A valid will is essential to ensure that your assets pass to the person you want if you die. However, other laws and legal documents may get in the way of that as demonstrated in a recent decision of the New York State Court of Appeals. The case involved a live-in partner of the decedent who inherited the shares of stock and proprietary lease in the cooperative apartment they resided in. When the co-op board refused to allow her to receive the stock and lease because she wasn’t a spouse, she sued for discrimination under New York’s Human Rights Law. Her case was dismissed for reasons important to anyone seeking to provide for a non-marital partner.
The plaintiff in McCabe v, 511 West 232nd Owners Corp., (the “Corporation”), resided with the decedent in the co-op apartment for over thirteen years. He left her the stock and lease in his will. However, after his death, the Board declined to give her the shares and lease based on a provision in the co-op’s proprietary lease. The lease required automatic transfer of the stock and lease to the deceased shareholder’s spouse but stated that transfer to a financially responsible family member or a third party still required board approval, even if the stock and lease were bequeathed to such individual.
The Corporation had requested that McCabe, who owned another unit in the building, provide proof that she was either the decedent’s spouse or a family member who was financially responsible. When the plaintiff was unable to do so the Board invited her to apply to “purchase” the Unit. The plaintiff submitted the application and the Board rejected it, presumably on financial grounds (as the Board had apparently previously approved McCabe as a shareholder when she took ownership of her own unit).
The plaintiff then commenced an Article 78 proceeding seeking an order directing the Corporation to immediately transfer the stock and lease to her. She alleged that by not automatically transferring the stock and lease bequeathed to her, the Board was discriminating against her in violation of the New York State Human Rights Law (Executive Law Section 295 [5]), which prohibits discrimination in housing based on, inter alia, “marital status.”
The lower court dismissed the petition finding that the plaintiff was not the decedent’s spouse, that she was not being discriminated against on the basis of her marital status and that the Corporation had sufficient reason to reject the application. The plaintiff appealed but limited her appeal to the issue of whether her relationship with the decedent was the “equivalent of a spouse” and that, if so, the Board’s rejection of her application constituted discrimination. The Appellate Division affirmed the lower court’s decision. The plaintiff then sought leave to appeal to the Court of Appeals which was granted.
The Court of Appeals affirmed finding that the reason the plaintiff was not granted automatic ownership was not because she was not married, but rather because she was not married to the decedent. Therefore, she was not entitled to the benefits afforded spouses under the lease and there was no discrimination. The Court also noted that although the plaintiff and decedent resided together for thirteen years, they had neither married nor registered as domestic partners and found that the “equivalent of a spouse” is not a recognized protected class. The decedent also did not add the plaintiff as an owner of the unit during his lifetime. Given that the plaintiff had limited her appeal to one specific issue, the Court of Appeals did not need to reach the issue of whether the Board acted properly in rejecting the plaintiff’s application.
The lesson here is that if you are in a relationship and you want to transfer assets to a particular individual, it may make sense to take the necessary steps to do so during your lifetime.
Please contact one of our real estate or estate planning attorneys if you have issues similar to those discussed above.