Articles Posted in Breach of Fiduciary Duty

The appointment of a fiduciary is essential for the administration of a decedent’s estate.  Assets that were owned solely in a decedent’s name at death are not accessible unless the Court appoints a duly authorized representative.  Such representative can be an administrator if the person dies intestate or an executor if there is a Last Will and Testament.

Both executors and administrators have duties and responsibilities.  Their primary job is to identify, protect and collect estate assets.  They must also determine the existence of any claims or debts and, ultimately, distribute the net estate to the estate beneficiaries.  The New York Probate Lawyer Blog contains many articles discussing the administration of estates.

Upon receiving a Court appointment, the fiduciary is held responsible for carrying out the above duties.  If he fails to do so, the Surrogate’s Court has the power to remove him from office and revoke the letters testamentary or letters of administration which were issued to him.  Such was the outcome in a case entitled Matter of the Estate of Lewner which was decided by Manhattan Surrogate Nora Anderson on December 16, 2020.  In Lewner, a son of the decedent had been appointed Preliminary Executor of the decedent’s estate.  A petition to remove the son was filed due to the son’s failure to properly perform his fiduciary duties.  Among other improprieties, the Court found that the son did not file estate and income tax returns relating to the decedent resulting in liability to the estate for interest and penalty charges.  It was also reported that the probate proceeding was not prosecuted for years which delayed the settlement of the estate.  Based upon the above, the Court revoked the son’s Preliminary Letters Testamentary and appointed the Public Administrator as Temporary Administrator.  The son was also directed to file an account of his activities as fiduciary.

A New York estate is administered by an Executor or Administrator.  An Executor is appointed when a Last Will is admitted to probate.  The appointment of an administrator occurs in a case when the decedent dies intestate without leaving a Will.

The job of the estate fiduciary encompasses many functions.  First and foremost, the decedent’s assets need to be discovered and collected.  This process may be time consuming but is very important.  If a fiduciary fails to properly protect and collect assets he may be held personally liable due to a breach of fiduciary duty.

Next, the estate fiduciary is responsible for handling all estate administration matters such as paying debts, claims, expenses and taxes.  This aspect of estate settlement can take a lot of time and effort.  Sometimes the settlement of debts and claims may involve estate litigation in the Surrogate’s Court.  Generally, the administrator or executor cannot settle an estate and make a distribution to estate beneficiaries prior to seven months after appointment without first resolving all estate claims.  If a distribution is made before the end of the seven-month time period, the fiduciary may be personally responsible to pay any open debts or claims.

The Surrogate’s Courts in New York appoint estate Executors and Administrators and Trustees. These appointments make the appointee a fiduciary. As a fiduciary, the person has many obligations and duties. Any failure on the part of an appointee may result in a breach of fiduciary duty.

In general, a fiduciary has an obligation to collect and to protect assets, pay various expenses and other obligations such as taxes, and to provide payments to or on behalf of the beneficiaries. At times there may be lawsuits that must be defended or commenced in the course of administrating the assets of the estate or trust.

There is also an obligation to treat beneficiaries fairly and for a fiduciary not to engage in self-dealing or benefit himself from his fiduciary position. Conflicts of interest should always be avoided. A fiduciary is required to provide a full accounting of his transactions to the beneficiaries.

All fiduciaries such as Trustees, Executors and Administrators must properly perform their duties.  When there is a breach of fiduciary duty, a Court can suspend the fiduciaries’ powers or remove them from office.

Revoking the appointment of a fiduciary is not easily accomplished.  The Courts typically respect a person’s choice of Executors or Trustees and try to follow the intentions in a Last Will or Trust.  However, there are circumstances when revocation and removal is warranted.  Also, a fiduciary has a right to a full hearing before being formally removed.  This involves discovery of information and testimony before the Court.

In a recent Brooklyn estate decided by Brooklyn Surrogate Margarita Lopez Torres on March 20, 2019 entitled Matter of Estate of Gadsden, the Court removed a Trustee of a Living Trust.  This case involved a proceeding under Surrogate’s Court Procedure Act Section 711 entitled “Suspension, modification or revocation of letters or removal for disqualification or misconduct”.  The statute sets forth specific grounds that would be a basis for removal.

Did you know that a fiduciary in New York has certain duties and obligations. A fiduciary includes an Executor, Administrator and Trustee. These duties and obligations include the protection of estate assets and the payment of funds to the beneficiaries.

When a fiduciary fails to act properly, he may be found to have breached a fiduciary duty. There are many different circumstances that can result in a breach of duty. For example, if an Executor uses estate funds for his own benefit, such conduct is improper. Also, if an Administrator fails to pay an estate expense on time such as taxes and the estate is charged extra interest and penalties, this situation may be found to be a breach of duty. Continue reading

A fiduciary of an estate refers to an Executor or Administrator. The estate fiduciary can be removed if he breaches his fiduciary duty. The Surrogate’s Court Procedure Act (SCPA) contains a number of provisions concerning the circumstances in which a fiduciary can be removed.

SCPA Section 711 entitled “Suspension, modification or revocation of letters or removal for disqualification or misconduct” provides a number of grounds whereby a fiduciary can be removed. The New York Probate Lawyer Blog has posted numerous articles regarding the breach of fiduciary duty and the revocation of letters of testamentary or letters of administration. Continue reading

A person who is appointed as an estate Administrator or Executor is empowered to perform many tasks on behalf of a decedent’s estate.  Generally, the fiduciary identifies and collects assets; resolves and pays the decedent’s debts and obligations; satisfies estate administration expenses such as estate and fiduciary income taxes; and provides an accounting and distributes the net estate to the beneficiaries.  The New York Probate Lawyer Blog has published many articles describing and examining the estate settlement process.

Along with their administrative powers, fiduciaries also have many obligations sometimes referred to as fiduciary duties. In cases where there is a breach of fiduciary duty, the Surrogate’s Court can revoke the letters of appointment and remove a fiduciary from office. Continue reading

Fiduciaries in New York are appointed to administer estates and trusts.  With regard to an estate, the Surrogate’s Court appoints either an Executor or Administrator depending upon whether the decedent had a Last Will.  When a Last Will exists, the document is offered for probate and the Court appoints an Executor.  In situations where a decedent dies intestate (without a Will) the Court appoints an estate Administrator.

With regard to Trusts, there are many different types of trusts. There can be inter vivos trusts that are generally created during a person’s lifetime. There are also testamentary trusts that are created pursuant to the terms or provisions in a Last Will. The Trustee supervises the administration of the trust according to the trust terms. Continue reading

Estates and Trusts are administered by fiduciaries. The Surrogate’s Court Procedure Act (SCPA) section 103 (21) identifies persons that are fiduciaries and includes such office holders as Executors, Administrators and Trustees. Such persons are obligated to act in accordance with duties and responsibilities as set out in the New York statutes such as the SCPA, the Estates, Powers and Trusts Law (EPTL) and the rulings of the various courts such as the Surrogate’s Court.

New York estate lawyers are familiar with provisions of the law that permit the Surrogate’s Court to remove a fiduciary when he breaches his obligations or is otherwise unfit to serve in such capacity. The New York Probate Lawyer Blog has published numerous posts regarding this issue which is of utmost importance in estate and trust administration. Initially, reference should be made to a number of laws in this area. SCPA section 711 is entitled “Suspension, modification or revocation of letters or removal for disqualification or misconduct.” This statute provides a number of grounds for the removal of a fiduciary which include dishonesty or otherwise being unfit to serve in such capacity. Another statute that deals with these matters is SCPA section 719 which is entitled “In what cases letters may be suspended, modified or revoked, or a lifetime trustee removed or his powers suspended or modified, without process.” Continue reading