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Court suspended administrators due to wasting assets.  In re Steward, 2021 NY Slip Op 2395 (N.Y. App. Div. 2021)


The administrator of an estate is a fiduciary.  As such, they are held to a high standard of conduct.  They must perform their responsibilities with care and make the interests of the estate a top priority.  They must be trustworthy and must not self-deal.  If an administrator violates their duty of care, their actions can be challenged in court.  If the court concludes that the administrator was in breach of their fiduciary duty, potential consequences include reversal of the problematic transaction, suspension, or removal.

In In re Seward, on April 2, 2001, the decedent’s will was admitted to probate and letters of administration  were issued appointing co-administrators.  Nearly 20 years later, in September 2018, a petition was filed to revoke the letters of administration, to suspend the administrators as fiduciaries, and to appoint a new administrator.  The petitioners alleged that the administrators had allowed the estate to languish for nearly 20 years.  Further, the petition alleged that one of the administrators was acting against the interests of the estate.

New York law provides that the Surrogate’s Court can suspend or revoke letters issued to an estate administrator or other fiduciary. Reasons for suspending or revoking letters include evidence that the fiduciary wasted or misapplied assets, damaged estate property, removed property without approval, or failed to follow an order of the court. SCPA 711

Removing or suspending a fiduciary is a step that the court does not relish taking.  When a decedent names in their will who they want to serve as executor of their estate, the court has a responsibility to follow the decedent’s wishes, if possible. Because removing a fiduciary amounts to nullifying the choice made by the decedent, the court will only do so when there is clear evidence that sufficient grounds exist to do so. If the facts are disputed, generally the court will not remove or suspend the fiduciary as that would amount to an abuse of discretion.  See Matter of Mercer, 119 AD3d 689 (2014)

In Seward, there was clear evidence that the two administrators did not get along with each other. As a result, the administrators were unable to perform their responsibilities effectively and the estate was allowed to languish for nearly 20 years.  In addition, one of the administrators admitted that he deeded a property belonging to the estate to himself and allowed a family member to live on another estate property rent-free.  These actions amount to self-dealing and misapplication of property.

The court concluded that there was enough evidence to suspend the administrators.  The court noted that because the administrators were not executors nominated by the decedent, suspending them would not undermine the wishes of the testator.  If the parties were executors, it is unclear whether the court would have required more evidence before suspending them.

Another notable aspect of this case is the timeframe that it covers.  The suit against the administrators was brought 19 years after the decedent’s 1999 death and 17 years after the estate was opened and administrators appointed.  Typically, the administration process in New York takes no more then about 7-12 months.  Complications such as litigation, complex assets, poorly written estate documents, a large number of heirs and beneficiaries, or difficult to find beneficiaries would extend the process.  It appears that in Seward, the estate remained open for so long due to administrators not being able to work together and as a result, they failed to complete the tasks necessary to resolve outstanding issues and close the estate.

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