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Court Hears Proceeding to Settle an Intermediate Account


A New York Probate Lawyer said in this proceeding to settle an intermediate account of a bank as trustee of two trusts, the appeals are from two decrees of the Surrogate’s Court, Kings County, entered October 27, 1972 and July 30, 1973, respectively. The trustee appeals from so much of the first decree as (1) adjudged that the trustee was guilty of gross neglect with respect to one of the trusts, the one established for the benefit of the testator’s two daughters, in failing to make the trust productive; (2) surcharged the trustee $23,298.27; (3) adjudged that a certain 1946 consent and release (referred to in the decree as made in ‘1947’) executed by the daughters was ineffective to bind them with respect to the conduct of the trustee subsequent to the date thereof; and (4) adjudged that the In terrorem clause in a certain probate compromise agreement of 1926 had no legal force and effect upon the daughters, who in 1926 were infants.
A Kings County Estate attorney said that the trustee, a remainderman and the executor of the estate of another remainderman appeal from so much of the second decree as (1) authorized and directed the trustee to invade the principal of the daughters’ trust by transferring it equally to the daughters and (2) terminated that trust. The trustee also appeals from the further portion of this decree which ‘confirms’ the $23,298.07 surcharge; said remainderman and executor of a remainderman’s estate also appeal from so much of this decree as failed to deny the relief requested in a petition by one of the daughters, and the daughters cross-appealed from another portion of this decree.

A New York Estate Lawyer said the appeals by the daughters dismissed, without costs. The daughters have abandoned their appeals, their briefs asking only for affirmance of both decrees.
The testator died on October 25, 1925, leaving a wife and two infant daughters. By his will, as modified by a codicil and as further modified by a court-authorized compromise agreement, the testator established a trust for the benefit of his two daughters, whereby they were to receive the income from the principal of the trust during their lifetimes, with remainders over to the decedent and, if he be dead, to two individuals in equal shares, or to the survivor of them.

In 1967 the trustee filed its intermediate accounting. It showed that the daughters’ trust neither received nor produced any income during the 20-year period covered by the accounting. The daughters filed objections to the account and the Surrogate, after a trial on the objections, and in an opinion dated July 9, 1969, found that the trustee was guilty of gross neglect in failing to make the trust productive, in that it did not sell the stock and invest the proceeds of such a sale, and surcharged the trustee accordingly.

New York City Probate Lawyers said that thereafter, and by petition dated October 5, 1971, one of the daughters, alleged that the parties were unable to agree on a proposed decree. She requested omnibus relief. Her sister, did not join in or consent to this petition. The joint answer of the executor of the will of the decedent, deceased, denied various allegations of the petitioner’s petition and set up four affirmative defenses. The trustee also filed an answer to this petition.

In the opinion of the Surrogate dated May 25, 1972, he iterated some of the facts and noted what was to be included in the decree to be entered on his previous decision. Thereafter, the first decree now under review was made.

A Manhattan Probate Lawyer said that in a further opinion, dated January 30, 1973, the Surrogate authorized the trustee to invade the principal of the trust in whole or in part, in its discretion, and further authorized the trustee to invade the total principal by distributing the shares equally to the two daughters. He further directed that, in the event the trustee was unwilling to do this of its own accord, it must invade the principal and thus distribute the shares, thus terminating the trust.

We concern ourselves only with one contention raised by appellants to wit: that a hearing should be held to determine whether there exists a need to authorize or direct invasion of the corpus of the daughters’ trust. We find the proof presented to be deficient in this regard and, accordingly, direct that such a hearing be held, limited to this issue and also for the taking of proof as to whether the transfer of the shares of stock of a company to the daughters might be financially beneficial to them, thus justifying termination of the trust.

e have considered the other contentions raised and find them to be without merit.

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