There really is no substitute for good old common sense.
In Matter of Goldberg, NYLJ 1/15/09, a recent case emanating from the Surrogate’s Court, Nassau County, the court was called upon to decide a fiduciary’s petition seeking the advance payment of his executor’s commission during the administration of the estate.
The court began its analysis with reference to SCPA 2311, which allows a fiduciary to make an ex parte application for advance payment of commissions during the administration of an estate. The court noted that a petition seeking advance payment must allege that absent such payment, either the fiduciary or the estate would “be deprived of substantial advantages under the income tax laws of the United States or the state of New York or that [the fiduciary would] suffer inconvenience or hardship or that all persons whose rights and interests would be affected by the payment applied for applied for are persons under no legal disability and have by acknowledged instrument consented thereto” (SCPA 2311).
In the case before the court, the petitioner alleged that he desired advance payment of commissions for purposes of income tax planning, and because of the potential income tax savings associated with payments spread out over separate calendar years. Moreover, the petitioner alleged that the federal and state estate tax returns were filed; that he elected to pay a portion of the estate taxes in installments pursuant to Internal Revenue Code section 6166; that the undeferred portion of the estate taxes has been paid; and that all specific bequests under the decedent’s will have been paid. Moreover, all the beneficiaries — none of whom was under a disability — consented in writing to the application.
Therefore, the court determined that advance payment of commissions was appropriate.
There was, however, one obstacle for the court. The decedent’s will required any fiduciary to serve without compensation. In the ordinary case, according to the court, a fiduciary would have two choices: either decline to serve at all, or serve without compensation. But the court noted that unlike other cases in which courts had so held, in the case before it all the beneficiaries had executed and submitted written waivers confirming their awareness of the provision in the will requiring that an executor serve without commissions, but nevertheless consenting to the payment of a full statutory commission.
This, according to the court, rendered the case before it one of first impression. However, other cases had permitted full statutory commissions upon the consent of the beneficiaries in instances where the executor would not otherwise have been entitled to a full commission, for example, where an attorney-executor would only be entitled to half a commission pursuant to SCPA 2307-a.
Accordingly, the court granted the petition on the consent of all beneficiaries under the will, i.e., the persons who would bear the cost of the commissions. Makes perfect sense, doesn’t it?