In re Estate of Kinzler

195 A.D.2d 464, 600 N.Y.S.2d 126 (App. Div. 1993)

 

RULE:

A person standing in the relation of a fiduciary capacity cannot deal with or purchase the property in reference to which he holds that relation.

FACTS:

Appellant was the executor for the estate of the beneficiaries' mother. The beneficiaries were appellant's mother-in-law, her sister (Louise) and a trust for a sister (Beatrice), with the remainder to Beatrice's children. Appellant sold the mother's home to Louise and paid himself legal fees from the estate proceeds without prior court approval. Respondents, Beatrice and her children, filed a proceeding for a judicial settlement and objected to appellant's account. The trial court found that the sale of the decedent's house to one of the sisters was tainted by conflict of interest and self-dealing, surcharged interest on the unauthorized advance and fixed appellant's legal fees. The trial court also awarded legal fees to respondent's attorney. Appellant challenged the trial court's judgment. 

ISSUE:

Did the trial court err in finding that appellant engaged in self-dealing?

ANSWER:

No.

CONCLUSION:

The court affirmed the trial court's judgment. The evidence established that appellant did not carry out his fiduciary duties without prejudice or discrimination. Appellant also violated N.Y. Surr. Ct. Proc. Act § 2111 when he paid himself compensation in advance for legal services rendered without obtaining prior court approval. The court held that respondents' attorney was entitled to be paid by the estate because the distributive shares of all the beneficiaries of the estate were substantially enlarged by the efforts of respondents' attorney in the proceeding.  

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