New York Appellate Division Revokes Letters Testamentary and Letters of Trusteeship

Elena Eckhouse v. Anita Taormina, 202 A.D.3d 669 (N.Y. App. Div. 2022)

This action was brought in an effort to revoke letters testamentary and letters of trusteeship from Anita Taormina (“Taormina”).  Upon their father’s death in 2008, Taormina and her sister, Elena Eckhouse (“Eckhouse”), were appointed as co-executors of his estate, as well as co-trustees of GST trusts created for the benefit of his grandchildren.  While the court acknowledged the high thresholds required to revoke letters testamentary and letters of trusteeship, it found sufficient cause to do so here.

Over the course of many years, Taormina and Eckstein disagreed on much, most importantly, (1) the funding of the GST trusts, (2) making distributions from the GST trusts, and (3) the payment of estate taxes.

As to the GST trusts, Taormina refused to permit distributions to the beneficiaries despite their eligibility for those distributions under the trust terms, because she believed the GST trusts had been overfunded (resulting from the unanticipated appreciation of assets transferred to the trusts).  She also believed the beneficiaries should be required to refund those alleged overpayments to the estate before they could receive distributions.  Nevertheless, the court observed that all of the beneficiaries exceeded age 35, which was the age at which the entire trusts were to be distributed.  Thus, the court found that Taormina’s actions thwarted the trusts’ purposes and, accordingly, she should be removed as trustee.

As to the issue of estate taxes, Eckstein prepared and repeatedly presented estate tax returns to Taormina for her countersignature, which she refused.  Taormina alleged that the purported overfunding of the GST trusts prevented the filing of accurate estate tax returns.  The court found that, even if Taormina’s claims about the overfunding of the GST trusts were accurate, her actions actively harmed the estate by purposely allowing penalties and interest to accrue.  Additionally, she proffered no reason why a partial payment could not be made.  As a result, the court revoked Taormina’s letters testamentary.