Campbell v. Svenningsen (In re Svenningsen)

• Decision Date: 06 February 2013
• Citation: 959 N.Y.S.2d 237,2013 N.Y. Slip Op. 00751,105 A.D.3d 164
• Parties: In the Matter of John SVENNINGSEN, deceased. Maryann Campbell, et al., petitioners-respondents; v. Elisabeth Anne Svenningsen, et al., appellants; Emily Fuqui Svenningsen, respondent.
• Court: New York Supreme Court — Appellate Division

105 A.D.3d 164

959 N.Y.S.2d 237

2013 N.Y. Slip Op. 00751

In the Matter of John SVENNINGSEN, deceased.Maryann Campbell, et al., petitioners-respondents;

v. Elisabeth Anne Svenningsen, et al., appellants;Emily Fuqui Svenningsen, respondent.

Supreme Court, Appellate Division, Second Department, New York.

Feb. 6, 2013.

Cahill Gordon & Reindel, LLP, New York, N.Y. (David G. Januszewski and Joan Murtagh Frankel of counsel), for appellants Fanny Warren and Christine Svenningsen; and Wiggin and Dana, LLP, New York (Robert W. Benjamin, Steven B. Malech, and Kim E. Rinehart of counsel), for appellants Elisabeth Anne Svenningsen, Jon Anders Svenningsen, and Christina Svenningsen, individually and as virtual representatives of Melissa Anne Svenningsen and Sara Elvera Svenningsen (one brief filed).

Bertine, Hufnagel, Headley, Zeltner, Drummond & Dohn, LLP, Scarsdale, N.Y. (Stephen Hochhauser of counsel), for petitioners-respondents.

Carton & Rosoff, P.C., White Plains, N.Y. (Robin D. Carton of counsel), attorney for the child, the respondent Emily Fuqui Svenningsen.

WILLIAM F. MASTRO, J.P., CHERYL E. CHAMBERS, LEONARD B. AUSTIN, and ROBERT J. MILLER, JJ.

AUSTIN, J.

These consolidated appeals present a case of first impression regarding the rights and interests of an adopted child in irrevocable trusts and the estate of her first adoptive father, whose surviving spouse surrendered the child for a second adoption to the petitioners eight years after the first adoptive father's death and the admission of his will to probate.

In March 1996, the decedent, John Svenningsen (hereinafter the decedent), was diagnosed with cancer while he and his wife, Christine Svenningsen (hereinafter Christine), were in the process of adopting a child from China. As the decedent remained in New York undergoing treatment for cancer, Christine traveled to China to complete their adoption of an infant born on July 7, 1995, whom they later named Emily. The decedent and Christine entered into an “Agreement for Parties to an Adoption Registration” (hereinafter the adoption agreement), dated May 6, 1996, pursuant to which they guaranteed, inter alia, that they would not abandon Emily or “transfer or have [her] re-adopted,” and that they would “deem [Emily] a biological child.” Further, the adoption agreement provided that Emily had the right to inherit the estate of the decedent and Christine. A certificate of adoption reflecting the adoption of Emily by the decedent and Christine was issued on May 8, 1996, by the Hubei Province of the People's Republic of China.

Christine returned to New York with Emily, and a written announcement was made acknowledging the adoption of Emily on May 8, 1996, by the decedent and Christine. Additional proceedings were commenced by the decedent and Christine in New York to re-adopt Emily so that she could be issued a U.S. birth certificate and obtain a U.S. passport. The Family Court, Westchester County, eventually issued an order of re-adoption to Christine subsequent to the decedent's death.

The decedent and Christine had four biological children at the time of commencement of the adoption proceedings. Their fifth biological child, Sara, was born subsequent to their application to adopt a child from China but prior to the finalization of Emily's adoption.

During his lifetime, the decedent, as “Settlor,” created two irrevocable inter vivos family trusts for the benefit of his children. The first trust, entitled the “Svenningsen Family Irrevocable Trust Number One” (hereinafter the 1995 Trust), was created on July 20, 1995. The FIRST Article, subsection (D) of the 1995 Trust provided, inter alia, for the trustees, the decedent, and his sister, Fanny Warren (hereinafter Warren), at the time the 1995 Trust was created, to divide the trust fund into equal shares for “each child of the Settlor then living” when the oldest of the decedent's children attained the age of 30. According to the FIRST Article, subsection (A), the Trustees shall dispose of the net income and principal of the 1995 Trust by, inter alia:

“Pay[ing] or apply[ing] to or for the benefit of the Beneficiaries ... so much or all of the net income and so much or all of the principal of this Trust Fund as the Independent Trustee, in her sole and absolute discretion, shall from time to time deem advisable, without any requirement that Trustees make any payments to the Beneficiaries in any trust year or make payments to said Beneficiaries in equal shares.”

The TWENTY–FIFTH Article defined the class of “children” to include the decedent's then living four children, who were identified by name, “and any additional children born to or adopted by the [decedent] after the creation of this Trust.” When the decedent created the 1995 Trust, Emily had not yet been adopted and Sara had not yet been born. The record suggests that although Emily was not yet adopted, the concept of adoption had been discussed between the decedent and Christineprior to the execution of the 1995 Trust.

The second irrevocable family trust, entitled the “Svenningsen Family Irrevocable Trusts” (hereinafter the 1996 Trust) was created on October 29, 1996, for the benefit of the decedent's six children. The decedent and Warren were the trustees of the 1996 Trust. The 1996 Trust established six equal and separate irrevocable trusts, one for each of the decedent's children. Each of the decedent's children, including Emily, was expressly named as a beneficiary in the 1996 Trust. The 1996 Trust identified Emily as the sole beneficiary of her separate irrevocable trust, denominated as “The Emily Fuqui Svenningsen Trust.”

The decedent also executed a last will and testament on March 17, 1997. The decedent appointed Christine and Warren as cotrustees of the testamentary trusts created under his will.

After providing for Christine to inherit his personal property, real property located in Connecticut and California, and $10,000,000, the decedent's will stated under Article THIRD(D) that if Christine survived him, he gave to his “then living issue, per stirpes ... a sum equal to the largest amount that can pass free of Federal estate tax.” This credit shelter trust was subject to the provisions of the EIGHTH Article of the will. The EIGHTH Article provided that any assets distributable under the credit shelter trust, the residuary estate, or any terminating trust established under the will payable “to any child of mine” shall be paid to the child if such child attained the age of 40 at the date of distribution. If any child had not reached the age of 40 by the date of distribution, the funds would be held in trust, with one-third payable outright if the child had reached the age of 30 at the time of distribution, or two-thirds if the child had reached the age of 35. The balance of such share, or the entire share if the child had not attained 30 years of age at the time of distribution, would be held in trust for the child's benefit. Pursuant to Article EIGHTH(D), one-third of the share would be distributed when the child reached age 30, half of the remaining balance distributed when the child reached 35, and the remainder distributed and the trust terminated when the child reached the age of 40.

The FOURTH Article of the decedent's will established a separate trust with respect to his residuary estate, which was to be held in trust for the benefit of Christine. This was referred to as one of the marital trusts established under the decedent's will. The subject marital trust (hereinafter the Marital Trust) was to be funded upon Christine's death for the benefit of the decedent's “then living issue, per stirpes” with the remaining principal of this Trust, while any undistributed income of this Trust was to be paid to Christine's estate. The trustees had sole and absolute discretion to pay or apply the principal for Christine's benefit, including the whole thereof, and stated that the interests of the remainder persons were subordinate to the trustees' exercise of discretion. The decedent noted that it was his intention that Christine “continue to maintain the standard of living to which she was accustomed at the date of [his] death.”

Subsection (B) of the TWENTIETH Article provided that the term “issue,” as used in the decedent's will, “shall include children who have been legally adopted at the date of my death as well as children with respect to whom legal adoption proceedings had been commenced prior to the date of my death though not completed at the time of my death” (emphasis added). The decedent's will did not refer to any of the decedent's children by name.

The decedent died on May 28, 1997. He was survived by Christine, his five biological children, and Emily. His will, which bequeathed his multimillion dollar estate to Christine and his children, was admitted to probate in July 1997 pursuant to a probate petition in which Christine, the nominated executor of the estate, identified Emily as one of the decedent's six children.

In December 2003, more than seven years after the decedent and Christine had adopted Emily, and six years after the decedent's will had been admitted to probate, Christine brought Emily to a boarding school for children with special educational needs (hereinafter Emily's school). Christine's attorneys talked to administrators at Emily's school about Christine putting Emily up for adoption. At that time, Christine did not know of anyone willing to adopt Emily. Meanwhile, the petitioner Maryann Campbell, the Assistant Executive Director of Emily's school, contacted Christine's attorneys about adopting Emily, since she and her husband, the petitioner Fred Cass (hereinafter together the petitioners), had bonded with Emily. On December 16, 2004, Christine voluntarily terminated her parental rights with the understanding that Emily would be adopted by the petitioners. Christine surrendered custody of Emily to Spence–Chapin Services to Families and Children....