This past year has been witness to multiple applications for the disqualification or removal of a fiduciary. While a decedent’s choice of a fiduciary is generally accorded great deference, there are, nevertheless, instances in which a testator’s choice is superseded by the best interests of an estate or trust and its beneficiaries. Judicial discretion in these cases is motivated by various concerns as evidenced by the following decisions:

 In In re Brody, NYLJ, 10/17/08, p. 31 (Sur. Ct. Nassau County), the decedent’s son petitioned to remove his mother and sister as co-trustees of a testamentary trust created for his benefit on the grounds of hostility. The co-trustees moved to dismiss the petition for failure to state a cause of action and the court converted it to a motion for summary judgment.

In denying the application, the court opined that while hostility may prove to be a basis for disqualifying a person from being appointed fiduciary, this result will only occur when the friction between such person and the beneficiary interferes with the proper administration of the estate. To this extent, the court held that an evidentiary hearing was required in order to determine whether litigation pending between the parties in the Supreme Court impaired the estate’s administration to such a degree as to warrant the removal of the fiduciaries.

In In re Estate of Lurie, NYLJ, 6/4/08, p. 40 (Sur. Ct. New York County), application was made by the three executors named in the propounded Will for preliminary letters testamentary.

The record revealed that shortly before the execution of the propounded instrument, the decedent, an artist, suffered from one or more strokes. The record further revealed that soon after the propounded instrument was signed, the decedent suffered a massive stroke which left him completely aphasic.

Approximately six months before the decedent’s death on January 7, 2008, an action was commenced in Supreme Court on the testator’s behalf by Ms. Stein, an owner of an art gallery, purportedly in her capacity as decedent’s attorney-in-fact. Ms. Stein alleged that the decedent had revoked a prior power of attorney that had been given to the attorney-draftsman of his Will, on the grounds that he had mishandled the decedent’s assets. The attorney-draftsman disputed the validity of Ms. Stein’s power of attorney, and denied that his own power had been revoked.  The Supreme Court litigation was ultimately resolved pursuant to an agreement, which contained numerous and generous financial provisions for the benefit of Ms. Stein and the attorney-draftsman.

The testator died several days after the execution of the agreement, with an estate of approximately $30 million, and only one known distributee. The court noted that although the testator had made it clear to the attorney-draftsman that he wanted his estate to pass free of estate taxes, the propounded instrument as drafted failed to qualify for the charitable deduction contemplated by the decedent.

The record revealed that the estate was in need of the appointment of a preliminary fiduciary. However, based upon the circumstances, the court concluded that none of the named executors in the Will should be appointed to serve in that capacity. In pertinent part, the court questioned the validity of the propounded instrument, and found that the Supreme Court action raised serious questions regarding the qualifications of the attorney-draftsman and Ms. Stein, whom the attorney-draftsman had designated to serve as a third fiduciary. Moreover, while the court noted that the second named fiduciary was not implicated in the preparation of the Will, it court concluded that he was inexperienced in sophisticated business affairs, and any requirement that he post a bond would be too costly to the estate.      

Accordingly, based upon the foregoing, the court held that the best interests of the estate required the appointment of a corporate fiduciary as temporary administrator.

In In re Estate of Isaacson, NYLJ, 6/23/08, p. 35 (Sur. Ct. Kings County) each of the named co-executors in the decedent’s Will, a nephew of the decedent, and a distant relative of the decedent through marriage, who was also the attorney-draftsman of the instrument, objected to each others’ appointment.

Pursuant to the pertinent provisions of the propounded instrument, the decedent devised and bequeathed his residuary estate in four equal shares. In addition to his Will, the decedent executed a Durable Power of Attorney naming his nephew as his attorney-in-fact.

The record revealed that prior to his death, the decedent’s nephew requested and received from the attorney-draftsman the original power of attorney, and thereupon utilized same to transfer over $500,000 from the decedent’s accounts into joint accounts in his name and the decedent’s, which were thereafter utilized by him for his family’s benefit. The court found that the actions taken by him, as the decedent’s attorney-in-fact, were detrimental to the decedent and his estate, and demonstrated improvidence and a want of understanding.

Insofar as the attorney-draftsman’s eligibility was concerned, the nephew alleged that he was unfit to serve due to alleged misstatements made in the change of address form filed with the Post Office in order to have the decedent’s mail forwarded to the nephew’s law firm. The court held that the misstatements were of no consequence to counsel’s qualification to serve, and that his actions to preserve the decedent’s mail demonstrated that he was acting responsibly.

Based upon the foregoing, the court disqualified the decedent’s nephew from serving as executor of the decedent’s estate pursuant to SCPA Section 707(1)(e), and the objections to the appointment of the attorney-draftsman were dismissed.

Author’s Note: For a more in-depth discussion of the foregoing decisions, refer to the New York Law Journal, Trusts and Estates Update, by Ilene Sherwyn Cooper, Esq., dated November 17, 2008, p. 3 and New York Law Journal, Trusts and Estates Update, by Ilene Sherwyn Cooper, Esq., dated July 14, 2008, p.3.