Matter of Clemente: Surrogate’s Court Jurisdiction Over Lifetime Trusts Based on Trustee “Residence” and Finality of Open-Court Settlements Despite Suspected Fraud

1. Introduction

Matter of Clemente (2026 NY Slip Op 03706 [App Div 3d Dept June 11, 2026]) arises from long-running Surrogate’s Court litigation in Rensselaer County concerning the judicial settlement of an accounting of an inter vivos trust: the Frank A. Clemente Two-Year Grantor Retained Annuity Trust (the “trust”). The decedent, Frank A. Clemente, created an estate plan that included both the trust (benefiting his five children) and a related family limited partnership.

After the decedent’s death, one beneficiary (Paul Clemente, the “objectant”) pursued an accounting and contested, among other things, trustee compensation and fiduciary conduct. The litigation ultimately produced an open-court stipulation of settlement, later attacked by the objectant on fraud grounds. On appeal, the Third Department addressed two recurring procedural flashpoints in trust accountings: (i) Surrogate’s Court subject matter jurisdiction over lifetime trusts under SCPA 207 based on a trustee’s “residence,” and (ii) when an open-court settlement may be vacated for alleged fraud.

2. Summary of the Opinion

The Appellate Division affirmed a decree of Surrogate’s Court that, among other things, enforced the settlement and judicially settled the accounting. The court held:

  • Subject matter jurisdiction existed under SCPA 207 (1) because the trustee “resided” in New York at relevant times, even if his domicile was elsewhere.
  • After the trustee’s death, Surrogate’s Court properly retained and continued jurisdiction under SCPA 2207 (3) because the successor trustee voluntarily became a party and continued the accounting proceeding.
  • The objectant failed to justify vacatur of the open-court stipulation: alleged fraud was based on facts known or available before settlement, defeating a post-settlement fraud attack.
  • An “automatic stay” argument was unpreserved because it was not raised in Surrogate’s Court.

3. Analysis

A. Precedents Cited

i. Trust-jurisdiction framework under the SCPA

The court anchored its jurisdiction analysis in prior Third Department decisions interpreting SCPA 207:

  • Matter of Witherill, 306 AD2d 674 (3d Dept 2003): cited for the proposition that the SCPA “expressly confer[s] statewide subject matter jurisdiction over lifetime trusts” where, among other bases, “a trustee resides here.”
    Influence: Provided the organizing rule statement identifying “trustee residence” as an independent jurisdictional hook.
  • Matter of Samuel A. Garrasi and Mary H. Garrasi Irrevocable Trust dated July 31, 1991, 91 AD3d 1074 (3d Dept 2012): cited both for SCPA 207 jurisdiction and for continuation of accountings after a fiduciary’s death under SCPA 2207 (3).
    Influence: Supported the conclusion that jurisdiction, once properly obtained, can persist through fiduciary substitution.

ii. What it means to “reside” (as distinct from domicile)

Because the SCPA does not define “resides,” the court borrowed settled New York definitions of “residence”:

  • Yaniveth R. v LTD Realty Co., 27 NY3d 186 (2016): used for the Court of Appeals’ articulation that residence can mean living in a locality without intent to make it a permanent home (domicile), yet requires “something more than temporary or physical presence,” including “some degree of permanence and an intention to remain.”
    Influence: Supplied the controlling modern definition that the Third Department applied to the trustee’s living situation.
  • Finch v Erie Ins. Co., 211 AD3d 1152 (3d Dept 2022): cited in support of the residence definition framework.
    Influence: Reinforced that “residence” can be fact-intensive and distinct from domicile.
  • Hammerman v Louis Watch Co., 7 AD2d 817 (3d Dept 1958): quoted (through Yaniveth R.) for the principle that although a person may have more than one residence, the person must stay “for some length of time” and have bona fide intent to retain it “with at least some degree of permanency.”
    Influence: Provided the multiple-residences concept central to rejecting the objectant’s “Colorado domicile defeats New York residence” argument.
  • Matter of Chain Trust, 220 AD3d 770 (2d Dept 2023): cited for the proposition that an individual may have more than one residence and that New York “residence” can exist even where domicile is elsewhere.
    Influence: Offered cross-department confirmation that “residence” is not limited to domicile and can be established by sufficient connection and duration.

iii. Enforcing open-court settlements; fraud and due diligence limits

  • Rainone v Davenport, 121 AD3d 1444 (3d Dept 2014): cited for the principle that stipulations of settlement—especially those entered in open court—are favored and may be set aside only on contract-invalidating grounds (fraud, collusion, mistake, accident).
    Influence: Supplied the governing standard of review for setting aside the settlement.
  • Matter of McLaughlin, 97 AD3d 1051 (3d Dept 2012): quoted (through Rainone) for the same pro-enforcement principle.
    Influence: Reinforced the strong presumption of finality in open-court stipulations in Surrogate’s Court practice.
  • Myristica, LLC v Camp Myristica, Ltd., 201 AD3d 1078 (3d Dept 2022): cited for the rule that a settlement will not be set aside for fraud where the party had access to relevant proof when stipulating but failed to exercise due diligence.
    Influence: Provided the decisive “known or should have known” due diligence limitation that defeated the objectant’s motion.

iv. Preservation of issues on appeal

  • Matter of Brady v Town of Warwick, 244 AD3d 1699 (3d Dept 2025): cited for the rule that arguments not raised below are unpreserved.
    Influence: Supported rejection of the objectant’s “automatic stay” contention.

B. Legal Reasoning

i. Jurisdiction under SCPA 207 (1): “resides” includes a bona fide New York residence even if domicile is elsewhere

The objectant attempted to defeat subject matter jurisdiction by arguing (a) the trust assets were not in New York, (b) the grantor had died before commencement, and (c) the trustee did not reside in New York. The Third Department focused on the statutory basis actually invoked: SCPA 207 (1), which confers jurisdiction if a trustee resides in New York.

Applying Yaniveth R. v LTD Realty Co., the court treated “residence” as requiring more than momentary presence, but not requiring domicile. The record supported New York residence because:

  • The trustee’s petition alleged he was “temporarily residing” in Troy, New York.
  • An affidavit later averred he “currently” resided at the same Troy address.
  • Even if the trustee’s domicile was Colorado, New York law permits more than one residence; thus New York residence could coexist with Colorado domicile.

The court also noted—without converting it into estoppel doctrine—that the objectant himself initially invoked the Surrogate’s Court’s authority and acknowledged jurisdiction in objections, underscoring the practical reality that this was not a late-breaking jurisdictional defect discovered after years of litigation.

ii. Continuation after fiduciary death under SCPA 2207 (3)

The trustee died before trial concluded. The court held jurisdiction did not evaporate: under SCPA 2207 (3), when a fiduciary dies during a pending accounting, the court may continue the proceeding where a successor fiduciary has voluntarily become a party, and may determine all questions and grant relief as if the fiduciary had not died.

Because jurisdiction existed at commencement and the successor trustee voluntarily became a party through appointment and continued the accounting, Surrogate’s Court properly retained authority, consistent with Matter of Samuel A. Garrasi and Mary H. Garrasi Irrevocable Trust dated July 31, 1991.

iii. Vacating an open-court settlement: suspected fraud must overcome finality and due diligence limits

The objectant sought to vacate the settlement alleging fraud—primarily nondisclosure of certain payments from the trust and allegedly improper access to accounts to transfer funds from the estate to the trustee’s wife.

The Third Department applied two reinforcing principles:

  • Finality presumption: Under Rainone v Davenport (quoting Matter of McLaughlin), open-court stipulations are favored and are not set aside absent classic contract-defeating grounds.
  • Due diligence constraint: Under Myristica, LLC v Camp Myristica, Ltd., even an allegation framed as “fraud” will not undo a settlement if the movant had access to the relevant proof (or should have known) but failed to exercise due diligence before agreeing.

The record evidence the court found critical was timing and knowledge: the objectant’s own submissions acknowledged suspicions before the stipulation, and an attorney averred that the key documents were provided to all parties a week before settlement. The settlement transcript also reflected the objectant’s express acknowledgment that the agreement was final and not subject to later change. On those facts, the fraud claim could not overcome the settlement’s finality.

iv. Preservation: “automatic stay” argument waived

The appellate court rejected the objectant’s argument that an automatic stay should have taken effect upon the trustee’s death because it was not raised in Surrogate’s Court, citing Matter of Brady v Town of Warwick.

C. Impact

i. Practical expansion/clarification of SCPA 207 (1) “trustee residence” as a jurisdictional anchor

The decision reinforces a pragmatic jurisdictional principle for lifetime trusts: New York “residence” is not limited to domicile and can be established where the trustee has a bona fide New York living arrangement with some degree of permanence, even if described as “temporary” and even if mailing address and domicile remain elsewhere. This is likely to matter in modern trust administration where trustees may be geographically mobile, temporarily cohabiting with family, or otherwise maintaining multi-state living arrangements.

ii. Jurisdictional continuity after fiduciary death

By applying SCPA 2207 (3), the court underscored that a fiduciary’s death does not necessarily derail an accounting. Where a successor trustee steps in and voluntarily becomes a party, Surrogate’s Court can continue to adjudicate the accounting and related disputes. This supports efficient administration by preventing proceedings from restarting in a different forum solely due to a fiduciary’s death.

iii. Strong settlement finality in Surrogate’s Court accountings

The decision signals a caution to litigants: suspicions of wrongdoing must be pursued before stipulating. If documents suggesting fraud are available pre-settlement, a later “fraud” motion may fail on due diligence grounds. This promotes finality and reliability of open-court settlements in fiduciary litigation, where accountings often involve complex financial records and strong incentives to “reserve” claims for later.

4. Complex Concepts Simplified

  • Subject matter jurisdiction: The court’s legal power to hear a type of case. Here, Surrogate’s Court has power over certain lifetime-trust proceedings if statutory conditions in SCPA 207 are met.
  • Domicile vs. residence: Domicile is a person’s fixed, permanent home (one at a time). Residence can be broader and a person may have multiple residences, as long as the stay has some duration and bona fide intent to remain with some permanence.
  • SCPA 207 (1): A statute that, among other bases, allows Surrogate’s Court jurisdiction over lifetime trusts when a trustee “resides” in New York.
  • SCPA 2207 (3): A statute allowing an accounting proceeding to continue after a fiduciary dies, especially when a successor fiduciary voluntarily becomes a party.
  • Open-court stipulation of settlement: A settlement read into the record before a judge. Courts strongly favor enforcing these because the terms and assent are documented in real time.
  • Due diligence (in settlement challenges): A party generally cannot settle while sitting on known red flags or available evidence, then later undo the settlement by recasting the same issues as “fraud.”
  • Preservation: To argue an issue on appeal, a party must usually raise it in the trial court first; otherwise, it is “unpreserved.”

5. Conclusion

Matter of Clemente strengthens two core procedural messages in New York trust and estate practice. First, for jurisdiction under SCPA 207 (1), a trustee’s New York “residence” can exist even without New York domicile, so long as the living arrangement reflects more than fleeting presence and carries some degree of permanence. Second, once parties enter an open-court settlement, post-settlement fraud challenges face a steep climb—particularly where the alleged fraud was suspected or discoverable through available documents before the stipulation. Together, these holdings promote forum stability in lifetime-trust accountings and reinforce the finality of settlements reached on the record in Surrogate’s Court.