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Court Rules on Complex Will Contest Case

The Facts of the Case:

On 2 October 2005, a resident of Sands Point died with a will dated 6 June 1996. He is survived by his wife, his children, A, B and C, and his granddaughter, X, the infant daughter of a predeceased son, D. On 21 September 2006, the will was submitted for probate (will contest proceeding) and letters testamentary issued to the decedent’s wife, the decedent’s daughter, A, and the decedent’s brother. On 23 April 2008, A and the decedent’s brother filed their account, which was subsequently amended and supplemented. Thereafter, a guardian ad litem was appointed by the court to represent the interests of X. The administration and the account reflect ongoing discord between the wife and the decedent’s other fiduciaries, A and the brother, dominated by conflict over the computation of the wife’s elective share. Ultimately, the parties executed a stipulation, receipt, release and refunding agreement which resolves all of the disputed issues other than the legal fee paid from estate assets to an attorney, who provided legal services to A and the brother at the onset of the administration but whom they later replaced. The stipulation provides that for purposes of calculating the wife’s elective share, the gross estate is valued at $2,115,942.00; that the expenses paid to date, plus the amount reimbursable to the wife for administration expenses which she incurred, total $438,817.00. The parties agreed that the fees of their current attorneys and that of the guardian ad litem be fixed by the court.

The Issues of the Case:
The court is requested to determine the fees of the three lawyers who rendered their services in the estate administration, whose services were engaged by the three co-executors of the decedent’s estate; and the fee of the court appointed guardian ad litem to represent the interests of the decedent’s granddaughter before the court.

The Ruling of the Court:
A New York Probate Lawyer said in determining the cost of legal services or the fee of attorneys for the estate, the court bears the ultimate responsibility for approving legal fees that are charged to an estate and has the discretion to determine what constitutes reasonable compensation for legal fees rendered in the course of an estate. The rules provide that, while there is no hard and fast rule to calculate reasonable compensation to an attorney in every case, the Surrogate is required to exercise his or her authority with reason, proper discretion and not arbitrarily. The court may consider a number of factors and these include: the time spent; the complexity of the questions involved; the nature of the services provided; the amount of estate litigation required; the amounts involved and the benefit resulting from the execution of such services; the lawyer’s experience and reputation; and the customary fee charged by the Bar for similar services. In discharging this duty to review fees, the court cannot apply a selected few factors which might be more favorable to one position or another but must strike a balance by considering all of the elements. The legal fee must bear a reasonable relationship to the size of the estate. A sizeable estate permits adequate compensation, but nothing beyond that. The size of the estate can operate as a limitation on the fees payable, without constituting an adverse reflection on the services provided. The burden with respect to establishing the reasonable value of legal services performed rests on the attorney performing those services. However, when multiple co-executors conflict and are represented by separate counsel, it has been the court’s experience that the legal fees requested may be cumulatively higher than would typically be charged against a comparably sized estate. Duplication of services is almost inevitable, and legal services may be rendered in opposition to co-fiduciaries rather than in furtherance of the estate administration. Nonetheless, it remains the responsibility of the court to ensure that the amounts charged to the estate reflect the principles laid out in its previous rulings considering several factors which direct the court to review the type of legal services provided, and examine the benefit provided to the estate by such services. Generally, the total legal fees incurred by co-fiduciaries who engage separate counsel should not exceed the fee that would have been charged had one attorney represented all of the fiduciaries. While normally it has been said to be the right of co-fiduciaries to employ separate counsel, the practice tends to lead to excessive fees which the Surrogates have sought to discourage by limiting fees to those which would be deemed reasonable for the services of a single attorney representing all the fiduciaries. Courts have made an exception to this single fee rule where the adversarial positions taken by the co-fiduciaries necessitate separate counsel and additional fees.

On the fee of lawyer-one:
Well settled is the rule that Surrogate’s Court is vested with discretion to authorize and determine reasonable compensation for an attorney who has rendered legal services to an estate and a hearing is not required.

Here, lawyer-one initially represented two of the three nominated co-executors, A and the brother, for a total period of eleven months, and submitted an affirmation of the legal services he rendered to the estate, stating that he devoted 107.75 hours to the estate administration, at a rate of $350.00 an hour, resulting in a total fee of $37,712.50, all of which has been paid. Assuming that lawyer-one’s affirmation accurately reflects the amount of time devoted to the estate, the time spent is not the sole determinant of the fee. The difficulty of the work is also a factor to be considered in setting a legal fee. So, in order to justify a fee in connection with the initial months of an administration, the attorney would have to show that the work was particularly complex or demanding. However, despite the adversarial nature of the administration, its most complex and contentious issue, that of calculating the elective share, was not addressed substantively during the time frame of lawyer-one’s representation. Thus, the court finds that the affirmation submitted by lawyer-one is insufficient to justify the amount of legal services charged to the estate; the reasonable charge for lawyer-one’s services is $12,500.00.

Notably, A and the brother did not object to the fee charged by lawyer-one; they paid it out of estate assets, and are therefore not entitled to a refund of the excess portion of this fee. The court disallows only that portion of lawyer-one’s fee allocable to the residuary shares of the wife and X. Thus, lawyer-one need only return one-half of the excess fee or $12,606.25, half of which shall accrue to the wife and the other half to the trust for X’s benefit.

On the fee of lawyer-two:
Here, A and the decedent’s brother subsequently engaged the services of lawyer-two who rendered 165.67 hours of legal services for a period of three years. The firm seeks a fee of $41,417.50 plus disbursements of $2,136.64, of which $5,000.00 has been paid and $38,554.64 remains unpaid, which includes the computation of the elective share and the collating documents or preparing affirmations. Long Island Probate Lawyers said the court finds that the positions taken by lawyer-two in connection with the computation of the elective share were apparently without precedent, yet that does not dictate a finding that the positions were meritless. However, the court cannot approve a legal fee for collating documents or preparing affirmations in support of one’s own fees. Thus, the court fixes lawyer-two’s fee in the amount of $37,900.00 plus disbursements of $2,136.64, of which $5,000.00 has been paid and $35,036.64 remains unpaid.

On the fee of lawyer-three:
Here, the wife engaged the services of lawyer-three; lawyer-three’s firm has received payment in the amount of $35,000.00 for legal services rendered for a period of almost four years; and, while the firm’s actual outstanding balance of fees is $70,753.18, including disbursements, the firm has agreed to accept the lower amount of $55,000.00, for a total fee of $90,000.00 which represents a discount of approximately 15%. The wife is also a co-executor, as are A and the brother. While it is true that the wife would benefit if her attorney would successfully argue for the minimization of set-offs, it is equally true that A and the brother, as beneficiaries of the estate, would personally benefit from the maximization of set-offs against the surviving spouse’s elective share. However, it does appear in the affirmation of services submitted that at least a portion of the legal services accrued to the benefit of the wife alone and not to the benefit of the estate. It must be noted that legal services rendered to a fiduciary in her capacity as a beneficiary of the estate are to be paid by the fiduciary out of her personal funds, and not from estate assets, but if it can be shown that the services rendered on behalf of a beneficiary also served to benefit the estate, the fee may be payable from estate assets. Thus, the court fixes the fee of lawyer-three in the amount requested, and directs that 80% of the fee shall be paid from the estate, $72,000.00 less $35,000.00 already paid, and 20% or $18,000.00 shall be paid by the wife personally.

On the fee of the guardian ad litem:
Here, the guardian ad litem’s affirmation reflects 16.25 hours of services on behalf of decedent’s granddaughter X. Clearly, the efforts of the guardian ad litem assisted the court and the other attorneys in reaching the agreement which ultimately brought resolution to the contested administration. Queens Probate Lawyers said the court fixes the fee of the guardian ad litem in the sum of $5,600.00.

In sum, the court approves the stipulation of settlement, orders that A and the brother amend their account in accordance with the terms of the stipulation and the decision of the court in fixing the legal fees, and submit a decree settling the account on notice. On another note, in view of the multiple court appearances and conferences, and the diligent efforts of the lawyers to resolve the complex issues raised, the court acknowledges such outstanding work which led to the just settlement of the case.

Family disputes often arise in cases of estate litigation or estate administration. When a loved one dies and leaves a sizable amount of estate, the family members often cannot come into agreement and questions the share a relative receives, and the charges made upon the estate, like the above mentioned case. In such cases, the burden of losing a loved one becomes more burdensome when litigation before a court becomes necessary to resolve the issues. Thus, to ease this burden, one must choose only the most competent and independent legal counsel.
At Stephen Bilkis & Associates, we only have the best. We now offer free legal consultation services. Contact us now and find out the appropriate remedy applicable to you legal problems. We have our Suffolk County Probate Attorneys to assist you with issues concerning wills. We also have our Suffolk County Estate Administration Attorneys if your legal issues only concern that of the administration of a decedent’s estate. We have specialized attorneys who can help you with specific concerns. Call us and be advised by the best legal counsels in the country.

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