Accountings

December 14, 2016

A New York Compulsory Accounting Can Help Finalize Estate Settlement

There have been numerous posts in the New York Probate Lawyer Blog which describe the basic process to settle an estate. A brief review of these facts is always helpful:

1. First it is essential to determine whether the decedent died leaving a Last Will or without a Will (intestate). The existence or non-existence of a Will determines whether the procedure to be followed in Court involves the probate process or intestate administration.

2. Once the process to be followed is ascertained, an appropriate petition and other papers need to be prepared and filed with the Surrogate’s Court.

3. After all necessary estate papers have been filed with the Surrogate’s Court and the Court has approved the filing, an Executor or Administrator will be appointed. The fiduciary is granted Letters Testamentary in the case of a probate and Letters of Administration when a decedent dies intestate.

4. Once appointed, the Executor or Administrator begins the process of estate settlement by collecting the decedent’s assets and paying the decedent’s debts and obligations along with estate administration expenses.

5. The final stage of the estate is providing a payment of the net estate funds and assets to the beneficiaries. Typically, the fiduciary will prepare an accounting of the assets collected and payments made and provide this accounting statement to the beneficiaries so that they can review the basis for the distribution being made to them. Continue reading

February 24, 2016

New York Estate Accountings Require Disclosure by a Fiduciary

by Jules M. Haas

The settlement of a decedent’s estate can be viewed as encompassing three stages. Estate Lawyers in New York City are familiar with this process. The first step involves the appointment of the estate representative. When a decedent leaves a Last Will and Testament the Will is filed with the Court and submitted for probate. Once the Will is admitted to probate, the Court appoints an Executor. In situations where the decedent dies intestate (without a Will), a proceeding for Letters of Administration is presented to the Court and the Court then appoints an estate Administrator.

After a fiduciary is appointed, the second stage of the estate settlement process involves the collection of estate assets and the payment debts, taxes and other obligations. As discussed in earlier posts in the New York Probate Lawyer Blog, both of the above stages can be filled with complex issues such as Will Contests and Surrogate’s Court Litigation regarding the assets and obligations of a decedent. Continue reading

October 28, 2015

New York Estate Accounting Proceedings Involve Issues Regarding Commissions

by Jules M. Haas

An estate fiduciary such as an Executor and Administrator has many different obligations. The New York Probate Lawyer Blog has discussed many of these duties. For example, the fiduciary must locate, protect and collect estate assets. This function includes such tasks as closing a decedent’s bank accounts or brokerage accounts and depositing the funds into a newly established estate bank account.

Also, the fiduciary must pay a decedent’s debts and obligations. These items may include rent, mortgage payments, utility bills, income taxes and credit card payments. Another source of expenses are those incurred during the course of Estate Administration or Estate Settlement such as estate taxes, brokers fees that may be incurred if a decedent’s real estate needs to be sold and the costs of maintaining and protecting estate assets. Continue reading

March 18, 2015

A New York Proceeding to Compel a Fiduciary to Provide An Accounting is an Important Method to Settle An Estate

by Jules M. Haas

A very common complaint that New York Estate Lawyers hear is that an estate beneficiary has not received his share of a decedent’s estate. Typically, the beneficiary, who may be a legatee under a Last Will or a distributee in an intestate administration, has been waiting for years to receive a payment. Sometimes all efforts to contact or receive a response from the Executor or Administrator have failed.

In earlier posts, it has been discussed that a fiduciary must account for his actions. The accounting that is provided to estate or trust beneficiaries includes a list of all assets and income received, all expenditures that have been paid and all expenses or claims that are still outstanding. Continue reading

November 12, 2014

New York Estate Accounting Proceedings Can Involve the Discovery of Estate Information

by Jules M. Haas

The settlement of an estate in New York involves the preparation of an account by the fiduciary. Executors and Administrators need to assemble an account that provides information regarding the transactions that occurred during the administration of the estate.

New York estate lawyers are familiar with the provisions of the Surrogate’s Court Procedure Act (“SCPA”) that relate to accountings. These provisions are contained in Article 22 of the statute. The provisions of the law and the Surrogate’s Court Judges are generally liberal with regard to the right of an estate beneficiary to receive documents and information relating to a fiduciary’s handling of estate affairs. SCPA Section 2211 provides, in part, that the fiduciary can be examined under oath either before or after objections are filed. This section also allows document discovery to occur during such examination period. As a result, an estate beneficiary can obtain copies of bank statements, brokerage statements, expense receipts and bills, estate tax returns and other papers that can provide information as to whether there are any issues concerning the accuracy or validity of the account. In the event the beneficiary feels that the account is improper he can file Objections with the Court. Continue reading

November 5, 2014

New York Estate Accountings Can Be Settled Without Court Proceedings

by Jules M. Haas

The settlement of a New York estate can be divided into three main parts. The estate can begin with proceedings to probate a Will and appoint an Executor. If there is no Will and the decedent died intestate, then a petition can be filed to appoint an Administrator. Once the estate fiduciary is appointed the next stage involves the task of identifying and collecting assets, determining and resolving debts and claims and paying estate expenses such as taxes which include both income and estate taxes. Of course, both of the above stages can be complicated by various forms of issues and estate litigation involving a Will contest, a kinship hearing or other disputes. These controversies may delay the appointment of a fiduciary and the resolution of estate affairs.

Once the estate activities have been concluded, the time has come for the fiduciary to prepare his accounting and make a distribution to the beneficiaries. In most instances the beneficiaries will receive a copy of the account along with a form entitled “Receipt, Release and Waiver and Refunding Agreement” or some variation thereof. Essentially, the form will provide that the beneficiary approves of the account and releases the fiduciary from further liability regarding the estate. If all of the interested parties sign a release form, the estate executor or administrator will not have to file a formal accounting proceeding in the Surrogate’s Court to obtain the approval of his account. This informal method of accounting results in less time and cost for the finalization of the decedent’s affairs. If any of the beneficiaries have any questions regarding the account they can ask the fiduciary directly to respond to their inquiry. Also, if a beneficiary wants to review any of the estate papers such as bank account statements or an estate tax return, such paper can be requested from the executor or administrator. Continue reading

April 30, 2014

New York Fiduciaries Such as Guardians and Executors Must Account for Their Actions and Obligations

by Jules M. Haas

A fiduciary can be found in any number of different roles. The Surrogate’s Court can appoint a New York Executor or Administrator to handle the affairs of a decedent’s estate. The New York Supreme Court can appoint an Article 81 Guardian to be responsible for the property management and personal needs of an incapacitated person. In all of these situations the appointed party is a fiduciary who has obligations and responsibilities. The actions and performance of all fiduciaries are subject to review by the Court which typically occurs when the fiduciary prepares an accounting reflecting the transactions that have occurred during the tenure of the accounting party. All persons interested in the matter have a right to review the accounting and to file objections concerning issues they believe constitute a breach of a fiduciary duty. There have been a number of recent court cases which provide interesting examples of the process of reviewing the propriety of fiduciary conduct.

Matter of Flynn was a case involving an accounting by an Article 81 Guardian. Flynn was decided by Brooklyn Supreme Court Justice Michael L. Pesce on March 20, 2014. A son of the incapacitated person filed Objections to the Guardian’s account essentially asserting that the use by the Guardian of in trust for accounts (“Totten Trusts”), which named the son as beneficiary, was improper. After reviewing the evidence, the Court found that the Guardian’s use of these accounts, even without prior Court approval, was appropriate since the funds were needed and used for the interests of the incapacitated person. The Court also found that the Guardian’s selection of a nursing home to which the funds were paid was also appropriate and did not waste the funds. The Court dismissed the Objections as being without merit. Continue reading

July 10, 2013

New York Accountings May Be Compelled by the Surrogate’s Court

by Jules M. Haas

A New York Executor, Administrator or Trustee has many powers and obligations. As a fiduciary, such appointments require that a full record and account of activities be maintained so that an accounting can be provided to the estate or trust beneficiaries.

It is not uncommon for a beneficiary to complain that he did not receive either an accounting from a fiduciary or the full share of assets that he feels he was entitled to. The New York Probate Lawyer Blog has discussed in previous posts that the Surrogate’s Court Procedure Act (“SCPA”) provides a remedy when a beneficiary asserts that an accounting has not been provided. SCPA 2205 sets forth that the Court may issue an order that requires a fiduciary to file an account. Typically, the aggrieved beneficiary will prepare and file a Petition with the Court and a Citation is issued directing the fiduciary to appear in Court and state why he should not be required to file the account. Since the preparation of an accounting is fundamental to the completion of the fiduciary’s job, the Surrogate will almost always require the filing. If the fiduciary fails to appear on the Court date or does not comply with the Order to file, the Court may suspend or remove the fiduciary.

A New York Estate Attorney will usually represent an Executor, Administrator or Trustee in an accounting proceeding. Very often, the services of a fiduciary accountant are used to prepare the detailed schedules that are part of the papers to be given to the beneficiary and the Court. The schedules must be in accordance with the requirements of the estate rules. SCPA contains an Official Form 12 which is an Account of Executors and Administrators. Official Form 13 is an Account for Trustees.

While the Surrogate usually directs a court filing of a formal accounting, the Court appears to have some leeway in its determination. A recent decision by New York Surrogate Nora Anderson entitled Estate of Jean Kennedy decided on June 12, 2013 and reported in the New York Law Journal on June 21, 2013 is instructive. In Kennedy, Surrogate Anderson declined to require an Executor/Trustee to file a formal judicial accounting. The Judge ruled that such filing would not be in the best interest of the estate at the present time since the fiduciary had provided an informal accounting, was willing to provide the beneficiary with all requested financial information and it appeared that the beneficiary’s interests had already been satisfied with other assets.

I have found that a claim of breach of fiduciary duties and the failure to account to a beneficiary are very common aspect of Estate Litigation in the Surrogate’s Courts. While the New York Estate laws are very helpful and protective of the interests of beneficiaries, the Kennedy case shows that judicial decisions often reflect the needs of the particular facts and circumstances of the case.

Therefore, consultation with a New York Trusts and Estate Lawyer regarding fiduciary breaches and accounting requirements is important in order to present a matter to the Court in an appropriate fashion. As they say, one size does not fit all.

February 13, 2013

New York Estates Include Rights of Adopted Children

by Jules M. Haas

Estate litigation in New York can involve many types of issues. One area of dispute often concerns the rights various individuals may have in a decedent’s Estate or Trust. For example, the New York Probate Lawyer Blog has discussed in previous posts issues concerning the determination of a decedent’s next of kin or distributees. Kinship Hearings may be required by a Court to decide these issues which often relate to relatives such as cousins or more distant relatives whose relationship may be difficult to establish.

Persons interested in an estate may sometimes challenge the status of a surviving spouse. Questions may arise as to whether a marriage or divorce occurred, particularly where such proceedings occur in a foreign country and record keeping may be poor and valid proof of marriage and divorce proceedings may be difficult to obtain.

Litigation in estates may also arise where a person is either adopted by a decedent or where the decedent gave a child up for adoption and surrendered his parental rights. New York Estates, Powers and Trusts Law Section 2-1.3(a) provides that adopted children have the same inheritance rights as natural children. The statute, however, allows a person to avoid this result by expressing “a contrary intention”. Thus, a person who prepares a Last Will or Trust can specifically exclude adopted children, or any other child for that matter, since there is no requirement in New York preventing a person from completely disinheriting a child, natural or otherwise.

In a sort of reverse situation where a parent gives up a child for adoption, New York Domestic Relations Law 117(b) provides, generally, that after an adoption is complete the adoptive child loses his rights of inheritance from his birth parents. Thus, except in certain specific instances, the adoptive child no longer will have any statutory inheritance rights with regard to the family of the biological parents. While these rules may appear on their face to be able to be applied without much confusion, the dynamics of family interaction and monetary considerations often create complicated issues for the Surrogate’s Courts to decide.

An interesting example of the interaction of the New York adoptive rights statutes was recently presented in the Estate of John Svenningsen, which was decided by the New York Appellate Division, Second Department on February 6, 2013. and reported in the New York Law Journal on February 8, 2013. In Svenningsen, the decedent (“John”) and his wife “Christine” adopted a child from China about one year before John died. The couple then commenced proceedings to formalize the adoption in Family Court, Westchester County and these proceedings were finalized after John died. John and Christine had other natural children. The documents that were involved in the Court dispute concerned various Trusts and John’s Last Will. The Will was probated after John died and the adopted daughter (“Emily”) was identified in the Probate Petition by Christine as one of John’s children.

More than 7 years after the adoption and six years after the Will was admitted to probate, Christine surrendered her parental rights to Emily who was then adopted by another couple. When Emily’s new parents discovered by searching court records that John’s estate was valued at more than $250 million dollars, they sought an accounting from John’s estate Executors and Trustees. The fiduciaries, however, refused to provide an accounting and claimed that Emily had lost her rights to inherit under John’s Trusts and Estate pursuant to DRL 117 due to her adoption out of John’s family. Both the Surrogate and the Appellate Court found though that Emily’s right to benefit from John’s Estate and Trusts were not lost by her adoption and that the fiduciaries were required to provide her with an accounting of her share of the Estate and Trust funds.

One interesting aspect of this case is that Emily’s new adoptive parents were able to discover the large amount of funds available in John’s estate by researching the Court records. There are many cases in the Surrogate’s Court concerning Probate, Administration and Accounting proceedings where I have located valuable information to benefit a client by searching the Court records.

November 1, 2012

Estate Litigation in New York Can Involve Many Different Issues

by Jules M. Haas

Estate litigation occurs on a daily basis in Manhattan, Brooklyn, Nassau and other New York Surrogate’s Courts in counties across the state. The variety of the issues that are the subject of dispute often appear to be endless and usually present rather interesting problems. New York estate lawyers confront many complex issues and provide assistance to their clients in attempting to resolve these matters that can disrupt and delay estate settlement.

Estate court cases occur throughout the United States and it is helpful to review a few current controversies since the situations presented can easily relate to a New York decedent.

In one recent incident a Missouri attorney has been accused of murdering her father in a very unusual manner. As reported in an article by Martha Neil posted on October 2, 2012 in the ABA journal.com, the attorney apparently shot her father, but after he survived being shot, the attorney used a forged health care proxy to have life saving treatment for him discontinued.

Under Section 2981 of the New York Public Health Law a person can appoint a health care agent by preparing a Health Care Proxy. The statute, along with companion statutory provisions, contains many specific provisions regarding the process to create the proxy. For example, it must be “signed and dated by the adult in the presence of two adult witnesses who shall also sign the proxy.” PHL sec 2981 2(a).

It should be recognized that a Health Care Proxy relates to health care decisions. In New York an individual can also appoint an agent to make financial or property decisions. However, to do so a different document called a Power of Attorney must be prepared and executed in accordance with the statutory rules beginning at New York General Obligations Law section 5-1501.

New York estate planning lawyers typically discuss with clients the benefits of having a Health Care Proxy and Power of Attorney as part of their estate and financial planning papers. As can be seen from the case of the Missouri attorney and her father, it is also important to select as an agent a person that can be trusted and will act in the principal’s best interest.

A different set of circumstances was recently reported regarding a father who sued his daughter when she questioned his handling of her trust. As reported by Barbara Ross and Bill Hutchinson in an article in the New York Daily News on October 23, 2012 a Manhattan attorney sued his daughter for libel after she filed a request with the Manhattan Surrogate’s Court to have him provide an accounting of her trust.

New York estate and Surrogate’s Court laws provide that all fiduciaries, whether they are Executors, Administrators or Trustees, are obligated to provide an accounting of their activities. The Court can require a fiduciary to account and a beneficiary can request that the fiduciary be compelled to account. Surrogate’s Court accounting proceedings can be very complicated since the fiduciary may have had many financial transactions over many years and the advice of estate attorneys and also accountants is generally very helpful.

I have represented many clients in connection with fiduciary accounting proceedings including individuals who are preparing and filing accounting papers and beneficiaries who are reviewing the accountings. When an interested party disapproves of the actions of the fiduciary, the common procedure is to file objections to the accounting with the Court and the interested party may fully investigate all financial transactions and present the objections to the Court at a hearing.