The SCPA and the Estates, Powers and Trusts Law (EPTL) contain many provisions regarding the duties and obligations of fiduciaries. For example, EPTL Section 11-1.1 entitled “Fiduciaries’ powers” sets forth numerous powers granted to a fiduciary, such as investing or selling assets, paying expenses and making distributions. Also, a fiduciary is required to act fairly and not take personal advantage or engage in self-dealing. Beneficiaries are to be treated equally subject to the terms of the appointing documents, such as a Last Will or Trust. If a fiduciary acts improperly he may be found to have breached his fiduciary duty and be subject to a surcharge for improper conduct.
As part of his duties, a fiduciary is required to provide beneficiaries with an accounting of his activities. This accounting is in the form of a financial statement setting forth all of the items and matters which have taken place during the course of a fiduciary’s tenure. In most instances, an executor or administrator or trustee will voluntarily provide beneficiaries with an accounting. However, if a fiduciary fails to do so, SCPA 2205 entitled “Compulsory account and related relief on a court’s own initiative or on petition; who may petition” provides the process to require that an accounting be filed by a fiduciary with the Court. Even though a fiduciary has a duty to account, the Court will only compel an accounting if it is in the estate’s best interest. Of course, determining best interest is subject to the particular facts in each case. This issue was recently reviewed in a Manhattan estate case entitled Matter of Michael, decided by Manhattan Surrogate Hilary Gingold on September 19, 2024. In Michael, a contingent beneficiary of a testamentary trust filed a petition for a compulsory accounting. After reviewing the terms of the Will in which the trust was created and the activities of the trust, the Court declined to granted the petition. The Surrogate noted that the entire trust had been previously distributed to the primary beneficiary in accordance with trustees’ absolute authority and that the petitioner had no interest in the trust due to petitioner’s contingent interest. Additionally, the trustees had voluntarily provided the petitioner with a great amount of financial accounting information. The Court found that it would not be in the trust’s best interest to expend the time and expense to engage in an accounting proceeding under these circumstances.
While an accounting is important in estate and trust cases, a Court will exercise discretion to be certain that there is merit to the request for an accounting.
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New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 40 years resolve issues relating to guardianship and probate and estate settlement throughout New York City including the Bronx, Queens, Brooklyn, Manhattan, Nassau and Suffolk County. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial free consultation.