Who May Serve as Fiduciary?
The newly elected Surrogate for Nassau County, Edward W. McCarty III, recently issued a decision in what appears to be a gut-wrenching case involving an infant decedent. In the Estate of Jessica Fernandes, Surrogate McCarty attempts to get to the bottom of two commonly encountered issues in an infant decedent’s estate, that is 1) who should serve as administrator of the decedent’s estate; and 2) whether one of the decedent’s parents should be barred from receiving estate assets.
In most estates, the answer to the question of who will serve as fiduciary is straightforward. Where a decedent dies having executed a last will and testament, the will identifies the nominated executor (or co-executors). The nominated executor will serve unless the Court finds that he or she is ineligible to serve for the reasons set forth in SCPA § 707. Every person interested in the estate has the opportunity, pursuant to SCPA § 709, to object to the appointment of the nominated executor. Where a person dies intestate, a person interested in the estate may object to the appointment of an administrator on one or more of the grounds set forth in SCPA § 707. Article 10 of the SCPA governs the order of priority of who is entitled to serve as an administrator of an intestate estate.
In Fernandes, the decedent was a 12 year-old girl who succumbed to respiratory failure. She had been incapacitated since birth, and her mother had been appointed her personal needs guardian, as well as co-guardian of her property along with an attorney, pursuant to Article 81 of the New York Mental Hygiene Law. The decedent had recovered in excess of $3.5 million in the settlement of a medical malpractice action. All else being equal, the decedent’s mother and father have equal priority to serve as administrator of her estate pursuant to SCPA § 1001, and the Court may appoint, in its discretion, one or both of them.
Following the decedent’s death, her mother petitioned for letters of administration and requested that the decedent’s father be disqualified, pursuant to EPTL § 4-1.4, from taking an intestate share of decedent’s estate on the basis of his alleged failure to provide for, and abandonment of, the decedent. The decedent’s father struck back, denying that he had abandoned the decedent, objecting to the decedent’s mother’s appointment as administrator of the decedent’s estate pursuant to SCPA § 707 on the grounds that the decedent’s mother had engaged in fraud and dishonesty, and cross-petitioning for letters of administration. The decedent’s mother appears to have also alleged that the decedent’s father is a non-domiciliary alien and thus ineligible to serve as administrator pursuant to SCPA § 707 (1) (c), and that he cannot read or write in English, and that the Court should thus, in its discretion, find him ineligible to serve pursuant to SCPA § 707 (2). The decedent’s mother also alleged that decedent’s father’s open hostility to her rendered him ineligible to serve.
Judge McCarty’s decision indicates that he is poised to address the factual allegations that the parties have made. He explained that summary judgment was inappropriate; the papers before him left several issues of fact to be resolved at a hearing (the hearing may have already been held). Aside from untangling the issue of the decedent’s father’s immigration status, it seems that the Surrogate will be faced with determining whether each of the decedent’s parents can read and write in the English language, and, if not, whether this should affect their ability to serve. In this inquiry, he may be informed by a recent decision from the Surrogate’s Court, New York County, Matter of Torbibio.
Moreover, while dishonesty is one of the grounds set forth in SCPA § 707 (e) as a basis to render someone ineligible to receive letters, dishonesty as contemplated by the statute is not dishonesty in answering questions such as “how big was that fish that you caught last fall?” but, as the First Department recently explained, dishonesty in money matters from which a reasonable apprehension may be entertained that the funds of the estate would not be safe in the hands of the contemplated fiduciary. As for the decedent’s mother’s claim that the decedent’s father’s hostility renders him ineligible, as countless Surrogate’s Court practitioners have explained to their clients, mere hostility is simply not enough. It is well-settled that an individual will only be barred from being appointed fiduciary where friction or hostility interferes with the proper administration of the estate, and future cooperation is unlikely.
Barring a settlement, it appears that the Court will reach the second issue, whether the decedent’s father should be disqualified from sharing in the decedent’s estate, at the close of discovery. His decision contains a granular analysis of disputes among the parties as to documentary discovery - the kind of analysis that is helpful to lawyers when they get down to the task of drafting demands for documents.
Estate Fiduciary Wrongly Deprived of Counsel of Choice?
A recent decision emanating from the Appellate Division, Second Department, Matter of Venezia, implicates two fundamental -- and seldom conflicting -- legal principles. The first of these is that a testator has the right to designate a legally qualified person to administer his or her estate, and that designation is entitled to great deference. And, secondly, a party’s entitlement to be represented by counsel of its choice is a valued right, and any attempt to restrict that right must be carefully scrutinized.
Matter of Venezia was a probate proceeding in which the Surrogate’s Court, Kings County, after a hearing, granted the motion of the objectant to disqualify the nominated executrix from serving as such and reinstated letters of administration previously issued to the objectant.
The objectant’s proffered basis for removal of the petitioner as executrix -- which was accepted by the Surrogate’s Court -- was that the petitioner’s selection of counsel rendered her unqualified to serve. The objectant argued that he and the petitioner’s counsel had been adversarial in a prior conservatorship proceeding and that they had a hostile relationship.
The Appellate Division began its analysis by noting that “the right of a testator or testatrix to designate, among those legally qualified, who will settle his or her affairs, is not to be lightly discarded[,]” although “the Surrogate may disqualify an individual from receiving letters of administration where friction or hostility between such individual and a beneficiary or a co-administrator or co-administratrix, especially where such individual is at fault, interferes with the proper administration of the estate, and future cooperation is unlikely” (citations omitted).
The court noted, however, that the evidence adduced at the hearing demonstrated that the objectant -- not the petitioner’s counsel -- was the source of the hostility between them. That fact, combined with the fact that there was no evidence that the petitioner was unqualified to serve as executrix or that she committed misconduct, lead to a determinations that the Surrogate’s Court erred in disqualifying the petitioner from serving as executrix.
Nevertheless, the Appellate Division directed that the petitioner retain new counsel to represent her, “given the hostility the objectant harbors for the petitioner’s counsel, and since it is unlikely that the objectant will cooperate with counsel in the future. . . .” Notably, the court made this determination notwithstanding its observation that “the record does not demonstrate that counsel retained by the petitioner acted improperly[.]”
So, let’s get this straight. The duly nominated fiduciary of a decedent’s estate hired an attorney of her choice. That attorney did nothing improper. Yet, due to “hostility” between the attorney and the objectant -- hostility created by the objectant -- and the fact that the objectant was not likely to cooperate with the petitioner’s counsel in the future, the court directed the petitioner to retain new counsel.
The Court of Appeals has made clear that a party’s entitlement to be represented by counsel of its choice is “a valued right and any restrictions [thereto] must be carefully scrutinized” (S&S Hotel Ventures Ltd. Partnership v 777 S.H. Corp., 69 NY2d 437 [1987]). It is not clear from the Appellate Division’s decision that it adequately considered this principle when it deprived the petitioner of her counsel of choice.
