Published on:

Court Reviews Details of Final Accounting

Before the court is the first and final account of A as ancillary executor of the estate of B; an estate litigation. The court is asked to approve attorney’s fees, commissions, reimbursement of expenses for the estate administration and the settlement of the account.

A New York Probate Lawyer said on 3 May 2004, the decedent, B, died. B left a will dated 13 February 2001. At the time of her death, the decedent was domiciled in Florida. Ancillary letters testamentary issued to A on 18 July 2005. The accounting covers the period 3 May 2004 to 21 April 2009. An amended accounting covering the period 3 May 2004 to 22 December 2009 was filed on 5 February 2010. The amended accounting shows principal charges to the accounting party of $829,804.35. C, a $10,000.00 legatee and the beneficiary of fifty percent (50%) of the residuary estate filed objections to the accounting and the amended accounting. The ancillary executor is the beneficiary of the other fifty percent (50%) share of the residuary estate. By instrument dated 2 December 2010, C withdrew his objections to both the first account and the amended account.

A New York Wills Lawyer said with respect to the issue of attorneys’ fees, 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 services rendered in the course of an estate as held in Matter of Stortecky v Mazzone, Matter of Vitole and Matter of Phelan. 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 as was also held in Matter of Brehm and Matter of Wilhelm.

In evaluating the cost of legal services, the court may consider a number of factors. A Bronx Probate Attorney said these include: the time spent (Matter of Kelly); the complexity of the questions involved (Matter of Coughlin); the nature of the services provided (Matter of Von Hofe); the amount of litigation required (Matter of Sabatino); the amounts involved and the benefit resulting from the execution of such services (Matter of Shalman); the lawyer’s experience and reputation (Matter of Brehm); and the customary fee charged by the Bar for similar services (Matter of Potts, Matter of Freeman). 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 set forth in Matter of Potts, and as re-enunciated in Matter of Freeman. Also, the legal fee must bear a reasonable relationship to the size of the estate (Matter of Kaufmann). A sizeable estate permits adequate compensation, but nothing beyond that (Martin v Phipps). Moreover, the size of the estate can operate as a limitation on the fees payable (Matter of McCranor) 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. Contemporaneous records of legal time spent on estate matters are important to the court in determining whether the amount of time spent was reasonable for the various tasks performed.

Brooklyn Probate Lawyers said with respect to disbursements, the tradition in Surrogate’s Court practice is that the attorney may not be reimbursed for expenses that the court normally considers to be part of overhead, such as photocopying, postage, telephone calls, and other items of the same matter. This court discussed the allowance of charges for photocopies, telephone calls, postage, messengers and couriers, express deliveries and computer-assisted legal research. The court concluded that it would permit reimbursement for such disbursements only if they involved payment to an outside supplier of goods and services, adopting the standards set forth in Matter of Herlinger. The court prohibited reimbursement for ordinary postage and telephone charges other than long distance.

The attorney has submitted an affirmation of legal services, without contemporaneous time records. According to the attorney’s affirmation, he spent 171.1 hours on this matter at the hourly rate of $275.00 per hour for a total fee of $47,052.56, $25,435.00 of which has been paid and $22,117.00 of which remains unpaid. The attorney also charged a $500.00 flat fee to handle and supervise the delivery and inspection of oil paintings. The attorney also seeks $45.00 for expenses, but has not provided any detail as to the nature of the expenses.

It has consistently been held that the court has the discretion to review the reasonableness of an attorney’s fee on an accounting whether or not anyone objects to the fee as held in the case of Matter of Stortecky v. Mazzone.

In this case, the services performed by counsel as recited in his affirmation include time spent on the preparation of his affirmation of legal services. Time spent by counsel supporting his fee is not compensable as was held in Matter of Gallagher. In addition, the court finds that the time spent on some services appears excessive.

It is a general rule that an attorney will not be allowed legal fees for performing executorial services as held in Matter of Jones. Accordingly, for the above reasons, the court fixes the fee of counsel in the amount of $35,000.00. The request for $45.00 in expenses is disallowed since counsel has failed to identify the nature of the expense.

The accounting also includes a request for reimbursement to the ancillary executor for expenses and mileage for trips to the Bayville property in an amount in excess of $3,000.00 (12/30/2006-“estate expense reimbursement” $1,290.50; 04/18/2005-“estate expense reimbursement, mileage for trips to Bayville to maintain and sell house and other estate administration matters” $1,032.00; 12/31/2005-“estate expense reimbursement, mileage for trips to Bayville to maintain and sell house and other administration matters” $1,035.66). The court notes that the objectant was represented by counsel and voluntarily withdrew his objections to these expenses.

Nevertheless, the court declines to approve these expenses, which appear excessive and for which no supporting documentation is provided.

It also appears from Schedule C of the account that the ancillary executor took an advance payment of commissions in the amount of $12,594.50 without prior court approval. The objections filed sought the denial of commissions to the ancillary executor in their entirety for mismanagement of the estate and did not include a specific objection to the advance payment.

Commissions are not ordinarily payable until the entry of a decree settling a fiduciary’s account. Taking a commission prior to the settlement of an account without securing court approval pursuant to SCPA 2310 or SCPA 2311 exposes the fiduciary to the danger of being surcharged. Usually the court allows the commissions but surcharges the fiduciary the amount of interest the estate lost because of payment, most commonly the statutory interest rate under CPLR 5004, from the date the unauthorized commissions were taken until the entry of the decree settling the account.

There is some division between the Surrogates on the issue of whether there must be an interest surcharge on the advance payment of commissions even where all of the beneficiaries consent to approval of the advance in a nunc pro tunc order. Where the Surrogates took the position that while commissions are allowable, the executor must pay interest at the legal rate reckoning from the time of the taking, Matter of Conroy holds that SCPA does not provide for nunc pro tunc approval of advanced commissions as contrasted in Matter of Schmitt that held if no one objects, the court may waive such interest.

The court has generally taken the position that the taking of advance commissions without prior court approval is grounds for automatic surcharge at the statutory rate of interest of 9% as held in Matter of Moro.

Considering all the circumstances in this case and the above principles, the court surcharges the ancillary executor 9% statutory interest on the amount paid of $12,594.50 from the date taken of January 3, 2006 until the date of the decree. The surcharge shall be charged against the balance of the commissions due the ancillary executor.

In all other respects, the accounting is approved. A proposed decree has been submitted to the court and will be signed if found to be in proper form. This is the decision and order of the court.

Nassau County Probate Attorneys, Nassau County Last Will and Testament Attorneys or Nassau County Estate Litigation Attorneys at Stephen Bilkis & Associates are experts in probates, wills or estate proceedings but we do not charge as much. For consultations, call us or visit our firm at locations near you. We have the best legal teams in the country.

Contact Information