The Facts of the Case:
On 22 February 2004, a resident of Hicksville died with a will dated 6 November 2002, months after a guardian was appointed on her behalf under Mental Health Law Article 81. The decedent left all of her property, other than a $15,000.00 bequest to a corporation, to “A”, to the exclusion of her family members. The will named “X” as executor and after he offered the will for probate it was revealed that he had a felony record, making him ineligible to serve as a fiduciary. Thus, on 2 May 2005, “X” renounced his appointment. A New York Probate Lawyer said the nominated successor to the named executor had previously renounced her appointment as well.
On 4 May 2005, “A” petitioned the court for letters of administration, for estate administration (estate litigation). However, “A” also had a felony record and was ineligible to serve. Therefore, on 9 June 2005, the court appointed the Public Administrator of Nassau County as temporary administrator. The decedent’s distributees appeared and filed objections to the probate of the will, and notices of appearance were filed on behalf of “A”, the New York State Attorney General and the aforementioned corporation. On 22 November 2005, all of the interested parties entered into a stipulation of settlement. On 1 February 2006, the will, as reformed and restated by the settlement agreement, was admitted to probate, and full letters of administration, were issued to the Public Administrator. Under the terms of the stipulation, articles second and fifth of decedent’s will were reformed so that three of the decedent’s distributes will share in 2/3 of the decedent’s real property and her residuary estate; the remaining 1/3 will pass to “A”; that the decedent’s real property will pass to these parties in kind, so as not to be subject to a commission, and that the property would be sold and the proceeds held in an attorney’s escrow account; and that before any distributions are made to the interested parties from the escrow account, the sales proceeds will be used to pay the bequest to the aforesaid corporations, the commission of the Public Administrator, and all debts, fees and estate administration expenses of the estate.
On 6 March 2007, the account of the Public Administrator was filed and was subsequently amended on 14 April 2009. A Westchester County Probate Lawyer said the account shows the receipt of $34,227.09 of estate principal, which was supplemented by the income collected in the amount of $232.93. This resulted in total charges of $34,460.02. This amount was reduced by administrative expenses through the closing date of the account in the amount of $28,866.48 and payment of creditors’ claims in the amount of $1,734.25, leaving a balance of $3,859.29 on hand. The submitted schedule reflects that the decedent’s real property was sold for $450,000.00, with the proceeds being held in an escrow account, as stipulated by the parties. The petitioner, the Public Administrator, now filed a petition before the court and seeks approval of the accounting and the commission; asks the court to fix the fees for the services of the attorneys and the accountant and to determine the validity of the claims filed against the estate; requests that the court direct payment of $15,000.00 from the escrow account to the aforesaid corporation and authorize distribution of the net estate in accordance with the provisions of the will as reformed by the stipulation of settlement.
The Issue of the Case:
The issues filed before the court for its determination is the first and final account of the Public Administrator for the estate of the decedent who died on 22 February 2004 while a resident of Hicksville.
The Ruling of the Court:
A Suffolk County Probate Lawyer said the rules provide that in fixing the attorney’s fee for the estate, the court bears the ultimate responsibility for approving legal fees that are charged to an estate and has the discretion to determine what constitutes reasonable compensation for legal services rendered in the course of an estate. While there is no hard and fast rule to calculate reasonable compensation to an attorney in every case, the Surrogate is required to exercise his or her authority with reason, proper discretion and not arbitrarily. In evaluating the cost of legal services, the court may consider a number of factors and these include: the time spent; the complexity of the questions involved; the nature of the services provided; the amount of litigation required; the amounts involved and the benefit resulting from the execution of such services; the lawyer’s experience and reputation; and the customary fee charged by the Bar for similar services. In discharging this duty to review fees, the court cannot apply a selected few factors which might be more favorable to one position or another but must strike a balance by considering all of the elements. Also, the legal fee must bear a reasonable relationship to the size of the estate. A sizeable estate permits adequate compensation, but nothing beyond that. The burden with respect to establishing the reasonable value of legal services performed rests on the attorney performing those services.
First, the Public Administrator has asked the court to fix the fees of two law firms which represented the nominated executor in that capacity before “A” renounced his appointment. Law-firm-one has requested a fee of $4,449.20, all of which has been paid while law-firm-two has requested a fee of $5,978.23 and provided the court with detailed time records. As a rule, contemporaneous records of legal time spent on estate matters are important to the court in determining whether the amount of time spent was reasonable for the various tasks performed. However, here, it is impossible for the court to approve legal fees totaling $10,427.43 for the representation of a nominated fiduciary who was never appointed, particularly where the probate estate contains only $34,460.02. The size of an estate can operate as a limitation on the fees payable, without constituting an adverse reflection on the services provided. Thus, the court fixes the fee of these law firms in the amount of $2,500.00 each, and directs that any payment received in excess of this amount be refunded to the estate; and to the extent that an attorney may not yet have been paid, such fee shall be paid from the escrow account.
Second, the Public Administrator has also asked the court to fix the fee of his counsel. The affirmation submitted by counsel reflects $38,925.50 in attorneys’ fees incurred through 3 January 2007, of which $21,536.25 has been paid and $17,389.25 remains unpaid; and has provided the court with extensive records in support thereof. Here, the court finds that the services rendered were significantly greater than those necessitated by a typical administration, and the attorney performed punctiliously, leaving no stone unturned. Clearly, without the efforts of counsel for the Public Administrator, decedent’s family would have received nothing. Instead, the decedent’s distributees received a net amount of $300,000.00, subject to their proportionate shares of the charitable bequest, the commission, and the fees and expenses. Thus, the court approves the fee of counsel for the Public Administrator in the amount of $38,925.50, and any amount not yet paid shall be taken from the escrow account. The court notes and thanks the counsel for the Public Administrator for their adept assistance in the settlement of the instant contested and complex estate.
Third, the Public Administrator has also asked the court to review the accountant’s fees. Typically, an accountant’s services are not compensable from estate assets unless there are unusual circumstances that require the expertise of an accountant. As a general rule, the fee for such services is held to be included in the fee of the attorney for the fiduciary. The purpose of this rule is to avoid duplication. However, where the legal fees do not include compensation for services rendered by the accountant, there is no duplication and the legal fee is not automatically reduced by the accounting fee. Here, the accountant has submitted an affidavit of services. Although the schedule submitted and petitioner’s request for relief indicate that the accountant’s fee would be approximately $1,000.00, of which $550.00 remains unpaid, the affidavit actually reflects a total fee request of $450.00. Thus, finding that the work performed by the accountant was not duplicative of the services rendered by the estate attorney, and the requested amount for these services is reasonable, the court approves the fee in the amount $450.00, all of which has been paid.
Fourth, the Public Administrator has also requested that the court direct payment of $15,000.00 from the escrow account to the corporation named in the will. The court grants this request and orders its payment.
Fifth, the Public Administrator has also asked the court to determine the validity of claims filed against the estate. Here, the schedule of account submitted reflects claims presented and allowed but not paid in the following amounts: the Water District for $35.94, a Fuel Company for $694.69, and another company for $1,231.83, for a total of $1,962.46 in allowed but unpaid claims. However, following the service by mail of an amended first supplemental citation with summary of account on all of the creditors on 21 April 2009, the Water District filed a verified claim on 8 May 2009 against the decedent’s estate in the amount of $971.62 which is an increase of $935.68 since the original claim was noted. The claim was filed in connection with an account for services to decedent’s real property per a statement dated 6 May 2009. It must be noted that this additional claim from the Water District was filed many years after decedent’s death, making it unlikely that these additional fees were incurred during decedent’s lifetime, and “A” occupied decedent’s property subsequent to her demise. Notably, under the rules, where a co-tenant is in exclusive possession of the property, equity dictates that he or she bear those expenses incurred for his or her sole convenience, such as for utilities or optional repairs. Thus, the court directs payment of all three claims totaling $2,898.14, from the escrow account, and directs that “A”’s share of the escrow account be charged $935.68 to reflect “A”’s exclusive use of decedent’s property after her death unless documentation is provided to the court indicating that the additional Water District charges were not incurred during “A”’s occupation of decedent’s real property after her death.
Sixth, the Court also approves the commission of the Public Administrator subject to audit and directs the filing of an affirmation bringing the account down to date.
In sum, the court grants the decree requested which shall discharge the surety and shall authorize the Public Administrator to distribute the balance of the net estate, and this includes the net real estate sale proceeds remaining in the escrow account after all of the payments and adjustments have been made, in accordance with the terms of the will, as reformed by the stipulation of settlement.
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