Opinion
352770.
Decided March 30, 2009.
Certilman Balin Adler Hyman (attorneys for petitioner), E. Meadow, NY.
Berkman Henoch Peterson Peddy, Garden City, NY.
Before the court is a petition for an order to compel co-trustees to account. Dorothy Kossmann, as grantor, created the Dorothy Kossmann Living Trust by agreement dated April 2, 1997. Dorothy named herself and her husband, Charles A. Kossmann, as Trustees. She also named five individuals to be treated as her children for purposes of the trust: (1) Jacqueline Kielty and (2) Sean French (a/k/a Sean P. French), the petitioners herein, (3) Elizabeth Carol Cuffe (a/k/a Elizabeth C.K. Cuffe) and (4) Edward Charles Kossmann (a/k/a Edward C. Kossman), the two respondents in this matter, and (5) Elaine Joan Studer. Dorothy died on January 2, 2001, leaving Charles as sole trustee. In that capacity, Charles appointed Elizabeth as his co-trustee. Charles died on July 12, 2007, leaving Elizabeth as the sole trustee of the trust. On September 20, 2007, this court admitted the will of Charles, dated September 26, 2002, to probate, and granted letters testamentary to Elizabeth and Edward.
The petition before the court, filed September 2, 2008, seeks an accounting from Elizabeth in her capacity as trustee of the trust, and from both Elizabeth and Edward in their capacities as co-executors of the estate of a deceased co-trustee, Charles. Respondents filed objections to the petition on October 21, 2008, asserting that requiring the trustees to file an account would be burdensome, costly, and of no value to petitioners. The argument is based on respondent's position that petitioners have only three interests under the terms of the trust, all of which have been fully distributed or extinguished, as described below:
1. The right to share in decedent's personal property.
Respondents maintain that petitioners' rights in decedent's personalty was extinguished when the property, which they assert was valued below $10,000.00, vested in Charles pursuant to EPTL 5-3.1 upon the death of decedent. Respondents maintain that decedent's estate contains no personalty beyond that which vested in Charles, and therefore respondents are not obligated to account for decedent's personal property. On this basis, respondents assert that they have no obligation to account as trustee and as fiduciaries of a deceased trustee, because the petitioner is seeking an account in connection with assets which were never part of the probate estate.Furthermore, respondents advise the court that upon the death of Charles, respondents gave petitioners the opportunity to come to the residence shared by decedent and her husband, Charles, and select the personalty they wanted. According to respondents, petitioners arrived with a U-Haul truck and removed the personal property of their choosing.
The court notes that the right of an interested party to petition for an order to compel an accounting is predicated upon SCPA 2205(2)(b), which provides that the court may require a fiduciary to account on the petition of a person interested. A person interested is defined in SCPA 103(39) as "[a]ny person entitled or allegedly entitled to share as beneficiary in theestate. . . ." The term "beneficiary" is defined in SCPA103(8) as "[a]ny person entitled to any part or all of an estate." Accordingly, either petitioner is a "person interested" who has standing to seek a court order to compel an account, and the court may order such account. The statute does not include a threshold requirement that a "person interested" must demonstrate that the estate of which he is a beneficiary contains assets. If the court directs the fiduciary to account, the account itself will provide the fiduciary with an opportunity to accurately reflect which assets, if any, are held in the estate and which assets vested elsewhere.
2. The right to receive specific distributions pursuant to the trust agreement.
Article 7.3 of the trust provides that Sean and Jacqueline will each receive a distribution of $100,000 upon Dorothy's death. These distributions were made in August 2001 and were acknowledged by Jacqueline and Sean in executed releases.
3. The right to a remainder interest in the trust.
In Section 5 of Article 10 of the trust, decedent gave Charles a limited testamentary power over the trust property, to appoint all or part of the principal and accrued income among decedent's descendants, in equal or unequal shares.
In default of the exercise of the power of appointment, Article 12 of the trust provides that the remainder of the trust be divided equally among the five individuals named as decedent's children in her trust.
Respondents' third argument in opposition is that the distribution of the trust remainder is governed by the exercise by Charles, in his will, of the limited testamentary power in favor of his three children, to the exclusion of petitioners. Petitioners assert that Charles was unduly influenced in the execution of the will in which he exercised the power of appointment, and that petitioners, who were adversely affected by that will, were given no opportunity to challenge its admission to probate.
Petitioners' reply, dated January 29, 2009, to respondents' objections to the petition to compel an accounting, states that "[o]nce the account is filed and respondents commence the required proceeding to settle the account, Petitioners would then be afforded their day in court on the issues of whether Charles A. Kossmann lacked testamentary capacity on the day on which he purportedly executed the last will and testament dated January 26, 2002, and/or whether undue influence was exerted on or over him in order to induce him to execute said will." The issue raised by petitioners as to whether there was undue influence in the execution of Charles' will does not properly lie in an accounting proceeding for a trust created by Dorothy. If petitioners believe that they have grounds to commence a proceeding to vacate the decree of probate granted in the estate of Charles, they should do so.
The court finds that the Elizabeth is obligated to account as a co-trustee and that Elizabeth and Edward are obligated to account as fiduciaries of the deceased co-trustee, but only in connection with the personalty contained in Dorothy's estate. However, the relief requested is denied without prejudice to renew, based upon the assumption that petitioners will commence a proceeding to vacate the decree of probate in the estate of Charles A. Kossman. If no proceeding is commenced within ninety days of this decision, respondents are ordered to file and judicially settle their account no later than 120 days from the date of this decision.
The court further notes that respondents have not yet filed a list of assets reflecting the gross taxable estate of Charles A. Kossman, pursuant to the Uniform Rules for Surrogate's Court ( 22 NYCRR 207.20). The list was due by the later of (1) the date on which the New York State tax return would have been due, had one been required, or (2) six months after the issuance of letters ( 22 NYCRR 207.20[a]). Respondents are directed to file a list of assets no later than 30 days from the date of this decision.