| Articles | The
FALL 2006 • Vol. XLV
- Cy Pres
- Changes in the Rules Governing IRS
Offers in Compromise
- Brooklyn Law School Alumni Reception
- The Firm Highlights
- A Date to Remember
by Robert H. Groman, Esq. and Robert H. Groman,
One concept constantly stressed by theestate planning
team at The Firm is that beneficiary designations should
be accurateand an estate plan should be reviewed on aregular
basis to be sure that no changes have occurred that will
have an adverse impact onthe estate plan. Care must be taken,
not only in the preparation of your will, but in beneficiary
designations made outside the will. Inaccurate or out-of-date
beneficiary desig-nations can result in strange and expensive
results. Such a situation and such a result occurred in
a recent estate handled by Robert H. Groman, a partner in
our tax and estate department, and Barry C. Feldman, a senior
tax and estate attorney.
The facts were as follows: A person opened a bank account
in her name "in trust for" a charity. The person
who established the account died approximately six years
after this bank account was set up. Groman and Feldman were
retained by the executor of that person's estate to represent
the estate. A review by counsel found that no charity had
the exact name as designated on this "in trust for"
account. After many hours of research,the estate planning
team determined that there was a charity in Texas with a
name similar to the charity named on the bank account. After
further investigation it was determined that the charity
with the similar name had become defunct four years after
the bank account was established and prior to the death
of the account owner.
Based on the dissolution documents filed bythe Texas charity,
it was confirmed that the charity with the similar name
transferred its assets to another charity at a Texas university.
The legal question - what happens to the money in this bank
account? Assuming that it was the intent of the decedent
to name the charity with the similar name as the designated
charity to which the money in the bank account was to go,
would the money go to the Texas university charity since
the similar named charity was now defunct or would the "in
trust for" status be deemed negated and the balance
in the bank accountbe paid to the decedent's estate? Under
the law governing bank accounts with "in trust for"
designations ,if the person or entity named as the beneficiary
on the trust account predeceases the person who established
the account, then the account has no beneficiary and the
assets in that account will pass through the estate of the
deceased person. On the other hand, there is a long established
doctrine in the State of New York called "cy pres".
That doctrine, in its simplest form,provides that a charitable
bequest should not lapse, and the courts will do their best
to follow the intent of the person who opened the bank account
and see that a charity receives the monies in the account.
There was no clear answer as to which concept would govern
This matter was brought before the Surrogate of Nassau County
and the Surrogate of Nassau County ruled that the doctrine
of cy pres was the superior doctrine and that the monies
in this bank account should go to the charity at the Texas
Mr. Groman stated that, "It was unfortunate that the
charitable entity was not correctly named. While the charity
did receive the money from this bank account, some ofthe
funds were dissipated by the court costs and legal fees
and,o f course, payment to the charity was delayed. "Mr.
Feldman's conclusion: "Be accurate in your planning
and keep your estate plan current."