In this probate proceeding, petitioner, by motion filed on May 28, 2008, seeks an order vacating a stipulation of settlement and a renunciation and disclaimer purportedly executed to effectuate the settlement.

Decedent was survived by his spouse (petitioner) and two children of a prior marriage, Adam Abu-Regiaba and Debbie Abu-Regiaba (respondents).

Petitioner filed a petition for probate of an instrument dated June 8, 2005 and preliminary letters issued to her. Decedent's son appeared by counsel in the probate proceeding and settlement negotiations ensued. The negotiations resulted in a stipulation of settlement dated [*2]September 26, 2007 which was "so ordered" on November 29, 2007. The settlement provided that the assets of the "Charles Schwab & Co. Keogh Plan" be divided into three equal parts: 1/3 to the spouse, 1/3 to Debbie Abu-Regiaba and 1/3 to Adam Abu-Regiaba in trust. The will had provided that the Charles Schwab & Co. Keogh Plan be distributed 2/3 to petitioner, decedent's wife, and one-third to decedent's daughter, Debbie. The will further provided that the residue of the estate was to be divided 65% to the wife, 25% to the daughter, and 10% to the decedent's sister.

Decedent did not designate a beneficiary for the Schwab plan. Under the terms of the plan, petitioner became the beneficiary by default. Petitioner alleges that at the time of the execution of the stipulation she did not know that she was the beneficiary of the plan but believed instead that the estate was the beneficiary. Petitioner alleges that on October 18, 2007 her attorney made inquiries with Charles Schwab to determine the terms of the plan and that prior to receiving a response from Charles Schwab, she executed the renunciation of any interest in excess of 1/3 of the assets. It is petitioner's position that she would not have consented to an equal division of the assets of the plan had she known that she was the beneficiary.

Respondents oppose the motion to vacate the stipulation alleging that (1) the agreement reflects the intention of the parties (2) the designation of the petitioner as beneficiary under the plan was irrelevant as petitioner agreed to divide testamentary and non-testamentary assets in three equal parts and (3) petitioner, as preliminary executrix, had access to the financial records of decedent and could have obtained and reviewed the terms of the plan prior to execution of the stipulation. Further, respondents contend that the renunciation executed by petitioner is irrevocable.

A contract entered into under mutual mistake of fact is voidable and subject to rescission (Matter of Gould v Board of Educ. of Sewanhaka Cent. High School Dist., 81 NY2d 446 [1993]) if the mistake exists at the time the contract was negotiated (Matter of New York Agency and other Assets of Bank of Credit & Commence Int'l, 90 NY2d 410 [1997] and the mistake is substantial, resulting in an absence of the requisite "meeting of the minds" (County of Orange v Grier, 30 AD3d 556 [2d Dept. 2006]). To entitle a party to rescission, the contract must rest upon the assumption of a fact as to which the parties were mistaken. A stipulation of settlement is an independent contract and the same standard applies to a motion to vacate a stipulation of settlement based upon a mutual mistake (Hannigan v Hannigan, 50 AD3d 957 [2d Dept 2008]).

Petitioner's attorney, in a supplemental affidavit, now advances a different theory in support of the motion. It is now petitioner's position that the stipulation of settlement can be vacated without the necessity of establishing a mistake of fact.

Petitioner contends that the standard to be applied, where a final decree has not been signed, is whether the parties can be restored to the "status quo" (citing Matter of Frutiger, 29 NY2d 143 [1971]). Petitioner's reliance on Frutiger is misplaced as the case does not stand for the proposition that a stipulation of settlement can be vacated without any underlying basis. In addition, the fact that a decree admitting the will to probate has not been signed is not determinative. The stipulation of settlement was "so ordered." It is both a contract and an order and can be set aside only upon a showing of fraud, collusion, mistake or such other factors as are sufficient to invalidate a contract (Living Arts v Kazuko Hillyer Intern., 166 AD2d 284 [1st Dept 1990]). [*3]

Petitioner contends that the failure to vacate the stipulation of settlement would result in an injustice. Unjust enrichment is a factor to be considered on a motion to vacate a stipulation of settlement (Weissman v Bondy & Schloss, 230 AD2d 465 [1st Dept 1997]).

Respondents contend that petitioner's lack of knowledge was the result of negligence and her ignorance cannot be used as a ground to set aside the stipulation. A party bears the risk of a mistake when he is aware, at the time a contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient (Restatement [Second] of Contracts §154). A party cannot rely upon her ignorance of a condition which she could have discovered using ordinary care (P.K. Development, Inc. v Elvem Development Corp., 226 AD2d 200 [1st Dept 1996]; Vandervort v Higginbotham, 222 AD2d 831 [3d Dept 1995]). In Matter of Ham (N.Y.L.J., May 15, 2002 at 22, col. 3) the court denied an application by the co-administrator of decedent's estate to reform a stipulation of settlement which provided for a distribution of the decedent's probate and non-probate assets after she later discovered that one of the non-probate assets was a Totten trust for her benefit, finding that her failure to ascertain the beneficiary designation on the largest of the decedent's bank accounts could only be ascribed to negligence. The same result should obtain here, where the surviving spouse/preliminary executor was in a position to ascertain the beneficiary designation of the Keogh account and either failed to make the necessary inquiry, or did so and chose to enter into the stipulation without waiting for the answer to that inquiry.

This court has recognized that "[s]tipulations of settlement which put an end to litigation promote efficient dispute resolution and are essential to the litigation process" (Matter of Siegel, 5 Misc 3d 1017A [Sur Ct, Nassau County 2004], aff'd 29 AD3d 914 [2d Dept. 2006]). Also, stipulations are especially favored where, as here, the parties have been represented by counsel (Matter of Stark, 233 AD2d 450 [2d Dept. 1996]). The court finds no basis upon which to vacate the stipulation of settlement and the motion for that relief is therefore denied.

Even if a basis to vacate the stipulation did exist, vacating the stipulation would not achieve the result the movant seeks in any event. As indicated, the movant also seeks an order vacating the renunciation and disclaimer which she filed. A renunciation is irrevocable once properly served and filed (EPTL 2-1.11[g]). As this court held in Matter of Munch (125 Misc 2d 610 [Sur Ct, Nassau County 1984]), when the Legislature enacted EPTL 2-1.11, it obviously intended that renunciations be unquestionably irrevocable. This was done to ensure that renunciations under EPTL 2-1.11 would constitute qualified disclaimers for federal estate tax purposes. That being the case, the court declines to set a precedent which may have unintended and extremely adverse consequences to the estates of decedents having nothing to do with the instant controversy.

Accordingly, the motion to vacate the stipulation and the renunciation is denied in its entirety.

Settle order.

Dated: September 30, 2008

JOHN B. RIORDAN [*4]

Judge of the

Surrogate's Court