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Estate and Elder Law

Hostility as a Basis to Deny Fiduciary Appointment

 By: John G. Farinacci

Estate disputes have been called "divorces of siblings." Although sibling disputes over their parent's estates are common, there are many other relationships that result in estate disputes as well. However, the point of the saying is well taken in that complex family dynamics can make for extremely rancorous dealings between the survivors of a decedent. It is no surprise therefore that even before any real monetary dispute materializes, family members fight over control of the estate itself in proceedings for the appointment of a fiduciary.

The grounds for disqualification of a petitioning fiduciary are limited to those specified in SCPA 707; Matter of Shephard, 249 A.D.2d 748, 749, 671 N.Y.S.2d 561 (3d Dep't 1998). Persons ineligible under 707(1) are: (a) an infant; (b) an incompetent; (c) a non-domiciliary alien; (d) a felon; (e) one who does not possess the qualifications required of a fiduciary substance abuse, dishonesty, improvidence, want of understanding, or who is otherwise unfit for the execution of the office. The party alleging ineligibility bears the burden of proof. Matter of Rad, 162 Misc. 2d 229, 231, 616 N.Y.S.2d 684 (Sur. Ct. New York County 1994).

The last ground for ineligibility under 707 - "otherwise unfit for the execution of the office" - seems to provide a "catch-all" for a potential challenger to interpret has he chooses to support his challenge where none of the other specific grounds are present.  A common basis for challenge under the catch-all is to allege that a petitioning fiduciary possesses a conflict of interest is "unfit" to act. However, a potential, or even an actual conflict of interest on the part of a fiduciary, without actual misconduct, is not sufficient to render the fiduciary unfit to serve. Matter of Shephard, 249 A.D.2d 748, 749, 671 N.Y.S.2d 561 (3d Dep't 1998). However, friction, hostility, or antagonism between a fiduciary and beneficiaries can disqualify the fiduciary, but only when such enmity threatens to interfere with the administration of the estate. Matter of Venezia, 25 A.D.3d 717, 718, 809 N.Y.S.2d 129 (2d Dep't 2006); Matter of Sadowski, 21 A.D.3d 1034, 1035, 801 N.Y.S.2d 397 (2d Dep't 2005); Matter of Morningstar, 21 A.D.3d 1285, 1287, 801 N.Y.S.2d 674 (4th Dep't 2005).  This was demonstrated in recently in Matter of King, N.Y.L.J., Jan. 11, 2013, at 23, col. 2 (Sur. Ct. Bronx County).

In Matter of King, the decedent was survived by five children. Prior to his death, two of his children - a son and a daughter - were embroiled in a bitter Article 81 guardianship proceeding where the son was ultimately appointed guardian by the court. After decedent's death, the same son and daughter carried over their fight to the estate and each petitioned for letters of administration, both alleging that the other was not fit to serve. The son's application was supported by an alleged spouse of the decedent and another daughter.  The daughter was supported by another son. 

The testimony at the hearing evidenced extreme disharmony concerning the care of the decedent and handling of his funds during his life.  The court noted that although disharmony between the co-fiduciaries and beneficiaries alone is not a ground for disqualification, a fiduciary may be disqualified on the grounds of fitness or where the disharmony rises to the level that it would jeopardize the administration of the estate.  The court found that under the circumstances, it would be inevitable that if either son or daughter were the fiduciary, that fiduciary would not treat the other fairly resulting in further litigation costs. Accordingly, the court found both disqualified based on their extreme and long-standing hostility and appointed the public administrator.

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