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Trustee Accountings in Surrogate’s Court – Some Interesting Basics

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There are a number of different types of fiduciaries.  These include Executors, Administrators, Trustees and Guardians.  Even an agent under a Power of Attorney stands in a fiduciary relationship to his principal.  One common aspect relating to all fiduciaries is that they are required to provide a complete accounting of their conduct and activities to beneficiaries.

In most cases, accountings in estates and trusts are done voluntarily.  These are informal procedures.  After a beneficiary has had an opportunity to review the accounting, they can provide an acceptance and release to the fiduciary acknowledging that there are no objections or concerns as to the acts of the fiduciary.  Sometimes the parties cannot engage in this procedure either because the Executor or Trustee refuses to provide a full account or the objections by the beneficiaries cannot be informally resolved.  When this occurs, a formal accounting proceeding must be filed in the Surrogate’s Court or other Court that has jurisdiction over the case.

A recent Queens trust case was the subject of a judicial settlement of a final account by the trustee.  The case is entitled In Re Baron and was decided by Queens Surrogate Peter Kelly on July 7, 2020.  The Court was asked to consider an application by the trustee to dismiss various objections to the account that had been filed by the trust beneficiaries.  The objections encompassed various assertions of breach of fiduciary duty and wrongdoing by the trustee.  These centered around insurance policies held by the trust which had been allowed to lapse.  Thus, there was no value in the trust at the time of the grantor’s or insured’s death.

In analyzing the facts of the matter, the Court first found that the trustee had presented a prima facie case demonstrating that the account was complete and accurate.  The trustee submitted the account along with other documents such as financial ledgers, affidavits and deposition transcripts to establish the accuracy of the account as filed.

As to the objections, the Court found that there was no basis to support the allegations.  In analyzing the trust document itself, the Court noted that the paper did not require the trustee to pay premiums or continue the insurance policies under the circumstances.  During his life, the grantor discontinued financing the trust and after a while the trust just ran out of funds to support the premium payments.  Since there was no duty or obligation by the grantor or the trustee pursuant to the terms of the trust to contribute funds to continue the policies, the trustee could not be held accountable for the lapse of the policies.  Since the objectants failed to present verifiable claims of a breach of fiduciary duty other than speculation and conclusory assertions, the objections were dismissed.

I have represented many parties in Surrogate’s Court accounting cases.  The Baron case shows that objectants must provide very specific instances of wrongdoing by a fiduciary to prevail.  Objections cannot be based on speculation or conjecture.  Call Me Now for a free confidential review of your estate or trust issue.  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.

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