Estate of Kokotos

REFEREE’S REPORT AND DECISION Pursuant to a Decision and Order of Hon. Peter Kelly, Surrogate, dated September 1, 2022, the undersigned was appointed as Referee to hear and determine all issues raised in the captioned proceeding. Petitioner Efthimia Leonardi (“Petitioner” or “Efy”) and Respondents Steven Kokotos (“Steven”) and Catherine Kokotos (“Catherine”) (Steven and Catherine collectively, “Respondents”) are the parties to the captioned proceeding. It is undisputed that Efy and Steven are the children and distributees of the decedent Georgia Kokotos (“Decedent”), who passed away intestate on April 16, 2015. The captioned proceeding commenced by Petitioner seeks inter alia, the turnover and conveyance of interest in real property located at 146-03 28th Avenue, Flushing, New York (the “Premises”) to Decedent’s estate (the “Estate”) for intestate succession. Petitioner alleges, in sum and substance, that prior to her death, Decedent transferred her ownership interest in the Premises to 146-03 28 Ave LLC (the “LLC”), and Decedent was the sole member of the LLC. There is no dispute between the parties as to the validity of the conveyance of the Premises from Decedent to the LLC. Petitioner contends that the LLC ownership interest was then invalidly and/or improperly gifted by Steven, as agent for Decedent pursuant to a power of attorney, to Catherine, who is Steven’s wife, thereby depriving Petitioner of her one-half intestate interest in the Premises and the rental income generated by the Premises since Decedents death, which Petitioner should have received as a distributee of Decedent’s Estate. Respondents dispute Petitioner’s claims and allege, in sum and substance, that the power of attorney was valid and that Decedent intended to, and Steven acted at her direction to, gift her interest in the Premises to Catherine before her death. The parties filed competing Statements of Issues for consideration at the trial of this proceeding. After a conference with the parties, it was agreed that the issues would be determined by me based upon my review of the competing Statements. Upon review of the same, I rendered the following Statement of Issues to be tried herein: 1. Whether the Power of Attorney, dated July 3, 2014 (“POA”) was validly executed by Decedent? a. Burden of Proof: Petitioner, by a fair preponderance of the evidence. 2. Whether Steven was in a confidential relationship with Decedent at the time that Decedent’s membership interest in 146-03 28 Ave LLC (the “LLC”) was transferred to Catherine? a. Burden of Proof: Petitioner, by a fair preponderance of the evidence. 3. Whether Catherine was in a confidential relationship with Decedent at the time that Decedent’s membership interest in the LLC was transferred to Catherine? a. Burden of Proof: Petitioner, by a fair preponderance of the evidence. 4. Whether Decedent intended to make a gift of her membership interest in the LLC to Catherine? a. Burden of Proof: Respondents, by clear and convincing evidence. 5. Whether the transfer of Decedent’s membership interest in the LLC to Catherine, by Steven as attorney-in-fact for Decedent, was made for Decedent’s benefit and in her best interests? a. Burden of Proof: Respondents, by clear and convincing evidence, if the POA is valid or if a confidential relationship existed between Decedent and Steven or Catherine at the time of the transfer; Petitioner, by a fair preponderance of the evidence, if the POA is not valid and if no confidential relationship existed between Decedent and Steven or Catherine at the time of the transfer. 6. Whether the transfer of Decedent’s membership interest in the LLC to Catherine, by Steven as attorney-in-fact for Decedent, was made fairly and free from undue influence? a. Burden of Proof: Respondents, by clear and convincing evidence, if the POA is valid or if a confidential relationship existed between Decedent and Steven or Catherine at the time of the transfer; Petitioner, by a fair preponderance of the evidence, if the POA is not valid and if no confidential relationship existed between Decedent and Steven or Catherine at the time of the transfer. 7. Whether Steven and/or Catherine are obligated to pay to Petitioner the rental income collected from the real property located at 146-03 28th Avenue, Flushing, New York (the “Premises”), and/or use and occupancy for their use of the Premises, from the date of Decedent’s death to present? a. Burden of Proof: Respondents, by clear and convincing evidence, if the POA is valid or if a confidential relationship existed between Decedent and Steven or Catherine at the time of the transfer; Petitioner, by a fair preponderance of the evidence, if the POA is not valid and if no confidential relationship existed between Decedent and Steven or Catherine at the time of the transfer. A trial of this matter was conducted at my offices on October 24, 25, and 26, 2022. After trial, the parties’ counsel submitted post-trial memoranda, which I have reviewed, in addition to the trial transcripts. After due deliberation and upon my review of the same, together with all of the other written submissions and the record of the proceedings in this matter, I make the following determinations. Evidence and Testimony Concerning the Power of Attorney and Statutory Gifts Rider The POA, purportedly executed by Decedent on July 3, 2014, appoints Steven as Decedent’s attorney-in-fact, with no named successor agent. Exhibit 13, in evidence. Annexed to the POA is a statutory gifts rider (“SGR”), which appears to authorize Steven to make gifts, as relevant herein, of the Premises, and of personal property including bank accounts, brokerage accounts, and any interest as shareholder or member of an entity, including to himself. Sections (B) and (C) of the SGR, which include authority to make gifts of the Premises, and for Steven to make gifts to himself, both state that such gifting authority must be exercised “pursuant to my instructions, or otherwise for purposes which the agent reasonably deems to be in my best interest.” The POA and SGR appear to be signed by the Decedent, witnessed by Armen Caprillian and Peter Schneeberg, and Decedent’s and Steven’s signatures appear to be notarized by Rosanne Alicea. The SGR, which appears to model the statutory form set forth in GOL §5-1513 (the version of which was effective as of July 3, 2014), contains a statement above the witnesses’ signatures which states that both witnesses acknowledge that Decedent stated to them that the SGR reflects her wishes and that she has signed it voluntarily. Petitioner alleges that the POA and accompanying SGR were improperly and defectively executed, witnessed and acknowledged, all in violation of GOL §§5-1501 and 1514, such that Steven’s assignment of Decedent’s membership interest in the LLC to Catherine, and the subsequent deed transferring the Premises from the LLC to Catherine outright, are invalid and void. Respondents counter that the POA and SGR were prepared at the Decedent’s request, by Decedent’s attorney, and were properly executed in all respects. At trial, the following witnesses testified concerning the execution of the POA and SGR: Isidoris Tsamblakos, Esq.; Peter Schneeberg; Armen Caprillian; and Rosanne Alicea. Mr. Tsamblakos is an attorney who practices principally in the area of personal injury law. He testified that he also prepares simple wills and estate planning, as well as some divorce and real estate work. Mr. Tsamblakos has known Steven since the 1990′s, at which time Mr. Tsamblakos was a secretary for another attorney, John E. Pittas, Esq. Mr. Tsamblakos has represented Steven and Decedent in various matters, including representing Steven in personal injury actions and in another action commenced against Efy, and consulting with Decedent about a potential medical malpractice claim on her behalf. Mr. Tsamblakos testified that he never met Decedent in person, but spoke with her by phone. Mr. Tsamblakos prepared the POA and SGR in question. He testified that he spoke with Decedent about the POA one time; on June 25, 2014, he received a call from Decedent and spoke with her by phone for somewhere between 15 to 25 minutes, approximately 10 of which were spent explaining the POA and SGR. He did not believe that anyone was present with her during the phone call, and assumed that Steven was not with her when she made the call. At the time of the call, Mr. Tsamblakos was unaware that Decedent had executed two prior powers of attorney in 2013, one of which appointed Steven as agent for the limited purpose of dealing with a discrete insurance issue; and the second of which appointed Efy and Steven as co-agents, but did not contain a SGR. Mr. Tsamblakos testified that he spoke with Decedent in English and Greek. He stated that he explained the POA and SGR in Greek to make her more comfortable in understanding. He testified that he did not ask the Decedent why she wanted him to prepare a POA with SGR, and did not ask her whether she had a Will or what her testamentary wishes were. He did not discuss the fitness of Steven as agent, nor did he discuss whether Decedent had any assets other than the Premises. Mr. Tsamblakos testified that he did not know that Steven had a sister, i.e., he did not know that Decedent had any child other than Steven, nor that Petitioner existed. Mr. Tsamblakos was not present when the POA and SGR were executed. He mailed the POA and SGR to Decedent’s home at the Premises (where Respondents also reside), with a cover letter containing signing instructions in English and Greek, including instructions to obtain two independent witnesses and for Decedent to tell the witnesses that signing the SGR was her wish and she was signing it voluntarily. Mr. Schneeberg, a witness to the SGR, next testified that he is a friend of Armen Caprillian (the other witness to the SGR), and knows Steven through Mr. Caprillian. Mr. Schneeberg works in the real estate business. In 2014, Mr. Caprillian asked Mr. Schneeberg if he could put a friend, Steven, in touch with a lender to discuss obtaining a mortgage. Mr. Schneeberg set up an appointment with Steven to visit a friend of Mr. Schneeberg’s, Isaac Aronoff, at Ideal Properties, which is a realtor and mortgage lending company. Mr. Schneeberg attended a meeting on July 3, 2014 with Decedent, Steven and Mr. Caprillian at Ideal Properties, during which meeting Mr. Schneeberg was under the impression that Decedent was Steven’s sister. Mr. Schneeberg testified that the purpose of the meeting was to inquire about refinancing or selling the Premises. Mr. Schneeberg did not speak with Decedent concerning the Premises or any power of attorney during the meeting on July 3, 2014. Decedent said nothing to Mr. Schneeberg except, in sum and substance, hello and goodbye. During the meeting, Mr. Schneeberg was in and out of the room. Towards the end of the meeting, a notary asked if Mr. Schneeberg and Mr. Caprillian could act as witnesses to the POA and SGR. He was told two witnesses were needed, and he and Mr. Caprillian were present. He did not read the documents presented to him, did not read the language on the SGR, and only looked at it where it said to fill out his name and sign. He did not discuss the POA or SGR with Decedent. Decedent did not state to Mr. Schneeberg that the SGR reflected her wishes, nor that she signed it voluntarily. He was under the impression the document was a POA, but was not aware that it contained a SGR. Mr. Schneeberg testified that he was on his phone during the meeting and was distracted. He did not recall seeing Decedent sign the POA or SGR, and Decedent never told him that she signed it. On cross-examination, Mr. Schneeberg testified that he saw Decedent sign her name, but as to what page was signed, he does not know. He testified that he has no reason to believe that Decedent did not sign the document voluntarily, as he figured she would not sign it if she did not want to sign it. He reiterated that he believed he was witnessing a POA, and not a SGR. Mr. Caprillian testified next. Mr. Caprillian is a friend of Steven’s since 2005, and is friends with both Respondents, and attended their wedding. He is also in the real estate business, as was Steven in the past. Mr. Caprillian testified that Steven lived with Decedent all of his life, and after Steven married Catherine, Respondents lived with Decedent together. Mr. Caprillian testified that Decedent’s English was enough to have conversation, but their conversations were as simple as you can get. He had difficulty understanding her, and did not understand her all of the time that he spoke with her in English. Mr. Caprillian testified that Steven was seeking to obtain a home equity line of credit against the Premises, but he never discussed same with Decedent, nor did he discuss a power of attorney or statutory gifts rider with Decedent. Steven asked Mr. Caprillian if he knew anyone who could obtain a home equity line of credit against his mother’s house, i.e. the Premises, so that Steven could do renovations to the Premises. Mr. Caprillian then asked Mr. Schneeberg if he knew anyone, and Mr. Schneeberg provided the name of Ideal Properties. Steven asked Mr. Caprillian to drive him and Decedent to the meeting at Ideal Properties on July 3, 2014, the purpose of which was to meet about a home equity line on the Premises. Mr. Caprillian drove them to the meeting in Steven’s vehicle. Before, during and after the ride, Mr. Caprillian did not discuss the home equity line with Decedent. Mr. Caprillian testified that Steven brought the POA and SGR to the meeting, and the documents were in Steven’s possession. Steven (and not Decedent) stated during the meeting that he needed the document notarized and needed two witnesses. Steven asked Mr. Caprillian to sign as a witness on the SGR on the last page, and Mr. Caprillian complied. Decedent did not ask Mr. Caprillian to sign the SGR. Mr. Caprillian did not see Decedent sign the POA or SGR, as he was off to the side and he had no conversations with Decedent about the POA or SGR. He did not see Decedent sign anything on that date. He did not review or see any pages of the POA or SGR except the page which contains his signature as a witness, and which does not contain the Decedent’s signature. Decedent did not acknowledge her signature to Mr. Caprillian; she did not state to him that the SGR reflected her wishes; and she did not state to him that she signed it voluntarily. Mr. Caprillian testified that the only reason he signed the SGR was because Steven asked him to. The next witness to testify was Rosanne Alicea, the alleged notary on the POA and SGR. Ms. Alicea testified that she works in the real estate business. She has been a notary public since approximately 2013. She testified that she usually notarizes documents related to her real estate business, and has never notarized a power of attorney. Ms. Alicea testified, repeatedly and unequivocally, that she did not notarize Decedent’s or Steven’s signatures on the POA or SGR. She was emphatic that if she had notarized a power of attorney, she would have remembered doing so. Ms. Alicea denied that her handwriting or signature was on the POA or SGR, and denied that she wrote “Queens” in the section of the acknowledgement concerning venue. Ms. Alicea testified that it is her practice to always write “Kings” into the acknowledgement, even if she was taking an acknowledgement when located in another county. Ms. Alicea seemed unaware that doing so was contrary to the New York Notary Public License Law. Ms. Alicea denied that any of the handwriting on the documents was hers, including the date, county, or signatures. Ms. Alicea denied that her signature was on the documents, and testified that she signs her name differently. Ms. Alicea denied that the initials next to her notary stamp were made by her, despite that same was her practice, which is uncommon and not required by the Notary Law. Ms. Alicea testified that her notary stamp was on the documents, but that she did not affix it to the documents. Ms. Alicea testified that she did not notarize the Decedent’s signature and was not present when the POA or SGR were executed. During her testimony, Ms. Alicea was asked to sign her name to a piece of paper, and to make a comparison of the signature with the signatures on the POA and SGR. Ms. Alicea testified that the signatures on the POA and SGR were not similar to the comparison and were not hers. She also testified that the POA contains two stamps on one page and emphasized that she would not have stamped her notary stamp onto the document twice. Ms. Alicea testified that she does not know who Decedent or Steven are, and never met Decedent or Steven. She testified that she typically carries her notary stamp in her pocketbook but does not carry it at all times, and that she has never lost or misplaced one of her stamps. She denied knowledge of how anyone would have obtained her notary stamp or how it was placed onto the document. Ms. Alicea denied that it was possible she notarized the signature and doesn’t remember it, because she would have remembered a “little old Greek lady.” Ms. Alicea was familiar with Ideal Properties and Mr. Aronoff, having worked there for several years. She testified that she was familiar with and worked out of the conference room where the meeting took place, but never notarized documents there as she was usually out in the field. Ms. Alicea testified that her car was towed on July 3, 2014 near the office, and she probably was at the office on that date but again denied that she notarized any of the documents. Ms. Alicea testified that she does not know how her stamp was affixed to the POA or SGR. Evidence and Testimony Concerning the Transfer and Decedent’s Intent John E. Pittas, Esq. testified concerning the transfer of the LLC interest from Decedent to Catherine. Mr. Pittas is an attorney, having been admitted to practice in 1982. Mr. Pittas has known Decedent for many years, having previously notarized a deed for Decedent in 2004 after the death of Decedent’s pre-deceased husband, Theofanis Kokotos (“Theo”), wherein Theo’s interest in the Premises was transferred to Decedent. Mr. Pittas testified that he first met Steven, because a former colleague of his, Peter Marinas, was friends with Steven, and at some point Mr. Pittas went to the Premises and met Theo and Decedent, as well as Efy. He did not recall the sequence in which he met the various Kokotos family members. With respect to the 2004 deed, Mr. Pittas testified that Theo was not well, having suffered a stroke and incurring large medical bills, and that he prepared a deed transferring Theo’s interest in the Premises to Decedent after a conversation with Decedent about the need for the change in title. Mr. Pittas testified that he spoke to Decedent in both English and Greek, and “reiterated” in Greek to make sure that Decedent understood. He testified that Decedent had a working knowledge of English. The 2004 deed was signed by Theo, while the transfer documents were signed by Steven as agent for Theo under a power of attorney executed on the same date. Mr. Pittas testified concerning emails exchanged between him and Steven between April and May 2013, wherein Steven requests that Mr. Pittas provide a “full unlimited Power of Attorney” from Decedent to Steven, and Steven states that he needs it “ASAP.” Mr. Pittas testified that he prepared a power of attorney for Decedent at this time, to wit, one power of attorney appointing Steven as agent and limited to a specific water account and homeowner’s insurance issue. With respect to a “general” power of attorney, Mr. Pittas testified that his understanding of Decedent’s intent was that both Efy and Steven would be named as agents, and that Decedent wanted them to act jointly. Mr. Pittas also testified concerning emails exchanged between him and Efy, concerning Decedent’s power of attorney. Included therein was discussion concerning the potential transfer of the Premises to a trust(s) for the benefit of Decedent and her agents. A concern was raised by Mr. Pittas concerning whether Steven would have the capacity in the future to act as agent, because Steven has certain disabilities and was taking pain medication. Mr. Pittas also raised to Efy the concern that both Decedent and Steven may seek to be eligible for Medicaid benefits in the future, and that the Premises could be transferred to a trust or trusts to protect it for those purposes. Mr. Pittas testified that he prepared a second power of attorney for Georgia, containing broad powers, but no SGR, and naming Efy and Steven as co-agents. Mr. Pittas testified that he communicated with Decedent to confirm that she wanted Efy to be named as a co-agent on the power of attorney. Included in the power of attorney was a modification to allow the agents to “create, fund and/or terminate trusts…including, but not limited to, supplemental needs trusts and/or pooled income trusts…,” and that the Premises “may be transferred to a trust for the benefit of [Decedent] and Steven….” Mr. Pittas testified that Decedent executed both of the 2013 powers of attorney, and that he notarized her signatures. He also testified that he did not prepare a trust for the Decedent or Steven, but that he did tell Decedent to consider Medicaid planning, including creating a Medicaid trust and to transfer the Premises to the trust for her benefit. Mr. Pittas testified that Decedent was not sure what she wanted to do, but did “express that she wanted the house to go to [Steven], but she also wanted to do something for Efy…She wanted Steven to have the house. She was conflicted because she also wanted to leave something to Efy.” Mr. Pittas also testified that he established the LLC for Decedent, out of concern for medical bills because Decedent had cancer, as a layer of protection from creditors. Mr. Pittas also prepared a deed, to transfer the Premises from Decedent to the LLC. The deed was executed by Decedent as grantor on December 18, 2014, in Mr. Pittas’s presence. Mr. Pittas testified that the deed was signed at the Premises, and Steven and Efy were both present, but Efy left early. Mr. Pittas testified that he was sitting at a table with Decedent, who stated that she was tired, and asked if Steven could sign the deed for her. Mr. Pittas testified that he told Decedent he would prefer, and insisted that she sign the deed, since she is “up and able to sign.” He made clear that the transfer to the LLC was a transfer for her benefit, as she was the sole member of the LLC, and there was no discussion about ownership of the LLC being transferred to anyone else on that date. He stated that he had to “push” Decedent to sign herself. Mr. Pittas also testified that during the meeting on December 18, 2014, Decedent informed him that she had another power of attorney, in addition to the two that had been prepared in 2013 by Mr. Pittas. The document she was referring to was the POA and SGR in question, naming Steven as sole agent with gifting authority. Mr. Pittas testified concerning the execution of the assignment of LLC interest from Decedent, by Steven as agent, to Catherine. He testified that he was planning to visit the Premises on December 27, 2014 for Steven’s name day celebration. The day before, Steven called Mr. Pittas and asked him to bring the corporate kit for the LLC, and asked how to transfer the certificates. Steven told Mr. Pittas that Decedent was going to transfer the certificates to Steven. Steven asked Mr. Pittas if Mr. Pittas could fill out the certificates and bring them to the party. Mr. Pittas testified that he spoke to Decedent by phone on that date, December 26, 2014, and asked her if she agreed to transfer the LLC interest to Catherine, Steven’s wife. Decedent responded “yes, and transfer it to Steve.” Mr. Pittas testified that Decedent “meant to Catherine, for Steve’s benefit, Steve and Catherine.” Mr. Pittas testified that Decedent said it is better that the Premises be in Catherine’s name because Steve has capacity and Medicaid issues. Mr. Pittas testified that he explained to Decedent that she would be giving her interest in the LLC to Catherine. On December 27, 2014, Mr. Pittas visited the Premises for Steven’s name day party. When he arrived, Mr. Pittas went upstairs first and asked Steven where Decedent was. Steven responded that Decedent was downstairs and not feeling well. Mr. Pittas then went downstairs and saw Decedent sitting on a couch. Decedent wanted to lay down, so Mr. Pittas visited with Decedent, alone in her bedroom. He asked Decedent if she was sure she wanted to transfer the shares, and she said “yes, I do not feel well, can Steve sign?” Mr. Pittas then completed the documents necessary to assign Decedent’s interest in the LLC to Catherine. Although Mr. Pittas initially came to the Premises with the documents prepared for Decedent to sign, he voided those documents and revised them to that they would be signed by Steven, as agent for Decedent pursuant to the POA and SGR. He emphasized that he did not take direction from Steven, but confirmed with Decedent, and had no conversations with Catherine concerning the transfer. He also testified that he relied upon the POA and SGR, believing that they were validly executed. Mr. Pittas testified that Steven is a very good friend of his and has known him since the 1990′s. He also testified that Steven suffers from mental illness and can act erratically, impatiently and may lose his temper if he is not taking his medication. He also stated that when the medication wears off, Steven can be unpleasant and can yell at people, including Decedent and Mr. Pittas. On cross-examination, Mr. Pittas testified that Steven initiated the idea to transfer the Premises to the LLC, and that Decedent was not in the real estate business and was not a professional. He also testified that during his meeting with Decedent on December 18 at which time Decedent executed the deed to the LLC, there was a discussion about leaving some of her interest in the Premises to Steven and some to Efy. Mr. Pittas informed Decedent that she did not have to leave the interest to her children in equal shares and that she could change the percentages, and Decedent said she would let him know as she could not decide what she wanted to do. Decedent was “clear” that she wanted the Premises to go to Steven, but also wanted to leave Efy something. Mr. Pittas testified that he did not know what that meant, and did not have a conversation with Decedent about whether she wanted Steven to be able to simply live in the Premises, or to own the Premises. He also did not discuss who the ultimate beneficiaries of the Premises would be but understood that Decedent wanted the Premises to be for the benefit of Decedent and Steven while they were alive. Mr. Pittas testified that he did not discuss with Decedent that by transferring the LLC interest to Catherine, she would be deviating from her prior discussions that Efy was to share a percentage, and that he may have made a mistake by not asking her as much. He also testified that it crossed his mind that Steven was “maybe influencing his mother’s decision that his wife should get ownership of the house.” The next witness was Paul J. Nagel, a Certified Public Accountant. Mr. Nagel testified that Efy was his client, and she referred him to Steven, Catherine and Decedent. He prepared income tax returns for Decedent, Theo, Efy, Steven and Catherine. He testified that Steven has minimal income and was supported by his mother in 2012, before his marriage. When asked whether Decedent understood making a decision to name Steven as her tax dependent in 2012, Mr. Nagel testified that “that is a good question,” and that Steven “does most of the talking when I was dealing with [Decedent] and Steve, basically, at the same time.” On cross-examination, Mr. Nagel testified that when he asked Decedent questions, Theo or Steven would respond for her, and he did not have many conversations with Decedent over the years. Mr. Nagel testified that on March 1, 2014, during a meeting with Decedent and Steven to discuss preparation of their 2013 income tax returns, he “was told that there was a gift made by [Decedent] to her son Steven.” He could not recall whether Decedent was in the room when he was told about the gift. Steven told Mr. Nagel that the Premises was gifted to him, and Steven said “don’t tell my sister.” In response, Mr. Nagel suggested to and in fact prepared a 2013 gift tax return, reflecting that the Premises was gifted by Decedent to Steven in January 2013. Mr. Nagel picked the date of the transfer as “it is easier to do at the beginning of the year.” He was also informed by Steven that the value of the gift was $1,300,000. Mr. Nagel testified that because gift tax returns cannot be electronically filed and must be mailed, he mailed the return and instruction letter to Decedent, with instructions for her to sign. Mr. Nagel did not see Decedent sign the gift tax return, and did not receive a signed copy of the return from Decedent. He testified that during the March 1, 2014 meeting, he had a “two second” conversation with Decedent wherein he asked her, did you transfer the property, and she responded that she did. He otherwise received the information concerning the transfer from Steven. When asked whether Decedent had the capacity to understand the tax return or whether she needed an explanation from anyone, Mr. Nagel testified “that I cannot tell.” Finally, Steven testified briefly. He attempted to introduce into evidence a copy of the gift tax return prepared by Mr. Nagel and purportedly executed by Decedent, in which she reports gifting the Premises to Steven in 2013. Steven attempted to testify that he mailed the return to the IRS for Decedent, and objections were made concerning Steven’s capacity to testify to this transaction pursuant to CPLR §4519. THE VALIDITY OF THE TRANSFER OF THE LLC INTEREST FROM DECEDENT TO CATHERINE An agent under a power of attorney is a fiduciary, and must “act according to any instructions from the principal or, where there are no instructions, in the best interest of the principal and to avoid conflicts of interest.” Matter of Conklin, 43 Misc.3d 1211(A) (Sur. Ct. Nassau County 2014). A power of attorney “is clearly given with the intent that the attorney-in-fact will utilize that power for the benefit of the principal,” and the agent must “act in the utmost good faith and undivided loyalty toward the principal, and must act in accordance with the highest principles of morality, fidelity, loyalty and fair dealing.” Matter of Ferrara, 7 N.Y.3d 244, 254 (2006). This duty applies “whether the gift-giving power in a statutory short form power of attorney is limited to the authority spelled out in [GOL §5-1501(1)], or augmented by additional language in conformity with [GOL §5-1503].” Id. The “law is clear that an attorney-in-fact must act in the principal’s best interest even when he or she is given gifting authority in a POA.” Matter of Dietz, 47 Misc.3d 1202(A) (Sur. Ct. Erie County 2015); see also Matter of Audrey Carlson Revocable Trust, 59 A.D.3d 538 (2d Dep’t 2009). As a result, agents are only authorized to make gifts to themselves “insofar as these gifts were in decedent’s best interest, interpreted by [GOL §5-1502M] as gifts to carry out the principal’s financial, estate or tax plans.” Ferrara, 7 N.Y.3d at 254. The term “best interest” does not include “such unqualified generosity to the holder of a power of attorney, especially where the gift virtually impoverishes a donor whose estate plan, shown by a recent will, contradicts any desire to benefit the recipient of the gift,” Id. at 254-55, but may include “minimization of income, estate, inheritance, generation-skipping transfer or gift taxes.” Id. at 252. A gift must be established by clear and convincing evidence, and the burden is on the recipient. Matter of Saltzman’s Estate, 21 A.D.2d 892 (2d Dep’t 1964). The proponent of the gift must prove each element of a gift, to wit: (i) intent of the donor to make a gift; (ii) actual or constructive delivery to the donee; and (iii) acceptance by the donee, by clear and convincing evidence. Gruen v. Gruen, 68 N.Y.2d 48, 53 (1986). For purposes of my analysis whether Respondents have met their burden to prove the gift to Catherine, I will assume for the moment that the POA and SGR were validly executed by Decedent (my analysis of same is set forth later in this Decision and, as stated, there was conflicting testimony concerning the validity of those documents), such that the element of delivery is satisfied. I also note that there appears to be no dispute as to the element of acceptance, as the deed transferring the LLC interest to Catherine was recorded, and Catherine has since deeded the Premises from the LLC to herself, individually. Accordingly, of paramount concern to my analysis is the element of intent. Assuming arguendo the validity of the POA and SGR, wherein Steven was granted authority to make gifts including to himself, I find that Respondents have failed to establish, by clear and convincing evidence, that Decedent intended to gift the Premises, or the interest in the LLC that owned the Premises, to Catherine. Likewise, Respondents have failed to establish that the gift was made for Decedent’s best interest, such as to carry out her financial, estate, or tax plans. The record is replete with conflicting evidence concerning Decedent’s intent to make a gift of the Premises, or her interest in the LLC that owned the Premises, to Respondents. This includes the following testimony, which casts doubt on whether Decedent intended to make, or in fact fully understood the full implication of, the gift to Catherine. In 2013, one year prior to the gift, Decedent executed a power of attorney under Mr. Pittas’s supervision, in which she named Petitioner and Steven as co-agents, with no statutory gift rider. Decedent executed a separate power of attorney naming Steven as sole agent, but solely limited to addressing a discrete insurance issue. Mr. Pittas testified that he confirmed with Decedent that her intent was for both of her children to act as co-agents, with no gifting authority. Mr. Pittas testified that in 2013, there was some concern about Medicaid planning for both Decedent and Steven, and that Decedent wanted to ensure that Steven could remain living in the Premises. For those reasons, he included language in the general power of attorney in 2013, which provided that the power of attorney could be used to establish trust(s) for the benefit of Decedent and Steven. That power of attorney did not contain language which precluded Petitioner from being a beneficiary or recipient of transfers of Decedent’s assets. In 2013, Decedent repeatedly told Mr. Pittas that she wanted the house to go to Steven, but also wanted to do something for Efy. Decedent was unsure and could not make a decision about how to provide for her children in this way. Mr. Pittas did not have a conversation with Decedent about whether she wanted Steven to be able to simply live in the Premises, or own the Premises, and there was no evidence adduced at trial to clarify Decedent’s intent as expressed to Mr. Pittas at that time. Mr. Tsamblakos testified that on June 25, 2014, he explained the POA and SGR to Decedent by phone, for approximately ten minutes. However, Mr. Tsamblakos testified that he did not ask the Decedent why she wanted a POA or SGR, nor what her testamentary wishes were, and that he did not know or discuss whether Decedent had any other assets, or any other children other than Steven. He had no discussion with Decedent concerning her estate planning or testamentary intent. The POA and SGR were then executed at a meeting arranged by Steven, and attended by Steven’s friends and business associates, to discuss obtaining financing on the Premises for Steven’s benefit, as he wished to use the proceeds to make improvements to the Premises. On December 18, 2014, at Steven’s initial suggestion, Decedent executed the deed transferring the Premises to the LLC, during which time Mr. Pittas made sure to explain to Decedent that she was retaining ownership and control of the Premises, and that she was the 100 percent owner of the LLC. At the time this deed was executed, Decedent reiterated to Mr. Pittas that she may want to leave some of her interest in the Premises to Efy, despite the transfer of the entire LLC interest to Catherine just 9 days later. Decedent was “clear” that she wanted Steven to benefit, and that she also wanted to leave Efy something. Again, Decedent stated on this date that she was not sure what she wanted to do in that regard. On December 26, 2014, at Steven’s initial request, Mr. Pittas spoke with Decedent after Steven called and instructed Mr. Pittas to prepare the documents necessary to transfer the LLC interest to Catherine. Steven told Mr. Pittas that Decedent was going to transfer the certificates to Steven, and during Mr. Pittas’s phone call with Decedent, Decedent stated “yes, transfer it to Steve.” However, the LLC interest was actually transferred to Catherine “for Steve’s benefit,” according to Mr. Pittas. Mr. Pittas testified that Decedent “meant Catherine” when she asked him to transfer the LLC to Steven. There was no testimony adduced at trial concerning whether Decedent intended to benefit Catherine, whether she was confused, or whether she or understood the difference between a transfer directly to Steven versus to Catherine. Mr. Pittas testified that he may have made a mistake by not confirming with Decedent that she understood that by transferring the LLC to Catherine, that Efy would not receive a percentage. Although Mr. Pittas testified that it was his practice to always have the principal sign when possible, such as he did in connection with the transfer of Theo’s interest in the Property to Decedent, he did not do so at the time the LLC certificates were executed, because Decedent did not “feel well.” Mr. Pittas testified that Steven was “maybe influencing his mother’s decision that [Catherine] should get ownership of the house.” Mr. Nagel testified that he had very little conversation with Decedent over the years, as Steven did most of the talking in their meetings. Steven often responded to questions posed by Mr. Nagel for his mother. Steven falsely informed Mr. Nagel in 2013 that Decedent had gifted the Premises to him, and asked Mr. Nagel not to tell Efy about the gift. Mr. Nagel could not recall whether Decedent was in the room when Steven told Mr. Nagel about the purported gift. When asked whether he believed that Decedent had capacity to understand the gift tax return, Mr. Nagel could not say. Despite Decedent’s multiple conversations with her accountant and two attorneys concerning her desire to benefit both Steven and Efy, none of those professionals prepared a will, trust or other testamentary instrument for Decedent to fulfill her intent. This raises a question as to whether those professionals believed that Decedent had requisite capacity. Steven attempted to testify that he mailed a copy of the gift tax return to the IRS, executed by Decedent. At trial, Petitioner’s counsel objected to Steven’s testimony as barred by CPLR §4519, and I reserved decision on this issue. I find that whether or not the testimony is admissible is immaterial, because even assuming the testimony is admissible and viewing it in the light most favorable to Steven, the fact that Decedent purportedly executed a gift tax return which falsely reported a gift having been made to Steven in 2013, raises additional concerns about whether Decedent actually understood and intended to make the gift, and Steven’s level of influence over Decedent with respect to same. Likewise, there was no credible evidence adduced at trial that suggested that the gift was made in Decedent’s best interest, i.e., to further her financial, estate, or tax plans. Indeed, Decedent derived no benefit from the purported gift from a financial perspective, as she was transferring the Premises, her most valuable (and apparently sole) asset, for no consideration. From an estate planning perspective, there was no testimony or evidence that Decedent had ever engaged in estate planning for Steven’s or Catherine’s exclusive benefit; to the contrary, Decedent repeatedly stated to Mr. Pittas that she wanted to benefit Efy as well. From a tax perspective, Mr. Nagel offered no testimony that the transfer benefitted Decedent from an income tax or gift tax perspective. A party who must establish his or her case by clear and convincing evidence must satisfy the trier of fact that the evidence makes it “highly probable that what he or she claims is what actually happened.” N.Y. Pattern Jury Instr, Civil 7:65, Will Contests-Gifts-Discovery Proceedings. Based upon the inconsistent and often conflicting proof adduced at the trial, Respondents did not satisfy their burden of establishing by clear and convincing evidence that Decedent intended to make the gift to Catherine, nor that the gift to Catherine was made in Decedent’s best interest. Having failed to meet their burden to prove the necessary element of intent to make a gift, Respondents have failed to make their claim of gift, and the transfer of the LLC interest to Catherine is invalid. Wilder v. Tomaino, 52 A.D.3d 700, 700 (2d Dep’t 2008) (“…the transfers of the decedent’s property were invalid, as they were based on the improper exercise of a power of attorney which expressly stated that gifts of the decedent’s property could not be made to her co-agents and, in any event, were not made in the decedent’s best interests”). VALIDITY OF THE POWER OF ATTORNEY & STATUTORY GIFTS RIDER Pursuant to the version of the statute that was in effect at the time the POA and SGR were executed, to be valid, a statutory short form power of attorney must, among other requirements not in dispute here, be “signed and dated by a principal with capacity, with the signature of the principal duly acknowledged in the manner prescribed for the acknowledgment of a conveyance of real property.” GOL §5-1501B(1)(b). In order for a statutory gifts rider to a short form power of attorney to be valid, it must also be “signed and dated by a principal with capacity, with the signature of the principal duly acknowledged in the manner prescribed for the acknowledgment of a conveyance of real property, and witnessed by two persons who are not named in the instrument as permissible recipients of gifts, in the manner described in subparagraph two of paragraph (a) of section 3-2.1 of the estates, powers and trusts law,” which refers to the section of the EPTL concerning the witnessing of wills. GOL §5-1514(9). EPTL §3-2.1(a)(2) provides that the “signature of the testator [or principal] shall be affixed to the will [or statutory gifts rider] in the presence of each of the attesting witnesses, or shall be acknowledged by the testator [or principal] to each of them to have been affixed by him or by his direction.” The statutory form of the SGR as set forth in the statute contains language which precedes the signatures of the witnesses, and which was present on the SGR in question: “By signing as a witness, I acknowledge that the principal signed the Statutory Gifts Rider in my presence and the presence of the other witness, or that the principal acknowledged to me that the principal’s signature was affixed by him or her at his or her direction. I also acknowledge that the principal has stated that this Statutory Gifts Rider reflects his or her wishes and that he or she has signed it voluntarily. I am not named herein as a permissible recipient of gifts.” GOL §5-1514(10). The testimony at trial raises significant concerns about the validity of the POA, and particularly the SGR, in this case. With respect to the SGR in particular, which required two witnesses in conformity with EPTL §3-2.1(a)(2), Mr. Schneeberg was unable to testify that he the SGR was executed in his presence, nor that Decedent acknowledged to him that she affixed her signature on the SGR. Mr. Schneeberg testified that he saw the Decedent sign her name at some time during the meeting, but did not know what document she was signing or whether it was the SGR. In fact, he did not know that he was witnessing a SGR. He did not see the Decedent execute the SGR, did not have any conversation with the Decedent except mere hello and goodbye, and Decedent did not acknowledge, at any time, that she affixed her signature on the SGR. Like Mr. Schneeberg, Mr. Caprillian did not see Decedent execute the POA or SGR, and had no conversations with the Decedent about the POA or SGR. In fact, Mr. Caprillian did not see the Decedent execute any documents during the meeting, and testified that Decedent did not acknowledge her signature to him. Mr. Caprillian testified that the only reason he executed the SGR, was because Steven requested him to. Likewise, Ms. Alicea’s testimony raises concerns regarding the validity of the POA, which contains Decedent’s and Steven’s signatures that were purportedly notarized by her during the meeting. Ms. Alicea disavowed, repeatedly, any knowledge of, or involvement with, the execution of the POA or SGR, and denied that she notarized any of the signatures on the documents, including the Decedent’s. She insisted that it was not a matter of the passage of time or lack of memory, but that she is certain that she did not take the acknowledgement on the documents. She denied that the notary’s signature, initials, or handwriting on the page were hers. Although certain aspects of Ms. Alicea’s testimony were unclear and raised questions about her credibility, such as her admission that she was likely at the office on the day in question and her inability to explain how her notary stamp, which is always kept with her or in her pocketbook, ended upon the POA and SGR, when her testimony is viewed together with the clear testimony of the witnesses that they did not see the Decedent execute the SGR, nor did she acknowledge her signature to the witnesses, the validity of the POA and SGR are cast into doubt. Having found that Respondents have failed to meet their burden to prove the gift by clear and convincing evidence, the question of whether or not the POA and SGR are valid has been rendered academic. That is, if the POA and SGR were valid, the transfer of the LLC interest to Catherine fails because Respondents have failed to prove all of the elements of gift by clear and convincing evidence. If the POA and SGR are invalid, the transfer of the LLC to Catherine still fails, because Steven had no legitimate authority to execute the transfer documents. DAMAGES At trial, the parties agreed to reserve the issue of damages, including whether Respondents are obligated to pay Petitioner the rental income and/or use and occupancy for the Premises for the period from the date of Decedent’s death to present, pending my determination of the remaining issues herein. Having rendered my findings as set forth above, I hereby direct the parties to contact the undersigned Referee within ten (10) days of receipt of this Report and Decision, to schedule further trial dates for the purposes of holding an inquest to determine the amount of damages, if any, due to Petitioner. Dated: January 19, 2023