver of the right of election.
“The parent giveth and taketh away”
“The Porsche versus the B.A.”
Drafters should address the particulars of these accounts in utilizing the proceeds as part of a parental contribution. The plan administrator/custodial institution is not bound by the contractual obligations under taken by the parents in a settlement agreement. Your client may be unaware that a child attaining age 21 is now entitled to the funds of the UTMA account and the parent is without recourse should junior show up with a new car rather than a college curriculum.
“No good deed goes unpunished”
Agreements frequently provide that the benefits for the children be paid to the spouse as “trustee” or “irrevocable beneficiary” or “guardian.” If benefits are to be paid to a spouse as a trustee, it behooves the drafter to insure that there is in fact a “trust” established or will be established to receive payment of the proceeds of the policy at death. In addition, it is important to specify that the “current spouse” be the trustee lest a trust established for the children of the first family find their financial well-being in the charge of the “second” or “third” spouse as the case may be.
“It’s the practice, not the ‘perfect’ of law”
|Nancy E. Gianakos is a matrimonial practitioner, of counsel to Albanese & Albanese LLP, Garden City, New York; admitted in Connecticut, New York and New Jersey and member of the New York State Bar Association, Nassau County Matrimonial and Family Law Committee, The American Family Law Inns of Court, the New York Association of Collaborative Professionals and former editor of the Nassau Lawyer.|
|1. Matter of Henken, 150 AD2d447, 448;Rogers v Pell,154 NY 518;Matterof Severoli, 9 Misc.3d 116(A),aff’d 44 AD2d 962. Note Thomas O. Rice, Esq. of Albanese & Albanese LLP represented litigants in Matter of Severoli.
2. Matter of Cerrito, N.Y.L.J., June 12, 1995 at 36, col 6.
3. Internal Revenue Code § 2053.
Nassau County Bar Association ALL Rights Reserved
15th and West Streets | Mineola, NY 11501 | (516) 747 4070 | Fax (516) 747 4147