Heart v. Head: A Judge’s Conundrum
May 04, 2018
Judicial oaths require that judges rule on the law, putting their personal feelings aside. Indeed, judges’ personal opinions are presumed to be non-factors in judicial decision making as judges are charged to uphold the letter of the law regardless of their personal beliefs. The decision in Matter of the Estate of Durcan is a case in point.
Before the Surrogate’s Court, New York County was a petition by James Durcan (“James”), the administrator of the decedent’s estate, seeking the turnover of certain IRA proceeds. In Durcan, Joan Durcan (the “Decedent”), was survived by two siblings, her brother James, and her sister Mary Anney Cunney (“Cunney”). Following Decedent’s death, Merrill Lynch & Co., Inc. (“Merrill Lynch”) distributed the proceeds of four IRA accounts (“Accounts”) owned by Decedent to Cunney. Shortly thereafter, James petitioned for the turnover of the Account proceeds, claiming that they belonged to Decedent’s estate (the “Estate”).
The Accounts were created by the Decedent in 2002, designating Cunney as the sole beneficiary. In 2014, Decedent sought to have the Accounts transferred from Merrill Lynch to Morgan Stanley. To effectuate the transfer Morgan Stanley sent Decedent certain transfer forms, which she completed and sent back, once again designating Cunney as her one hundred (100%) beneficiary. Shortly thereafter, additional transfer forms were sent to Decedent, including an IRA Adoption Agreement. The Adoption Agreement included a provision for designating a beneficiary for the new accounts. At his deposition, the Decedent’s financial advisor testified that when discussing the forms with the Decedent, she reiterated her desire to designate Cunney as the sole beneficiary. Decedent died unexpectedly a few days later. Critically, the second set of documents sent by Morgan Stanley, including the beneficiary designations contained in the Adoption Agreement, were neither received by Morgan Stanley nor found among Decedent’s papers. Following Decedent’s death, Morgan Stanley transferred the proceeds of the IRAs, valued at approximately $2 million, to Cunney, as Morgan Stanley recognized Cunney as the beneficiary on the basis of the information provided by Decedent.
Relying on EPTL 13-3.2 (e), James argued that Decedent failed to execute a valid beneficiary designation for her IRAs after the new accounts were opened at Morgan Stanley and, therefore, that the proceeds of each of the accounts should be paid to Decedent’s estate to be distributed among her intestate distributees. Section 13-3.2 specifically requires that a beneficiary designation be made in a writing signed by the person making the designation (id.). The Morgan Stanley transfer documents failed to comply with this requirement. In her own motion and in opposition to James’s motion, Cunney asked the court to apply the equitable doctrine of substantial compliance and determine that Morgan Stanley’s decision to waive its right to require strict compliance with the beneficiary designation provisions of its IRA Plan should not be disturbed (Durcan, at 4). Surrogate Mella ruled in James’s favor, and directed Cunney and Morgan Stanley to turn over to James, as administrator of Decedent’s estate, the proceeds of the IRAs (id. at 8).
The result in Durcan exemplifies the longstanding belief that it is a judge’s duty to set aside one’s personal feelings so that he or she can blindly administer justice according to the letter of the law. Judges take oaths to uphold the law, regardless of personal beliefs. Faced with this onerous burden, Surrogate Mella “reluctantly conclude[d] that compliance with the statutory requirement that a beneficiary designation be in writing and signed by the designator may not be disregarded As explained by the Court of Appeals in McCarthy, such requirement is critical to serve the essential goal of preventing the courts and parties from speculating regarding the wishes of the deceased” (id. at 7).