New York changed Surrogate's Court Procedure Act section 707 to allow a felon to be a fiduciary of a decedent's estate. Effective October 22, 2021, a felon can now receive fiduciary letters from the Surrogate's Court that appoint the felon as an executor, guardian, or trustee in a decedent's estate.
SCPA 707(2)(b) now allows the court to declare a felon ineligible to be a fiduciary where the "crime may be adverse to the welfare of the estate, including but not limited to, crimes such as embezzlement or any crime where there was a misappropriation of money or a breach of fiduciary duty."
SCPA 707 (Eligibility to receive letters) previously provided:
Letters may issue to a natural person or to a person authorized by law to be a fiduciary except as follows:
1. Persons ineligible
. . .
(d) a felon
Under prior law, SCPA 707(1)(d) disqualified a felon from serving as a fiduciary. But SCPA 707(1)(d) disqualified the nominated fiduciary only when the crime was a felony under New York law. It did not apply when the crime was not a felony under New York law. Also, the rule under SCPA 707(1)(d) could have been vitiated when the felon/nominated fiduciary obtained a pardon, a certificate of relief from disabilities, or a certificate of good conduct under the Correction Law.
Justification for Change
Assembly Bill A2573A, which was signed into law on October 22, 2021, does not give the justification for the change. But Senate Bill 294A, which was substituted by A2573A, informs why legislature changed the law to allow felons to be fiduciaries:
It is important for persons preparing their estate plan to prepare a Will and Trust and to nominate the persons they want to act as executors, executrix or trustees. In most instances the court respects the choices made by the creator of the document and appoints the nominated parties. It is detrimental to grieving families when an individual is prohibited from acting as an executor due to his or her conviction after paying their debt to society.
State laws govern probate and surrogate courts, not federal law, so the rules can vary a great deal from jurisdiction to jurisdiction. For example, in New Jersey and Oregon, there are no laws stating that a convicted felon can't serve as executor of an estate. In New Jersey, this applies even if the named executor is still in jail when the testator dies. In other states, such as Illinois and New York the law specifically states that a convicted felon can't serve under any circumstances.
Courts may be more likely to remove an executor or bar him from taking office if the nature of his crime is specifically averse to the welfare of the estate. For example, if the conviction was for embezzlement, this might create trust issues relating to the executor's involvement with the estate's finances. If the conviction was drug-related and had nothing to do with misappropriation of money, a court might be more likely to overlook it
Text of Assembly Bill A2573A - SIGNED BY GOVERNOR
2021-2022 Legislative Session
A2573A (ACTIVE) - SUMMARY
Removes the prohibition on individuals convicted of a felony that prevents them from being appointed fiduciary of an estate; allows the court the discretion to permit or prevent such appointment of an individual convicted of a felony.
A2573A (ACTIVE) - BILL TEXT
STATE OF NEW YORK
2021-2022 Regular Sessions
January 19, 2021
Introduced by M. of A. FALL, DICKENS, WILLIAMS, SAYEGH, GOTTFRIED, O'DONNELL, EPSTEIN, BARRON, PICHARDO -- Multi-Sponsored by -- M. of A. COOK -- read once and referred to the Committee on Judiciary -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the surrogate's court procedure act, in relation to removing the prohibition on individuals convicted of a felony that prevents them from being appointed fiduciary of an estate
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1. Paragraphs (d) and (e) of subdivision 1 and subdivision 2 of section 707 of the surrogate's court procedure act, paragraph (e) of subdivision 1 as amended by chapter 514 of the laws of 1993, are amended to read as follows:
(d) [a felon
(e)] one who does not possess the qualifications required of a fiduciary by reason of substance abuse, dishonesty, improvidence, want of understanding, or who is otherwise unfit for the execution of the office.
2. Persons ineligible in court's discretion. The court may declare ineligible to act as fiduciary:
(A) a person unable to read and write the English language; OR
(B) AN INDIVIDUAL CONVICTED OF A FELONY WHOSE CRIME MAY BE ADVERSE TO THE WELFARE OF THE ESTATE, INCLUDING BUT NOT LIMITED TO, CRIMES SUCH AS EMBEZZLEMENT OR ANY CRIME WHERE THERE WAS A MISAPPROPRIATION OF MONEY OR A BREACH OF FIDUCIARY DUTY.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in ITALICS (underscored)ALL CAPS is new; matter in brackets [ ] is old law to be omitted.
SeeIn re Estate of Thompson, 75 Misc. 2d 508, 347 N.Y.S.2d 877 (Sur. Ct. N.Y. County 1973) (holding that a nominated executrix was disqualified where she had been convicted in federal court of making false statements under oath in order to obtain an immigrant visa and alien registration, and this crime would also be a felony in New York). ↩︎
SeeIn re Estate of Kaufmann, 77 Misc. 2d 424, 353 N.Y.S.2d 355 (Sur. Ct. N.Y. County 1974) (a nominated executor was not disqualified where a felony conviction on federal securities fraud charges would have been misdemeanors under New York law); In re Estate of Murphy, 136 Misc. 2d 618, 518 N.Y.S.2d 897 (Sur. Ct. Richmond County 1987) (a nominated executor was not disqualified where a felony conviction under federal law for conspiracy to defraud the United States and receipt of unlawful gratuity would not be felonies under New York law). ↩︎
Editor's Note: The original explanation makes sense when viewing the PDF of the legislation. I edited it to make sense for the plain text version of the legislation, where ALL CAPS (rather than underscore) displays the new text. ↩︎