Can A Life Estate Deed Be Contested in New York City?

Yes, a life estate deed can be contested in New York. The success of the contest would depend on the merits of the case.

A life estate deed is a type of deed, where the grantor transfers ownership over a property to a third person but retains the right to use and possess the property in his lifetime. Life estate deeds are commonly used in New York as a simple estate planning tool to avoid probate since most people’s estate consists mainly of their principal residence. Issues may arise, however, when property is transferred to one family member, to the exclusion of others. In this case, life estate deeds are often contested.

In New York, life estate deeds are contested using the same grounds for contesting a will: lack of capacity, fraud or duress, improper execution, and undue influence.

Lack of Capacity

One of the most common reasons for contesting a life estate deed is lack of capacity. Lack of capacity or diminished capacity is often used in conjunction with undue influence.

Most grantors who transfer properties to their family members using a life estate deed are older people whose only property is their house and prefer to avoid probate in the transfer of property to their children. When the transfer through a life estate deed is made to only one family member, to the exclusion of the other family members, the excluded ones usually contest the transfer on the ground of the grantor’s old age and lack of capacity.

Lack of capacity is usually proven through the grantor’s medical records, witness testimony who had regular contact with the grantor at or about the time the life estate deed was executed, expert testimony who can evaluate the grantor’s medical records to show lack or diminished capacity, and other documentary evidence such as letters, emails, and other written communication that show the grantor’s confusion and cognitive decline.

Undue Influence

Undue influence is usually raised together with the grantor’s diminished capacity. Even if the grantor did not completely lack capacity, a diminished capacity on the part of the grantor makes the grantor more prone and vulnerable to the exertion of undue influence.

Undue influence requires three elements: motive, opportunity to exercise undue influence, and the actual exercise of undue influence. Motive is shown when the one exerting undue influence is a substantial beneficiary or the grantee of the life estate deed. The opportunity to exercise undue influence is usually reflected through the grantee’s close proximity towards the grantor, frequent interactions or control over the grantor’s affairs. The actual exercise of undue influence is shown through the influencer-grantee’s overt actions of manipulation, control, or coercion upon the grantor.

Usually, when there is a relationship of trust and confidence between the grantor and the alleged influencer, i.e., a fiduciary relationship under a POA, attorney-client relationship, caregiver-patient relationship, the burden of proof is reversed and the influencer has to show that there was no undue influence.

When the grantor is in a more vulnerable state, i.e., taking mind-altering medication, is physically dependent upon another person for support, etc., the possibility of undue influence becomes greater.

To support a claim of undue influence, evidence such as witness testimony from people who had regular contact with the grantor at the time the life estate deed was executed (including the attorney-draftsperson), medical and psychological evaluation documents of the grantor, and other relevant documents can be presented.

Improper Execution

Through rare, improper execution can also be a ground for contesting a life estate deed.

In New York, a life estate deed must be written and signed by the grantor. Its language must state that ownership in fee simple is transferred to the grantee with a reservation of life estate to the grantor. The reservation a life estate can be expressly stated or it could also state that the grantor reserves the right to the use and possession of the property including collection of rents for the duration of the grantor’s life. What is important is the intent of the grantor, through the language of the deed, to create a life estate.

The life estate must also be notarized and recorded with the county clerk’s office where the property is located.

In the absence of any of the above, the deed may be contested on the ground of improper execution.

Fraud or Duress

Fraud and duress are both grounds to contest a life estate deed in New York. Though they appear similar, they are in fact different.

Fraud is the intentional or deceitful misrepresentation of fact that leads the grantor to rely on such fact as basis for making the decision to create a life estate deed. Duress, on the other hand, refers to situation where the grantor is coerced due to threat of harm or economic consequence to create the life estate deed.

In the case of fraud:

• There must be a false misrepresentation or omission of a material fact.
• The person making such misrepresentation or omission has knowledge of such falsity.
• The misrepresentation or omission was made with intent to deceive.
• The person who was misled relied on such material misrepresentation or omission of fact in making the decision.

In the case of duress:

• There must be a form of threat, intimidation or coercion upon the grantor, depriving them of their free will.
• The threat must involve an immediate or impending harm to the grantor or his loved ones.
• The grantor must perceive that there is no other reasonable alternative but to comply with the duress or coercion.

Contesting a life estate deed in New York requires the filing of a complaint. Aside from the grounds and evidence to contest a life estate deed, many other factors come into play such as the time period in filing the complaint for purposes of the statute of limitations. A qualified New York lawyer will be able to assist you in analyzing your case. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].