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Two Sons File for Accounting Proceeding

This is an accounting proceeding wherein objections were filed by one of the two sons of the decedent who have equal shares in the residuary estate.

A New York Probate Lawyer said the issues presented before the court arise from a situation where an attorney-draftsman and his partner petitioned in the probate or will contest proceeding to be appointed co-executors, no objections to their serving in that capacity were filed in the probate proceeding and they continued to serve as co-executors without objection until the final accounting, at which time objections are raised to their request for two full executors’ commissions as well as attorneys’ fees. The objections to executors’ commissions and legal fees raise significant questions which no reported case has fully answered. The result hinges on the applicability of the precedents of Matter of Weinstock, Matter of Laflin and Matter of Harris to the facts of this case.

On 19 February 1985, the decedent died in his early nineties. He executed on 14 June 1983. A, a lawyer who had represented the decedent, was nominated as the primary executor. A New York Will Lawyer said the attorneys who are the accountants in this proceeding were named alternate co-executors. The will was admitted to probate on the waivers and consents of both of decedent’s sons. The primary executor renounced and both of the alternates, who are the sole partners of their law firm, qualified as co-executors of the estate. These attorneys have served as co-executors from the inception of the estate and have performed all of the legal services in the probate, tax and accounting proceedings.

Long Island Probate Lawyers said the testimony of the attorney-draftsman co-executor who appears to have performed the lion’s share of the executorial and legal services for the estate served as the proof at the hearing. He testified, without objection, to the circumstances surrounding the drafting and execution of the will. He admitted that he had broached the subject of the appointment of an alternate executor in the event that A should, for any reason, be unable to serve. It was his contention that it was the decedent’s idea that both the witness and his partner should be named as alternate co-executors. He further claimed that he had advised the decedent that two commissions would be payable in the event that both he and his partner served. His recollection of this conversation, which occurred approximately five years ago, was that decedent responded to the effect that he liked both the attorneys and wanted them both to serve anyway. He inquired about the assets but decedent refused to reveal the size of his estate and, in effect, told him that it was none of his business. The account reflects that the commissionable assets total $147,289, which results in each co-executor receiving statutory commissions in the sum of $6,891, making their combined commissions the sum of $13,782. In addition, their firm originally requested $11,018 in legal fees. At the hearing, counsel said that he had spent twenty hours on this estate since the account was filed and that he should receive additional compensation for this time.

Brooklyn Probate Lawyers said that although the counsel stated that he kept no contemporaneous time records, he claimed that he could reconstruct the amount of time spent on various items with a high degree of accuracy by looking at his file. Based on this, he claimed that he had spent almost $15,000 worth of billable time on this estate, billing his time at $150 per hour, and that $11,018 is a reduced charge. It was his allegation that, for the past decade, he has been charging at the same rate. The court observes that his testimony on this subject was surprising to the extent that he indicated that he was able to keep his charges constant over the past ten years. The court opines that cousel is apparently one of the fortunate few who has escaped the impact of inflation upon office overhead.

Counsel stated that he had been in practice for thirty years and had handled four or five estates a year and he is not claiming to be an expert in estate law. However, he testified that, in his opinion, regardless of the size of the estate, he and his partner would both be entitled to full statutory commissions.

The court finds that his opinion is incorrect. It finds it clear that he was unaware of the holdings in Matter of Weinstock, Matter of Laflin and Matter of Harris prior to the instant proceeding.

Counsel paid himself $2,235 on account of commissions without a court order as shown in his entry schedule. To the court, this exhibited counsel’s lack of expertise. This act is improper. If executors wanted to receive a payment on account of commissions, they have to make an appropriate application. Inasmuch as the attorneys and the fiduciaries were one and the same in this matter, even if petitioners had denominated the payment as being made on account of legal fees, a court order was required in accordance with SCPA 2111.

The court concludes that counsel intentionally misstated the facts which led to the nomination of both himself and his partner as alternate executors in the will. However, the court would have to be gullible not to conclude that counsel, at least subconsciously, engaged in revisionary history when he implied that decedent knew that his estate would have to pay twice as much in commissions in the event that both partners in the law firm served as executors.

Counsel’s apparent lack of knowledge about the holding in Matter of Weinstock, supra, indicates that he did not know that an attorney had an obligation to make a full disclosure to a client before he permitted himself and another attorney in his firm to be written into the will as co-executor.

Counsel conceded that he did not have even an inkling as to the size of decedent’s estate and that, even if he had, he was unaware that the commissions would be doubled only if the estate reached a certain value. If petitioners’ present request for legal fees and commissions were to be granted, they would receive in excess of $25,000.

The court finds it incredible that assuming that the decedent was aware of these charges as well as other estate administration expenses and debts, one would lead to the conclusion that he sanctioned a distribution of his estate which leaves each of his sons approximately $21,000 in satisfaction of his residuary legacy while counsel receives $25,000.

The court concludes in viewing the credible testimony in the light most favorable to counsel, after he had initiated the discussion as to the need to nominate an alternate executor, decedent, without any improper prompting from counsel, but also without any meaningful knowledge or disclosure as to the financial impact upon his estate, selected counsel and his partner as the alternate co-executors.
The implications which can be drawn from the holdings in Matter of Weinstock, Matter of Laflin and Matter of Harris can be used as a guide in determining the instant matter. In Matter of Weinstock, where an attorney-draftsman and a partner are named in a will as executors, without having had any prior relationship to the client and without having advised the client that double commissions are payable, they may be barred from serving because the overreaching is held to constitute constructive fraud. Inasmuch as Weinstock involved a father and son team of attorneys unknown to the elderly testator prior to the will conference and execution ceremony, the overreaching was particularly egregious. In the instant case, the uncontroverted testimony was that the attorneys had had some dealings with the decedent for a few years prior to his death and that it was not unreasonable that he would appoint one of them as an alternate executor of his estate. The decedent apparently did not wish to appoint a member of his family. However, it is highly suspect that both attorneys were named. Counsel candidly admitted that there was no conceivable benefit to the estate by so doing, and decedent’s desire to benefit the attorneys was obviously not paramount since they would receive nothing in the event that the primary executor served.

Weinstock is distinguished from the case at bar in the sense that there is no evidence that the attorneys actively induced the decedent to name both of them as fiduciaries or that they purposely deceived the decedent into believing that it would make no difference whether one or both members of the firm were named. However, it is equally clear that there was no meaningful, full disclosure as to the double commissions that would flow from multiple fiduciaries serving. Consequently, the client was deceived.

Without endorsing this rule and with knowledge that the Weinstock court stated that the mere naming of one attorney as the fiduciary does not of itself constitute overreaching, one cannot reasonably contest that such disclosures in some manner should be made to the client. The existence of such an affidavit or similar statements in the will would clearly serve as a preventive measure to avoid future problems for counsel. Where two attorneys from the same firm are nominated as co-executors, they should be able to present compelling proof that the client made this selection with full knowledge as to its ramifications.

Since no objections were filed in the probate proceeding to the assumption of the role of co-executors by the attorney-draftsman and his partner, the court does not have to consider whether such objections would have resulted in one or both of the attorneys being denied the right to serve as an executor. However, counsel conceded that he had not advised the beneficiaries of the estate that double commissions would be charged when he and his partner qualified as alternate executors. Consequently, his reliance on their waivers in the probate proceeding, when it appears that they were not represented by independent counsel, is unfounded and cannot be the basis upon which to hold that decedent’s son is estopped from raising the objections he now pursues in the accounting proceeding.

The court finds that counsel was guilty of passive malpractice in his failure to adequately advise the decedent of the consequences of appointing both attorneys as executors. Matter of Laflin and Matter of Harris hold that in the absence of an estoppel, multiple attorney-fiduciaries who have not complied with the Canons of Ethics by making a full disclosure must suffer the consequences in the accounting proceeding, even though no objections to their serving were raised in the probate proceeding.

Statutory commissions should be denied to those who are guilty of serious misconduct, breach of trust, or mismanagement In the case at bar, it is clear that counsel’s failure to adequately explain to the testator the impact upon his estate in the event that both partners served as co-executors should bar the co-executors from receiving two statutory commissions. The next issue is whether the two executors should automatically be permitted to share in one statutory commission and receive the customary legal fee. If they do, they would be receiving exactly the same amount as they would have had they acted in accordance with the highest standards of the legal profession and either

discouraged the decedent from appointing both of them as executors or had only one of them served. This result does not commend itself to the court.

The court concludes that the proper remedy is to allow combined executors’ commissions and attorneys’ fees on a quantum meruit basis. The amount to be awarded should in no event exceed one commission and the legal fee that would be allowed, taking into consideration that there is an overlapping of executorial and legal services which results in a reduction of the legal fee where counsel is also the executor as held in the cases of Matter of Moore, Estate of Schilling, Estate of Ketcham, Estate of Gillett, Estate of Sherwood, Estate of Smith, N.Y.L.J., Will of Deguire and Estate of Orza, N.Y.L.J.

Accordingly, the court sustains objections to schedule C-1 and schedule I.

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