In a recent court decision, Pochopsky Estate, the court found the Deceased’s four children (the “Beneficiaries”) jointly and severally liable for the estate trustee’s costs related to an application compelling him to pass his accounts. The Beneficiaries had obtained an order compelling the estate trustee to account. The court ultimately found that the application was unnecessary and awarded the estate trustee his costs payable by the Beneficiaries.
In his will, the Deceased appointed his friend as the sole estate trustee. The will provided that the Deceased’s estate would be divided equally among the Beneficiaries. However, prior to his death, the Deceased gifted most of assets to the Beneficiaries or arranged for his assets to be held jointly with right of survivorship with his sister. As such, the estate trustee advised the Beneficiaries that there was no estate and he would not being applying for a certificate of appointment as estate trustee.
At issue, was one joint account that the Deceased and his sister held jointly. Initially, the estate trustee believed that this bank account might be an estate asset but upon being provided with evidence, including an affidavit from a bank employee, received legal advice to not pursue litigation against the Deceased’s sister with respect to the joint account.
The Beneficiaries continued to press the estate trustee to pursue litigation against the Deceased’s sister. They also repeatedly requested that he applied for a certificate of appointment as estate trustee. The Beneficiaries eventually demanded that the estate trustee formally pass his accounts.
The estate trustee advised the Beneficiaries that there simply was no estate funds to pursue litigation that would likely be unsuccessful and no need for him to pass his accounts as all of the Deceased’s assets fell outside of the estate. He also put the Beneficiaries on notice that if they compelled him to account, he would seek his costs from them personally as there was no estate to reimburse him for his expenses. The Beneficiaries subsequently obtained an ex-parte order requiring the estate trustee to pass his accounts.
The court noted that a number of the Beneficiaries’ outstanding objections had already been answered prior to the litigation or were frivolous. He also noted that the accounts indicated that the estate was non-existent (less than $200.00) but the Beneficiaries still pursued a contested passing.
The court was critical of the Beneficiaries’ aggressive conduct and ultimately found that their actions had put the estate trustee to unnecessary expense. The court awarded the estate trustee his costs of $17,445.60 payable by the Beneficiaries. The Beneficiaries’ requests for costs were dismissed.
The case is a good reminder that there is no positive obligation on estate trustees to formally pass his or her accounts. The size of the estate is one factor for all parties to consider when compelling a formal accounting. Beneficiaries may be at risk for a cost award if the estate trustee’s actions are found to be reasonable and proportional.
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