In re Jakab
| Docket Number | Docket No. 1993-0703/C |
| Decision Date | 10 July 2023 |
| Citation | 2023 NY Slip Op 32281 (U) |
| Parties | In the Matter of the Judicial Settlement of the Final Account of Proceedings of Susan Abrams Jakab, formerly Susan Lasdon Abrams, as Co-Trustee of the Trust Created For the Benefit of Jacqueline M. Lasdon Under Article FIFTH of the Last Will and Testament of STANLEY S. LASDON, Deceased. |
| Court | New York Surrogate Court |
Unpublished Opinion
DECISION
This is a contested final accounting by a co-trustee of a trust established under Article Fifth of the will of decedent Stanley Lasdon (Trust). The petitioning co-trustee is decedent's daughter, Susan Abrams Jakab, formerly Susan Lasdon Abrams (Susan or Petitioner). Decedent's other child, his son, Jeffrey Lasdon (Jeffrey) is co-trustee, and he has filed certain objections to Susan's account, as amended (Account). Also objecting to the Account is Jeffrey's daughter, Jacqueline Lasdon (Jacqueline), who is the lifetime beneficiary of the Trust. The guardian ad litem (GAL) appointed to represent Jacqueline's unborn issue who are the presumptive remainder beneficiaries in the event she dies before age 35, did not file objections and recommended in her report that the Account be approved.
The accounting period spans from the trust's inception on January 31, 1993 through December 23, 2020. The principal and income accounted for over this period totals $4,726,028.
The parties, including the GAL, filed a stipulation, dated November 21, 2021, in which they agreed that the remaining objections may be resolved without a hearing on the papers submitted (Stipulation). Those objections center on whether commissions and legal fees as well as disbursements for certain investment and accounting professionals should be paid from the Trust.
This Trust is not the first for the benefit of decedent's grandchildren under his will that has been the subject of litigation by the parties. Previously, Susan and Jeffrey battled at length as co-trustees in accounting proceedings regarding the trusts established under Article Fifth of decedent's will for the benefit of each of Susan's two children (see Matter of Lasdon, NYLJ, June 29 2010, at 30, col 1 [Sur Ct, NY County 2010] aff'd as modified, 105 A.D.3d 499 [1st Dept 2013]; Matter of Lasdon, NYLJ, June 29, 2010, at 37, col 1 [Sur Ct, NY County]; Matter of Lasdon, NYLJ, Nov. 19, 2010, at 36 [Sur Ct, NY County]). As to the current proceeding, it was first commenced by Susan as an intermediate account in 2012. Litigation ensued immediately, culminating in the filing of objections and a partial summary judgment motion (Matter of Lasdon, 41 Mise 3d 1204[A], 2013 NY Slip Op 51578[U] [Sur Ct, NY County, Sept. 24, 2013]).
Thereafter the matter lingered, with the parties, other than the GAL eventually claiming that they had settled and that the proceeding should be discontinued. However, because the GAL was not involved in the settlement discussions, the discontinuance, and the purported settlement on which it was based, were never effectuated. Although the parties continued to devote substantial time to resolving the issues among them, they were ultimately unable to reach a settlement.
During this period, Susan petitioned to resign as co-trustee of the Trust, which was granted, and she was replaced as co-trustee by Jacqueline, who has since served with her father as co-trustees of the Trust. After resigning, Susan amended her account through December 23, 2020, the date that her resignation was approved by the court, thus making this a final accounting by Petitioner as a co-trustee of this Trust. Jacqueline and Jeffrey, as co-trustees, filed new objections to the amended account, and eventually, as aforementioned the parties agreed to have the court resolve them on the papers, foregoing a hearing, in their Stipulation.
The Stipulation confirmed the agreement of all parties that the court "may determine contested attorneys' and accountants' fees and disbursements, and any and all objections, on the written submissions of the parties and without a hearing." In addition to the papers listed in the Stipulation to be considered, the court permitted counsel for Jeffrey and Jacqueline to file a brief in support of their remaining objections and a response to the GAL's report.[1]
The objections to be determined by the court are to the: (1) statutory commissions (SCPA 2309) sought by Susan as co-trustee; (2) fees in the amount of $6,000 for a Trust investment analysis by the Donegan-Smith firm; (3) accounting fees in the amount of $12,500, for preparation of the account and the amended account, submitted to the court; and (4) legal fees totaling $411,479.45 sought by Susan's attorneys. Before discussing each in turn, the court notes that although the Stipulation provides that the court will determine the "contested . .. accountant's fees," as a technical matter, no formal objections to the fees of the accountants were filed in this proceeding. Nevertheless, because the parties agreed to have the court determine such fees, the court will adjudicate the issue as though a formal objection had been filed.
To the extent that Jeffrey and Jacqueline object that Susan by her behavior has forfeited commissions or that they should be reduced, extended analysis is not required. For incurring the significant duties and obligations of trustee, the court "must allow" commissions (SCPA 2309[ 1 ]) in the amounts provided by statute, except where the trustee has engaged in "fraud, gross neglect of duty, intentional harm to the trust, sheer indifference to the rights of others, or disloyalty" (Matter of Lasdon, 105 A.D.3d 499, 500 [1st Dept 2013]), with a significant consideration being whether the trustee's actionss resulted in pecuniary loss to the trust (Matter of Pavlyak, 139 A.D.3d 1338, 1340 [4th Dept 2016]; Matter of JPMorgan Chase Bank, N.A., 133 A.D.3d 1292 [4th Dept 2015]; see Kim v Solomon, 132 A.D.3d 463 [1st Dept 2015]).[2]
Here, notwithstanding the opportunity for discovery, Objectants' narrative regarding Susan's possible fiduciary misdeeds falls short. They do not allege that the Trust suffered losses due to Susan's conduct as co-trustee. Instead, they point to: Susan's alleged personal animus toward her brother or her niece (which she denies); her inquiries as co-trustee into the concentration of the Trust's investments or the need for a third co-trustee; and her failure to settle their objections to her accounting or resign as co-trustee earlier.
On the record before the court, Jeffrey and Jacqueline did not establish that personal animus amounting to bad faith existed on Susan's part that impaired her proper functioning as co-trustee or that damaged the Trust (see Matter of Gregory Stewart Trust, 109 A.D.3d 755 [1st Dept 2013]; see also Matter of Collins, 36 A.D.3d 1191 [3d Dept 2007]). Nor did they establish bad faith in connection with Susan's inquiries into the concentration of the Trust's investments in the stock of one company or the option of adding a third trustee (not forbidden by decedent's will) to assist with possible deadlocks in Trust administration decisions by them. These were well within a trustee's discretion to examine and pursue (see Matter of JP Morgan Chase Bank, N.A., 133 A.D.3d 1292; Matter of Saxton, 274 A.D.2d 110 [3d Dept 2000]; see also Tibble v Edison International, 575 U.S. 523, 530 [2015] []).
Finally, other than their own self-serving speculation, Objectants have offered no proof in their submissions to substantiate their allegations that Susan acted in bad faith because she should have or could have settled their objections to her account on appropriate terms earlier. Likewise, nothing in the decedent's will establishing the Trust required Susan to seek to resign at a particular time, nor did Objectants offer any factual basis necessitating an earlier request for her resignation as co-trustee.
Nothing provided by Objectants here rises to the level of misconduct, much less the serious misconduct necessary to deny or reduce Susan's commissions (see Matter of Gregory Stewart Trust, 109 A.D.3d 755 [1st Dept 2013]; see also Armstead v Morgan Guar. Trust Co. of NY, 13 A.D.3d 294 [1st Dept 2004]; Matter of JPMorgan Chase Bank, 133 A.D.3d at 1296).[3]Accordingly, the objections to Susan's receipt of statutory commissions are dismissed.
Among the disagreements Susan and Jeffrey had over how the Trust should be administered was one as to how the Trust assets should be invested. In 2011, Susan sought an opinion on whether it was prudent for the Trust to hold 70% of its investments in one stock, Pfizer, Inc. She hired the investment advisory firm of Donegan-Smith, which rendered a report for which she seeks to pay $6,000 from Trust assets to which Jeffrey and Jacqueline object.
In general, a co-trustee's reasonable expenses should be allowed and paid (SCPA 2309[l]; see Matter of Pavlyak, 139 A.D.3d 1338 [reasonable and necessary accounting expenses allowed]). Based on the reasoning of Matter of Janes (223 A.D.2d 20 [4th Dept 1996], aff'd 90 N.Y.2d 41 [1997]), Susan has established the reasonableness and appropriateness of the expense. The Janes court noted that, "in appropriate circumstances, liability for imprudence may be predicated solely on a fiduciary's investment of a large portion of the estate or trust fund in a single security, regardless of whether the concentration is coupled with other elements of hazard" (223 A.D.2d at 29). In response, Objectants have not demonstrated that it was unreasonable for...
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