Each Executor of an estate or Trustee of a trust owes a fiduciary duty to the heirs and beneficiaries and are required to keep accurate records of all transactions engaged in by him or her.  Such fiduciary also has a duty to account to the heirs and beneficiaries to the extent requested.

If a beneficiary has questions or concerns regarding a fiduciary’s handling of an estate or trust, they may request an accounting and copies of all relevant documentation.  To the extent that these concerns are not alleviated, or in the event that the executor or trustee ignores the request, the heirs and beneficiaries have the right to file an action in Court to compel access to the fiduciary’s books and records and an accounting of his or her handling of the estate or trust.  Before doing so, a beneficiary should consult with an attorney to determine whether such an action is viable given the status of the beneficiary’s interest in the estate or trust.

Recent Cases: 

Denial of Attorneys’ Fees

In the Matter of the Estate of Lillian Schmidt, Deceased, 2012 N.J. Super. Unpub. ____ (Docket No.: A-0210-11T2) (App. Div. 2012). On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County. Before Judges Grall, Alvarez and Skillman.

Plaintiff appeals the denial of her request for counsel fees and from the lower Court’s approval of the accounting filed by Decedent’s attorney in fact.

Decedent was the Aunt of Plaintiff and Defendant. Prior to her death, Decedent appointed her nephew, the Defendant, as her attorney in fact, and executed a Will leaving her entire estate to Defendant’s mother. Defendant’s mother predeceased the Decedent and therefore Defendant became Decedent’s sole beneficiary.

Plaintiff, a niece of the Decedent, filed suit requesting an accounting of Defendant’s actions under Decedent’s Power of Attorney and as administrator of her Estate. Plaintiff accepted the accounting as to the administration of the Estate but questioned Defendant’s conduct under the Power of Attorney. A trial ensued and the Court found that Defendant did not keep proper records and often made payments out to cash, but most of the funds were used for Decedent’s benefit. The Court ordered $8,036 which Defendant had yet to account for put back into Decedent’s account. Plaintiff then sought attorneys’ fees out of a fund in Court, which the Court denied, as Plaintiff’s application did not serve to create, protect or preserve the Estate as Defendant is the sole beneficiary.

The decision was upheld on appeal, with the Appellate Court finding that the lower Court made credibility determinations which were adequately supported by the record and that Plaintiff’s attorneys’ fees were properly denied as the Estate was not enhanced by years of litigation, as Defendant is the sole beneficiary of the Estate.

Failure to Abide by Settlement Agreement and Sanctions

Frank A. Marinaccio v. Rosemarie Grgec and Suzanne Dapkins, jointly, 2012 N.J. Super. Unpub. ____ (Docket No.: A-3962-10T2) (App. Div. 2012). On appeal from the Superior Court of New Jersey, Chancery Division, Somerset County. Before Judges Grall, Alvarez and Skillman.

Plaintiff appeals form a final order entered by the Chancery Division confirming an umpire’s determination pursuant to the New Jersey Alternative Procedure for Dispute Resolution Act (the APDRA) that Plaintiff violated the terms of the Settlement Agreement and the umpire’s award of legal fees to Defendants.

Plaintiff acted as trustee of testamentary trusts established by the parties’ aunt and parents which ultimately benefited the parties in equal shares. After a Complaint was filed by Plaintiff’s sisters seeking an accounting and distribution from the trusts, the parties agreed to mediate the matter and enter into a final Settlement Agreement. In this Agreement, Plaintiff agreed to sell their parents’ residence and pay to each of his sisters, the Defendants, $250,000, in recognition of their respective shares in the trusts. They also agreed that all disputes pertaining to the settlement would be resolved through arbitration under the APDRA.

Six months after the settlement, Defendants moved under the APDRA before the umpire to declare Plaintiff in violation of the Settlement Agreement, wherein he agreed to list and market for sale their parents’ residence, and to keep the Defendants informed on the listing of the property and any offers. Defendants discovered that Plaintiff received an offer on the property well above the amount required to be paid to the Defendants pursuant to the Agreement. In response, Plaintiff sought to vacate the settlement. Plaintiff’s request to vacate the settlement was dismissed, and affirmed on appeal, as Plaintiff failed to offer newly discovered evidence which would probably alter the judgment and which by due diligence could not have been discovered in time to move for a new trial. Plaintiff claimed that he found documents in his basement that were grounds to vacate the settlement. The umpire found that plaintiff did not make diligent inquiry prior to entering into the settlement, and thus, these documents are not newly discovered evidence pursuant to the rule. The umpire also found that Plaintiff violated the terms of the Settlement Agreement and ordered him to pay $15,000 of Defendants’ attorneys’ fees. The trial Court upheld these findings.

On appeal, the Appellate Division agreed with the trial Court that Plaintiff failed to establish newly discovered evidence to vacate the Settlement Agreement, and the award of fees was proper in light of Plaintiff’s obligations under the Agreement.

Court ordered informal accounting 

In the Matter of the Estate of Gennaro Mecca, Deceased, 2011 N.J. Super. Unpub. ____ (Docket No.: A-3233-10T3) (App. Div. 2011).  On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Bergen County.  Before JudgesPayne and Reisner.

Defendants appeal from the lower court’s order requiring them to file an informal accounting.  Helen Mecca, Decedent’s widow, and Peggy Mecca, one of their daughters, are the trustees of three testamentary trusts created under decedent’s Will.  Pursuant to the Will, Helen is the income beneficiary of the trusts and her 5 children are the remainder beneficiaries, with the childrens’ shares distributable to their children if they predecease Helen.  Helen is also entitled to up to 5% of the principal of the trust during her life.

The Will requires that the trustees provide annual informal accountings to the income beneficiaries and the vested remaindermen.  Decedent died in 2001 with a sizeable estate.  The trustees failed to provide informal accountings since the inception of the trusts, resulting in a Complaint by one of decedent’s daughters seeking an informal accounting.  The trustees resisted, claiming that decedent’s daughter was not a vested beneficiary and therefore not entitled to the accounting.  According to the scrivener, the accounting provision was inserted into the Will to ensure that annual accountings were provided to the beneficiaries, in an effort to protect the remainder beneficiaries.  The lower court took a plain reading of the Will and required that the trustees account to the remainder beneficiaries, finding that decedent’s daughter was a vested beneficiary subject to defeasance if she didn’t survive Helen.

On appeal, defendants argued that decedent’s daughter had a contingent interest in the trust, not a vested interest.  This was rejected by the Appellate Division, which held that it was decedent’s likely intent to provide the remainder beneficiaries, including his daughter, with annual informal accounting.

Accounting Action filed by Creditor of Estate

In the Matter of the Estate of LeonGenet, 2011 N.J. Super. Unpub. ____ (Docket No.: ESX-CP0044-2011) (Ch. Div. 2011).  Decision by the Superior Court ofNew Jersey, Chancery Division, Probate Part,EssexCounty. 

Decedent’s brother and former business partner filed a complaint against the Estate seeking recovery of partnership assets, a constructive trust and an accounting, claiming that decedent, plaintiff’s business partner, overpaid himself commissions from their real estate partnership.  Decedent and his brother were partners in a realty business in which they made an arrangement regarding the payment of commissions.  After decedent’s death, plaintiff had negotiated with the beneficiaries a distribution of ongoing commission payments to which the decedent was entitled.  When these payments stopped, the beneficiaries of the Estate sued plaintiff in New York, seeking payment of the commissions.  This suit was dismissed as it should have been brought by the Estate.  In the interim, plaintiff filed his complaint in New Jersey seeking an accounting.

In his complaint, plaintiff seeks a formal accounting of the Partnership from decedent’s personal representatives.  The Estate moved for summary judgment.  The Court held that the Uniform Partnership Act (now repealed) applies to this case, but fails to allow for the remaining partner to compel an accounting from the Estate.  As to an accounting from the Estate of the estate assets, plaintiff must file his claim in the Law Division, and after receiving a judgment, may refile his claim in the Probate Part seeking an accounting from the Estate.  He is not entitled to an accounting from the Estate until judgment is entered.  Plaintiff also failed to file a claim against the Estate within 9 months.  In fact, it wasn’t filed until 6 years later.  Although plaintiff is also afforded the right to file a claim before the assets of the Estate are distributed, in this case, the assets of the Estate were distributed before plaintiff’s complaint was filed.  Plaintiff is therefore not entitled to an accounting or to a constructive trust, as there are no assets left to encumber.  Summary judgment was therefore granted in favor of the Estate.

Exceptions to Trust Accounting Require Specificity

In the Matter of the Inter Vivos Trust, James W. Phillips, Grantor; In the Matter of the Inter Vivos Trust, Jill A. Phillips, Grantor; In the Matter of G. Willard Phillips, 2011 N.J. Super. Unpub. ____ (Docket Nos.: BER-P-439-10, BER-P-440-10 and BER-P-441-10) (Ch. Div. 2011).  Decision by the Superior Court ofNew Jersey, Chancery Division,BergenCounty. 

This matter was brought by Order to Show Cause and Complaint filed by Bank of America, as Co-Trustee of various trusts established for the benefit of members of the Phillips family, seeking approval of interim accountings, approval of the actions of Bank of America as Trustee, and the payment of commissions and attorneys’ fees.

The various beneficiaries filed a list of exceptions without providing specific reference to the accountings, as filed, and also sought affirmative relief regarding the distributions from the trusts, the timing and amount of same, removal of Bank of America as co-trustee, and various other relief.

Upon reviewing the various motions to dismiss and the underlying pleadings and certifications, the court issued an order allowing for the beneficiaries to resubmit their exceptions to provide the requisite specificity required by the Supreme Court in Higgins v, Thurber, No. A-12-10, 2011 N.J. LEXIS 327, at *5 (March 16, 2011) and R. 4:87-8, which requires that an interested party seeking to file exceptions serve the accountant with written exceptions which state with particularity the item or omission excepted to, the modification sought in the account and the reasons for the modification.  An exception failing to provide adequate specificity may be stricken because of its insufficiency in law.

The exceptions listed by the beneficiaries lacked any reference to the accounting.  Instead of dismissing their exceptions, the Court allowed for resubmission of the exceptions with the specificity required by R. 4:87-8.  The Court also recognized that the beneficiaries may refile their requests for affirmative relief pertaining to the trusts in future proceedings, as they were not properly brought in the accounting action.

Enforcement of Settlement and Legal Fees

In the Matter of the Estate of Elisabeth Wenning Davidson, deceased, 2010 N.J. Super. Unpub. ____ (Docket No.: A-1712-08T2) (App. Div. 2010).  On appeal from the Superior Court of New Jersey, Chancery Division, Mercer County.  Before Judges Reisner and Yannotti.

This matter involved an appeal of the lower court’s enforcement of a hand written settlement agreement which was signed by the beneficiaries of the estate after engaging in mediation.  The lower court also awarded legal fees for the necessity of bringing an enforcement action.

The settlement involved a payment by the executor beneficiary to the other beneficiary for having conveyed real estate to himself without providing an equal amount to the other beneficiary.

At mediation, counsel for the executor drafted a settlement agreement to commemorate the settlement which was signed by all parties.  However, the executor refused to sign a typed version of the agreement.  He also contested the settlement.

His sister filed a motion to enforce the settlement.  The executor continued to deny that he had agreed to the settlement, and his attorneys sent a letter to the court stating that they could not represent him in good faith, and also had a conflict as they had lent the executor monies over the years to fund the litigation.  The attorneys for the executor then withdrew from the case.

The lower court granted the motion and upheld the settlement.  On appeal, the executor claimed that the settlement should be set aside as he was duressed into the settlement through threats of criminal prosecution and inasmuch as his attorney had a conflict of interest.  These claims were rejected.

There were no compelling circumstances, despite the conflict of interest.  The lower court’s decision was therefore upheld on appeal.

Failure to Account 

In the Matter of the Estate of Francesco Racamato, deceased, 2010 N.J. Super. Unpub. ____ (Docket No.: A-2202-09T3) (App. Div. 2010).  On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Passaic County.  Before Judges Wefing, Payne and Baxter.

Decedent died in 2003, leaving a will devising his personal property and his residuary estate to his children in equal shares.  The named executor was appointed by the surrogate..  In trying to administer the estate, in 2004, the executrix provided an informal accounting to the beneficiaries together with a refunding bond and release.  One of the beneficiaries, a daughter of the Decedent who was estranged from the family for many years never responded to the 2004 accounting. 

In 2007, this beneficiary sent a letter to the executrix asking for all back-up documentation.  At some point, distributions of personal property and cash were made to Decedent’s children, despite failing to receive a sign-off by Decedent’s estranged daughter.

In 2008, this beneficiary filed a complaint requesting a formal accounting and the appointment of a substitute administrator of the estate to administer property in Italy.  The trial court dismissed the action finding that it was time barred by Rule 4:85-1, not having been filed within 4 months of the probate of the will.  The appellate court reversed, finding that Rule 4:85-1 is inapplicable to claims challenging the administration of an estate.  There is no statute of limitations in filing a complaint seeking an accounting.  Also, the action is not barred by laches.  The key factors in deciding whether to apply the doctrine of laches are the length of the delay, the reasons for the delay, and changing conditions of either or both parties during the delay.  The estranged daughter had been adverse to the estate since inception as she had refused to sign the refunding bond and release or to loan the estate monies, like the other beneficiaries.  The fact that the other beneficiaries were forced to spend down their legacies on legal fees was not sufficient grounds to apply laches under the circumstances.  The lower court’s decision was therefore reversed, requiring the Executrix to file a formal accounting.

Laches – Failure to File Suit Timely

In re Estate of Joseph Wisnewski, Sr., deceased, 2009 N.J. Super. Unpub. LEXIS 1334 (Docket No.: A-3074) (App. Div. 2009).  Before Judges Fisher, C.L. Miniman and Baxter.

Issue:  Was it proper for the lower Court to deny the plaintiff’s motion for reconsideration seeking to reinstate a surety bond issued to the Executor?

Holding:  Yes.  The accounting was approved more than 16 years ago and plaintiff failed to provide a meritorious basis to reopen the probate litigation.  Plaintiff was afforded the opportunity to present her claims at a plenary hearing several years ago which she did not attend, and the Court perceived no need to address her claims that could have been addressed more than a decade ago.