Legal Question in Wills and Trusts in New York
My father recently died, leaving a rather large sum of money and other properties. The estate value is very approximately $4,000,000, and will be probated in New York county of NYC. There is a will distributing the estate in seven equal parts to his ex-wife, and 6 children, all now adults. But he kept much of his money in regular bank accounts and CDs. To keep FDIC insurance on these funds he would make them in trust for these family members, and his nine grandchildren (six of whom are now adults, and three are minors). When I learned of these accounts that were in trust for grandchildren, I told him that this was not the way to leave large sums of money for young adult grandchildren as it could lead to some very unfortunate life decisions at their tender ages. He agreed to remove all the grandchildren, though I am not sure that this was completely accomplished by the time of his demise. Further I expect that he replaced their names with those of his adult children, thus perhaps resulting in an inequitable distribution of his monies.
I proposed to the grandchildren that they sign a contract before we know the contents of the accounts agreeing to split all money left to grandchildren in these accounts equally between themselves. All adult grandchildren are in favor of doing this, and the parents� of minor grandchildren are also agreeable to this solution. Likewise, the adult children and the ex-wife are agreeable to a similar contract covering bank accounts left in trust to any of them being split equally between the 7 beneficiaries of the estate .
I have been advised that such a contract would be revocable because the contract was not based upon the knowledge of who the accounts were left in trust for. This baffles me, as the advantage of this agreement is that everyone takes the same risk in sharing. Upon knowing who is on those accounts, there are only winners and losers. Even the most fair minded family members might be tempted to change their minds upon knowing before signing the contract that they could keep a much larger share of the money. I was also advised that minor children could not be a part of the grandchildren contract because they are minors and their parents did not have the right to sign it for them.
I am asking for opinions, case citations, and any other comments on this topic. Specifically, is it true that such a contract could be easily revoked? Can you think of a method for providing the equal distribution of the bank funds? Are the minor grandchildren unable to participate? Thank you very much. -- Joe
1 Answer from Attorneys
What you propose is fair and equitable, but people are human and have human emotions, not necessarily the most altruistic. However, there may be another solution. Since the express reason for doing what was done, was to comply with FDIC rules, these accounts seem to me to be like "accomodation" accounts, not true gift accounts ITF the particular named person. An accomodation account typically is established to accomodate specific needs of the person creating the account. Usually this is done to allow someone access to an account when the account creator is unavailable, or, as in this case, to get FDIC coverage. Accomodation accounts are treated like revocable trusts and are wholly included in the decedent's estate, to be distributed as the Will provides, notwithstanding that other names are on the account, and that the account may be presumed to belong to the other person named on it. This (accomodation) may require litigation if some beneficiaries of the estate are not cooperative. .
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