Matter of Lippold
Annotate this CaseDecided on May 9, 2006
Sur Ct, Nassau County
In the Matter of the Estate of Richard Lippold, Deceased.
325097
John B. Riordan, J.
The Will of decedent Richard Lippold was admitted to probate by this court and letters testamentary issued to decedent's companion and business associate Augusto Gianni Morselli, and to another business associate of decedent, Marilyn Karp. Letters of trusteeship of a testamentary charitable lead trust (CLT) issued to Mr. Morselli and to decedent's two daughters, Lisa Hantman and Tiana Benway. Ms. Hantman, in her capacity as one of the trustees of the CLT, has petitioned the court for revocation of the letters testamentary which issued to Mr. Morselli and Ms. Karp and the letters of trusteeship which issued to Mr. Morselli. Incident to that proceeding, Ms. Benway, also in her capacity as a trustee of the CLT, now moves the court for an order granting summary judgment (i) revoking the letters of trusteeship which issued to Mr. Morselli; (ii) dispossessing Mr. Morselli and the Richard Lippold Foundation (the Foundation) and their personal property from the decedent's former residence; (iii) charging Mr. Morselli and the Foundation with the costs and reasonable attorneys' fees of the CLT in bringing the proceeding; and (iv) such other relief as the court deems just and proper. The Foundation has cross moved for summary judgment to revoke the letters of trusteeship which issued to Ms. Hantman and Ms. Benway.
The decedent was an artist of some renown who lived in Locust Valley, a community in Nassau County, New York. He also created much of his work at the residence. In 1997 Mr. Lippold created an irrevocable lifetime trust which contained the decedent's residence as its sole asset. In the trust instrument, Mr. Lippold reserved to himself a limited testamentary power of appointment which he exercised in the Will admitted to probate. Pursuant to that exercise, the premises was appointed to the CLT and is now the sole asset of the CLT. The Richard Lippold Foundation is the charitable lead beneficiary of the CLT. The remainder is payable 20 years after Mr. Lippold' s death to his issue then living in equal shares, per stirpes. During the 20-year period of the CLT's existence, the trustees are to pay to the Foundation a unitrust amount equal to 7½ % of the net fair market value of the trust assets determined as of the first business day of each taxable year. The decedent's daughters, in their capacities as trustees of the CLT, want to sell the premises, satisfy existing encumbrances on the property, and pay the unitrust amount to the Foundation pursuant to the terms of the CLT. Mr. Morselli, who resides at the premises and is also the trustee of the Foundation, is adamantly opposed to a sale of the property and has refused to leave the property. It is this impasse which led to the petition for revocation of letters and the instant motion and cross motion. [*2]
During the pendency of the motion and cross motion, the parties have executed a stipulation in which all parties, including Mr. Morselli, agree that the branch of the motion which seeks the revocation of Mr. Morselli's letters of trusteeship of the CLT be granted. The letters of trusteeship of the CLT which issued to Mr. Morselli are therefore revoked.
Regarding that branch of the motion which seeks to dispossess Mr. Morselli and the Foundation from the premises, the language of the Will is clear that the trustees of the CLT have the power to "sell, transfer ... or otherwise dispose of ...any...property, real or personal...in such manner, ...and upon such terms, credits and conditions as the Trustee may deem advisable." It is also clear that the trustees are obligated by the terms of the CLT to pay the unitrust amount to the Foundation on an annual basis and that there are no other assets of the CLT from which such payments may be made. Despite the arguments of Mr. Morselli and counsel to the Foundation that the preservation and ultimate disposition of some of the artwork would be fostered by their continued presence at the residence, the language of the CLT not only authorizes a sale of the property by the trustees, but also anticipates it. Specifically with regard to payment of the unitrust amount to the Foundation, the CLT provides that the payments
"shall be made first from the ordinary taxable income of the Trust
(including short-term capital gains) which is not unrelated business
income and, to the extent not so satisfied, the Unitrust amount shall
be paid from 50% of the unrelated business income, the long-term
capital gains of the Trust, the balance of the unrelated business income,
the tax-exempt income, any accumulated income, and finally the principal
of the Trust, in that order."
Clearly, the decedent was aware that the only asset that would be in the CLT was the residence and that his directions regarding payment of the unitrust amount could not be accomplished without the sale of the property and investment of the net proceeds.
While the Foundation argues that maintaining the artwork at the residence would be more advantageous to the Foundation, that is not a sufficient reason to deny the trustees the authority they have been granted by the decedent's Will. What the Foundation and Mr. Morselli seek, in essence, is for the court to decide that the beneficiaries of the CLT would best be served by permitting the Foundation and Mr. Morselli to remain in residence at the property, despite the language of the Will which clearly anticipates a sale of the property. But the court cannot substitute its own business judgment for that of the trustees (Matter of Marcus, NYLJ, Jan. 3, 2001 at 27, col 3; 6 Warren's Heaton on Surrogates' Courts, § 67.10), especially where the trustees are exercising a specifically granted power (Matter of Lovell, 23 AD3d 386 [2005]).
Accordingly, the motion is granted to the extent that the letters of trusteeship which issued to Augusto Gianni Morselli are revoked and that Augusto Gianni Morselli and the Richard Lippold Foundation shall vacate the premises along with all of their personal property within 45 days of service upon them of this order; the motion is otherwise denied.
The cross motion is denied in its entirety, as it seeks to revoke letters of trusteeship on the basis of conduct that the trustees are expressly authorized to exercise by the governing instrument.
This decision constitutes the order of the court and no additional order need be submitted.
[*3]
Dated: May 9, 2006____________________
John B. Riordan
Judge of the Surrogate's Court
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