A fiduciary is defined in Section 103(21) of the Surrogate’s Court Procedure Act (SCPA) as including an executor, administrator and trustee. These fiduciaries have various obligations with regard to carrying out their duties and obligations. To begin with, statutes such as Estates, Powers and Trusts Law (EPTL) section 11-1.1 entitled “Fiduciaries: Powers, Duties and Limitations” lists many of the powers that are granted to a fiduciary to use when administering an estate or a trust.
In addition to statutory powers, the document that defines the tasks which a fiduciary is responsible for completing, such as a Last Will and Testament or Trust, can provide additional powers or specific directions as to certain matters.
There are many occasions in which a fiduciary must exercise his judgment and make decisions regarding various matters. For example, it may be necessary to sell estate or trust property and the fiduciary must decide whether the sales price is fair and appropriate. In other situations, the administrator or executor must determine whether a certain investment should be made or whether a discretionary distribution from a trust to a beneficiary should occur and the amount of the payment. In these cases, the fiduciary must act properly or else he will have breached his fiduciary duty. A breach of fiduciary duty may result in the fiduciary being removed or even held personally responsible for financial damages in the form of a surcharge. The New York Probate Lawyer Blog has published many articles regarding estate settlement and administration issues. These matters often result in estate litigation or trust litigation.
Of course, if a fiduciary can obtain the review and approval of his proposed actions from the Surrogate’s Court before he makes a decision, he would then be protected from criticism by beneficiaries, particularly if all the parties had a chance to present any objections to the Court before the decision was made. SCPA section 2107 entitled “Court may direct as to value, manner and time of sale of property and give advice and direction in extraordinary circumstances”, provides a procedure whereby a fiduciary can file a petition with the Court and obtain guidance as to an action that is contemplated to be undertaken.
It is important to recognize that the statutory provision mandates that “extraordinary circumstances” be present and states in paragraph 2 that the Court does not have to accept a case if it would just “substitute the Court’s judgment for that of the fiduciary.” The general rule is that the fiduciary’s role is to make his own decisions and the Court will not interfere until there is an issue that is raised at a later date after the decision is made. These matters may later arise as objections to an accounting.
While the Court is reluctant to accept these advice and direction cases, there are times when it does. I have utilized this statute in a Manhattan estate case where my client, the administrator c.t.a., needed to determine the proper beneficiary of an annuity policy where the language of the policy was unclear and there were opposing parties claiming a right to the proceeds.
A recent case decided on April 2, 2020 by Justice John Egan, Jr. of the Appellate Division, Third Department, entitled Matter of Hoover v. Fowler, demonstrates the use of SCPA 2107. In Hoover, two individuals had owned a parcel of real estate and had agreed to build a house on the property and provide for its occupancy. They had created a trust and transferred the property into the trust. The trust agreement set forth the terms of their agreement. After one of the parties died, the decedent’s executor became a co-trustee of the trust and disagreed with the surviving co-owner – co- trustee as to the parties’ respective obligations regarding completing the construction of the house and its occupancy. Both parties filed petitions with the Surrogate’s Court pursuant to 2107 seeking advice and direction as to how to proceed. The Surrogate’s Court accepted the case and found that the terms of the trust were unambiguous and enforced the obligations against the decedent’s estate. The Appellate Division upheld the Surrogate’s determination.
As can be seen from Hoover there is a remedy in the estate laws to allow a fiduciary to obtain Court guidance in extraordinary circumstances. I have represented parties in these types of proceedings dealing with fiduciary duties and beneficiary rights. Call me now for a free confidential review of your estate or trust case. We provide reasonable and flexible fee arrangements and personal representation.
New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 40 years resolve issues relating to Guardianship and probate and estate settlement throughout New York City including the Bronx, Queens, Brooklyn, Manhattan, Nassau and Suffolk County. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial free consultation.