In the Matter of the Estate of Hausman

921 N.E.2d 191 (2009)

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In the Matter of the Estate of Hausman

New York Court of Appeals
921 N.E.2d 191 (2009)

  • Written by Rose VanHofwegen, JD

Facts

In 2000, Lena Hausman prepared a will directing her son and executor, George Hausman (plaintiff) to distribute her residuary estate in four equal shares, one each for George and his sister Susan, and two for the children of two sons, Gilbert and Gerald, who died before Lena, including her granddaughter Fredda Simon (defendants). The will directed George to create a limited-liability company (LLC) and transfer Lena’s rental property into the LLC to benefit her heirs. George was to distribute the LLC membership interests in four equal shares to Lena’s surviving children and grandchildren the same way she had directed distribution of her residuary estate. About a year later, George and Susan executed articles of organization for an LLC to own, operate, and manage real property, along with an operating agreement. Both said George and Susan alone would be members in the LLC, which would effectively keep Simon and the other grandchildren from sharing in any benefits from Lena’s rental property. However, George and Susan waited six weeks to file the articles and related documents with the state. Meanwhile, Lena executed a deed transferring the rental property to the LLC on November 2, 2001. The articles of organization were filed two weeks later on November 16, 2001, and the deed was recorded on December 3, 2001. When Lena died six months later, her will was admitted to probate. The grandchildren claimed the property had not gone to a valid LLC because the articles were not filed when Lena executed the deed. If no LLC existed to receive title, the conveyance was invalid, meaning the property remained in the residuary estate and would go to all Lena’s heirs instead of only George and Susan. George petitioned to determine whether the conveyance was valid. The probate court granted the petition, concluding that the LLC was a valid de facto company before George and Susan filed the articles. The grandchildren appealed, and the appellate court reversed, deeming the deed invalid. The New York Court of Appeals granted George leave to appeal.

Rule of Law

Issue

Holding and Reasoning (Ciparick, J.)

Dissent (Pigott, J.)

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