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Court Discusses Counsel Fees in Accounting Proceedings

Submitted for decision in this uncontested accounting proceeding are the issues of the fees of counsel for the executor, accountant’s fees and reimbursements to the executor of sums advanced by him.

Mrs. VY died on August 27, 2003 a resident of Massapequa, New York. Her son, petitioner DJ, and her daughter, KR, survived her. Her will of September 30, 1970 and a codicil thereto-dated June 22, 1972 were admitted to probate on November 12, 2003 and letters testamentary issued to petitioner. The will provides that the residuary estate be divided equally between the two children but that KR, if unmarried, be given a two year right to occupy the decedent’s Massapequa home provided she pay real estate taxes. KR resided in the premises until late August, 2005 and the estate sold the property on February 14, 2006.

As with any request for a fee, 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 regardless of a retainer agreement.

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. Also, the legal fee must bear a reasonable relationship to the size of the estate. A sizeable estate permits adequate compensation, but nothing beyond that. 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 accountant’s fees, normally, accountant’s services are not compensable out of estate assets unless there exist unusual circumstances that require the expertise of an accountant. The fee for such services is generally held to be included in the fee of the attorney for the fiduciary. The purpose of this rule is to avoid duplication. Where the legal fees do not include compensation for services rendered by the accountant, there is no duplication and the accounting fee does not automatically reduce the legal fee.

In this estate the executor originally retained BBB, Esq. at a fixed fee of $12,000.00 for 40 hours of professional time with an understanding that provided for compensation for additional unanticipated services. Mr. BBB billed and was paid for $1,000.00 in additional services. Mr. BBB primarily handled the probate proceeding, negotiating with KR’s attorney regarding a possible purchase of the decedent’s home by her and qualified DJ as the appointed fiduciary. He obtained a waiver and renunciation from the drafting attorney nominated as a co-fiduciary, reminded Ms. KR of her duty to vacate the premises and handled the sale of the premises. He filed an inventory with the court and communicated with CCC, of counsel, who handled the preparation and filing of this account.

CCC was retained by Mr. BBB and the executor on or about July 22, 2005. Their fees include 24.51 hours of various partners time and 46.48 hours of paralegal time for a total of $14,573 plus disbursements of $747.18 for a total fee of $15,320.18 which has been voluntarily discounted to $13,172.50 of which $3,677.75 has already been paid and $9,494.75 remains outstanding.

Total charges in this estate are $419,975.94 according to the summary statement of the account plus $6,461.66 in interest income earned until January 2007. Total legal fees are $25,172.50 which amounts to approximately 6% of the estate.

BBB, Esq. sheparded a probate proceeding through the court in circumstances where there was a possibility of a coexecutor-attorney claiming a right to serve and where KR, through her counsel was considering objections to her brother’s nomination based upon his qualifications. Animus between these siblings generated some of these additional fees. Mr. BBB also handled the closing on decedent’s home and preparation of the inventory. To the extent Mr. BBB relies upon time expended by him, he has failed to produce contemporaneously maintained time records of the amounts of time allegedly expended and describing with particularity the precise services rendered. Therefore, it is difficult for the court to correlate the tasks performed to the alleged time in excess of forty (40) hours. However, no objection to the fee has been raised and the amount is not unconscionable. Therefore, the legal fee requested by BBB, Esq. is allowed.

With respect to CCC, there was an apparent effort to minimize fees by the use of a paralegal. Nevertheless, an excessive amount of time appears to have been devoted to duplicative services of consultations between CCC partners and Mr. BBB, in telephone conferences with Mr. BBB and in reviewing Mr. BBB’s emails and responding thereto. Additionally, several hours in November and December of 2006, which are not precisely ascertainable, were expended in the preparation of both attorneys’ affidavits of services. Finally, disbursements for UPS, priority mail, postage and photocopying are disallowed. However, as set forth above, CCC has already discounted its fees and therefore the reduced amount requested is reasonable and allowed as are the disbursements in the sum of $625.00 through entry of a decree in this proceeding.

Accounting services of $550.00 for preparation of Federal and state fiduciary income tax returns are allowed.

The executor also seeks reimbursement for $3,324.81 plus an additional $262.18 since the account was filed, for funeral expenses, travel related expenses and miscellaneous postage, film, landscaping and other costs. Of these expenses $2,454.18 are for travel from the executor’s home in Ohio to New York for food, gas and lodging. When it can be inferred that the testator knew that travel by a representative she nominated, such as her son who resides in Ohio, would be required, reimbursement of such travel expenses in permissible. Thus reimbursement of $2,454.18 in travel expenses is approved. Reimbursement of $100.00 paid to a landscaper and funeral expenses of $810.00 for the minister, florist and funeral luncheon are also allowed. Other expenses for postage, film, bulbs, duct tape and signs are deemed to be costs of performing routine fiduciary duties and are deemed absorbed by commissions (in this case $16,599.28) whether the fiduciary is a resident or non resident of this state.

Fees and other charges due to the executor and accountant in a probate proceeding must commensurate with the degree of difficulty the estate requires. If irregularities arise because of unscrupulous persons surrounding the close of probate proceedings, call Stephen Bilkis & Associates.

Their attorneys may also assist you in filing petition for the probate of a will, writing your will and other matters concerning wills and other disposition of property.

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