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Court Appoints Temporary Administrators – Will of Duke, 632 N.Y.S.2d 532 (N.Y. App. Div., 1995)


In this case the court had to determine whether it was appropriate to remove the co-executors of an estate and appoint temporary administrators. Typically, a testator will name in his or her last will and testament the person or persons that he or she wants to serve as his or her executor. However, before the nominated executor will have the legal authority to assume the duties of the position, the Surrogate’s Court must approve the nomination and issue letters testamentary. The court will only issue letters to someone who is qualified. Under Surrogate’s Court Procedure Act § 711, upon petition from an interested party, the Surrogate’s Court will suspend, modify, or revoke the authority of the executor if there is evidence that the executor was not qualified for the job, or is no longer qualified.

The decedent, Duke, left an estate valued at $1.2 billion. She names as co-executors her former butler, Laffety and U.S. Trust Company. The Surrogate’s Court was asked to remove the co-executors because they were unfit, because of violation of fiduciary duty, and because of conflicts of interest. The Surrogate’s Court did so and the former co-executors appealed. The Appellate Division affirmed the decision of the Surrogate’s Court.

The Appellate Division concluded that the Surrogate’s Court properly concluded that the Lafferty wasted estate assets by paying himself a significant salary and lavish benefits, even though he was earning a substantial commission for serving as co-executor. There was evidence that he was living at the decedent’s estate and using the property as if it was his own. The court concluded that these activities by Lafferty amounted to self-dealing.

The Surrogate’s Court also found that Lafferty regularly commingled his personal assets with assets of the estate, which is a breach of fiduciary duty. Further, there was evidence that Lafferty was repeatedly hospitalized for drunkenness, making him unfit to serve as a fiduciary to the estate by reason of drunkenness in accordance with Surrogate’s Court Procedure Act §§ 711(2) and (8).

As for the corporate co-executor, the U.S. Trust Company, the Appellate Division agreed with the Surrogate’s Court that the corporate co-executor created an actual (not theoretical) conflict of interest by loaning Lafferty money for his personal needs. By loaning Lafferty money, the corporate co-executor had an interest in Lafferty continuing to serve as executor so that he can earn commissions that he would use to repay the loans.

Based on these findings, the court concluded that it was appropriate to remove the co-executors and appoint new administrator, because the co-executors are no longer qualified to serve.

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