The Eligibility of a Fiduciary

April 13, 2017

While deference is accorded to the testator’s selection of a fiduciary, there are circumstances when judicial intervention is required in order to safeguard the interests of the estate and satisfy statutory dictates. Recently, Surrogate’s Courts have had the opportunity to consider this issue, as evidenced by the decisions that follow.

Administrator cta Eligibility

Before the Surrogate’s Court, Kings
County, in In re Waxman, was an application,
pursuant to the provisions of SCPA
1418, for letters of administration cta
by the decedent’s sole distributee, who
had been specifically disinherited under
the propounded will. Seven of the eight
residuary beneficiaries under the instrument
renounced their right to serve and
consented to the relief requested by the
petitioner.

Objections to the application were
filed by the public administrator, who
had previously been appointed temporary
administrator of the estate, alleging
that the petitioner was ineligible to
serve since (1) she was not a beneficiary
under the propounded will, and therefore,
was not a person interested in the
estate, as required by the provisions
of SCPA 1418 (1)(c); and (2) she had
failed to obtain the consent of all those
beneficially interested in the estate, pursuant
to SCPA 1418(6). The petitioner
moved to dismiss the objections, which
motion was converted to one for summary
judgment.

In support of her application, the
petitioner maintained that despite
her disinheritance, she was a “person
interested” in the estate, and, thus,
qualified to serve pursuant to SCPA
1418, since she would be entitled to
a share of the decedent’s estate if the
propounded will was denied probate. In
addition, she claimed that the interest
in the estate of the beneficiary whose
consent she had not obtained was de
minimis, and in any event, that beneficiary
had defaulted in the proceeding.
In opposition, the objectant contended,
inter alia, that the petitioner was not
a “person interested” in the estate,
as defined in SCPA 103(39), and that
the provisions of SCPA 1418 expressly
required the consent of all beneficiaries
of the estate in order for the petitioner
to be appointed.

The court agreed with the objectant,
finding that the petitioner was
not a “person interested” in the estate
“entitled or allegedly entitled to share
as a beneficiary” thereof, and thus,
was not entitled to letters of administration
cta, pursuant to the provisions
of SCPA 1418(1)(c). The court rejected
the petitioner’s argument that as an
intestate distributee she was a “person
interested,” concluding that while
her status would entitle her to object to probate, it would not qualify her as
a “person interested” for purposes of
SCPA 1418, which required the fiduciary
to have an interest in the property to
be administered.
Moreover, the court noted that
although petitioner could, in its discretion,
be appointed administrator
cta, the exercise of that discretion was dependent upon her filing acknowledged
consents of all the beneficiaries. The
court found that the absence of one such
consent was fatal to the petitioner’s
application.
Accordingly, letters of administration
cta were issued to the public administrator,
pursuant to the provisions of
SCPA 1418(2).
In re Waxman, NYLJ, Dec. 9, 2016,
at p. 35 (Sur. Ct. Kings County).

In ‘In re Waxman’, the court
noted that although petitioner
could, in its discretion, be appointed
administrator cta, the
exercise of that discretion was
dependent upon her filing acknowledged
consents of all the
beneficiaries. The court found
that the absence of one such
consent was fatal to the petitioner’s
application.

Hearing on Eligibility Ordered

In In re Srybnik, the petitioner, the decedent’s
spouse and preliminary executor
of the estate, sought admission of the
decedent’s will to probate, but objected to
letters testamentary issuing to the respondent,
the co-executor nominated under
the instrument, on the grounds of “want of
understanding,” pursuant to SCPA 707(1)
(e). Alternatively, the petitioner sought
an order directing an independent medical
evaluation of the co-executor or an
immediate hearing on his eligibility. The
respondent was the decedent’s brother
and lifetime business partner.

Following the filing of the probate petition,
the petitioner, individually and ex
parte, requested the issuance to her of
preliminary letters testamentary. In support
of that application, the petitioner’s
counsel alleged, upon information and
belief, that the respondent was ineligible
to serve as fiduciary, on the grounds
that he was 99 years of age, infirm, and
lacked the requisite understanding to fulfill
his duties. Although the respondent
subsequently sought the revocation of
the petitioner’s preliminary letters, that
application was later withdrawn.

Depositions of both the petitioner and
respondent were directed, and thereafter,
petitioner moved for summary
judgment.

The court noted that the phrase “want
of understanding” has been defined as
a lack of intelligence sufficient to understand
the nature and extent of fiduciary
duties, rather than a lack of information, business experience or legal knowledge.
That is, disqualification on this contemplates
that the fiduciary is likely to jeopardize
estate assets and put the interests
of the beneficiaries at risk.
Because the testator’s selection of
a fiduciary is entitled to great deference,
the burden of proving ineligibility
rests with the party asserting the
claim. To that extent, the court found
that the petitioner had satisfied, prima
facie, her entitlement to summary judgment,
based upon the respondent’s videotaped
deposition, together with the
affidavit of a physician who reviewed
the tape and transcript. Nevertheless,
the court concluded that the respondent
had raised an issue of fact as to
his eligibility to serve, based upon the
affidavit of a physician and counsel’s
affirmation, both of which called into
question the medical opinion of the
physician retained by petitioner.

Accordingly, the court denied petitioner’s
motion for summary judgment,
and scheduled a hearing in order to fully develop the record before it determined
whether the respondent was capable
of understanding and performing his
duties as fiduciary.
In re Srybnik, NYLJ, Jan. 23, 2017,
at p. 29 (Sur. Ct. New York County)
(Mella, S.).

In ‘In re Jacobs’, the court found
that the objectant had failed to
demonstrate any misconduct on
the part of the proposed successor
trustees that would endanger
the trust, and opined that
alleged hostility is not grounds
for disqualifying an otherwise
eligible fiduciary.

Successor Trustees

Before the Surrogate’s Court, New
York County, in In re Jacobs, was a contested proceeding in which the petitioners
sought permission to resign as
co-trustees of the trust created under
the decedent’s will, and to appoint the
principal beneficiary’s siblings in their
place and stead. One of the proposed
successors was nominated in the instrument,
and the second was designated
by the co-trustees pursuant to their
authority under the instrument.

Objections to the application were
interposed by the beneficiary, who
appeared pro se, and who alleged that
her family had been abusive towards
her, and that she had had no contact
with one of her siblings for at least 15
years. The remaining beneficiaries of
the trust, including the guardian ad
litem appointed for the infant beneficiaries,
consented to the application.
The court acknowledged the general
rule that accorded respect for the testator’s
choice of fiduciary, noting, as well,
that the principle extended to the selection
made by a person authorized by
the testator to select a successor. With
this in mind, the petitioner’s application
was granted.

Specifically, the court found that the
objectant had failed to demonstrate any
misconduct on the part of the proposed
successor trustees that would endanger
the trust, and opined that alleged hostility
is not grounds for disqualifying an
otherwise eligible fiduciary. Moreover,
the court found it significant that the
proposed successors were family members
who were familiar with the needs
of the beneficiaries, and who agreed to
serve without compensation.
In re Jacobs, NYLJ, April 5, 2016,
at p. 22 (Sur. Ct. New York County)
(Mella, S.).

Ilene Sherwyn Cooper is a partner with Farrell
Fritz in Uniondale, where she concentrates in the area
of trusts and estates. She is the past-chair of the New
York State Bar Association’s Trusts and Estates Law
Section.

 

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