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Court Decides Whether it Should Grant Settlement of Account

A New York Probate Lawyer said that, before the court is the first and final account of the ancillary executor of the estate of the decedent. The court is asked to approve: (i) attorney’s fees; (ii) commissions; (iii) reimbursement of expenses; and (iv) the settlement of the account. The decedent, died on May 3, 2004, leaving a will dated February 13, 2001. At the time of her death, the decedent was domiciled in Florida. Ancillary letters testamentary issued to the executor on July 18, 2005. The accounting covers the period May 3, 2004 to April 21, 2009. An amended accounting covering the period May 3, 2004 to December 22, 2009 was filed on February 5, 2010. The amended accounting shows principal charges to the accounting party of $829,804.35.

A Nassau Estate Lawyer said that, objections to the accounting and the amended accounting were filed by a $10,000.00 legatee and the beneficiary of fifty percent (50%) of the residuary estate. The ancillary executor is the beneficiary of the other fifty percent (50%) share of the residuary estate. By instrument dated December 2, 2010, he withdrew his objections to both the first account and the amended account.

The issue in this case is whether the court should grant the settlement of the account.

Long Island Probate Lawyers 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. 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”.

Queens Probate Lawyers said in evaluating the cost of legal services, the court may consider a number of factors. These include: the time spent; the complexity of the questions involved; the nature of the services provided; the amount of 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 set forth in Matter of. Also, the legal fee must bear a reasonable relationship to the size of the estate. Moreover, 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. 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.

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. 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 Here, 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. In addition, the time spent on some services appears excessive. For example, counsel claims to have spent in excess of twenty-three hours preparing Federal and New York State estate tax returns. The affirmation includes generalized descriptions of services such as 17.8 hours on “meetings concerning renunciation by residuary beneficiary and primary Executrix-client and estate beneficiaries meetings, correspondence, telephone calls.” In addition, counsel charged for work done in connection with the Florida probate proceeding which is duplicative of the work performed by Florida counsel. Counsel also billed for attending an open house for the Bayville property and communicating with the alarm company, both of which are executorial in nature and not compensable. It is a general rule that an attorney will not be allowed legal fees for performing executorial services. 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 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. An intermediate position was taken by then Surrogate Prudenti who held that a fiduciary’s violation of SCPA 2310 and 2311 cannot be condoned and will ordinarily result in surcharge for the unauthorized payment at the legal rate of interest in order to protect the rule and deter advances without court orders, but such advances can be excused in certain extraordinary circumstances.

This 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%”. 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.

Accordingly, the court held that 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.

If you have issues regarding the accounting of your estate, seek the assistance of a Nassau Estate Attorney and Nassau Estate Administration Attorney at Stephen Bilkis and Associates.

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