Will of Parkinson, Matter of

• Decision Date: 11 March 1988
• Parties: In the Matter of the Judicial Settlement of the Account of Proceedings of John Parkinson III and Citibank, N.A., as Executors of the Last WILL and Testament Of Winifred Loew PARKINSON, Deceased. Surrogate's Court, Nassau County
• Court: New York Surrogate Court

Page 379

526 N.Y.S.2d 379

138 Misc.2d 1069

In the Matter of the Judicial Settlement of the Account of

Proceedings of John Parkinson III and Citibank,

N.A., as Executors of the Last WILL and

Testament Of Winifred Loew

PARKINSON, Deceased.

Surrogate's Court, Nassau County.

March 11, 1988.

Sprague, Dwyer, Aspland & Tobin, P.C., Mineola, of counsel, for executors.

Humes, Andrews, Botzow & Wagner, New York City, for petitioners.

Edward S. Schlesinger, P.C., New York City, for Clive Runnells, III.

Goodman, Phillips & Vineberg, New York City, for respondent.

Dean Patrick J. Rohan, St. John's University School of Law, Jamaica, guardian ad litem.

Lester Forest, Jr., Lynbrook, asst. to guardian ad litem.

C. RAYMOND RADIGAN, Surrogate.

Is the property of an inter vivos trust which reverts to the settlor's estate on her death subject to executor's commissions? This is the prime issue raised on a motion made by Citibank and John Parkinson, III for partial summary judgment dismissing objections 1 and 2 interposed to the settlement of their final account. The alternative question presented is whether commissions may be disallowed where the services rendered in administering certain assets is minimal in comparison to the compensation?

The objectants, a daughter and two grandchildren, request that the papers filed by them in opposition to petitioner's application be treated as a cross-motion for summary judgment sustaining objection 2 as a matter of law, and denying dismissal of objection 1 because of the existence of triable factual issues.

In 1948, the decedent created a revocable trust for her own benefit pursuant to an agreement which provided:

"Upon the death of the donor, this trust, shall terminate and the property then held in the trust estate, if any, less so much thereof as may be required to pay the necessary expenses of winding up the trust estate shall thereupon revert to the estate of the donor".

Objection No. 1 relates to the entitlement of Citibank and John Parkinson, III as executors to statutory commissions on assets having a value of $4,611,527.13 that passed to the estate from the inter vivos trust. Although one of the executors, Mr. Parkinson, was also a co-trustee of the trust, no question is presented as to the payment of double commissions. Mr. Parkinson was not entitled to any commission on paying over the trusts assets. Under the trust agreement, as amended, John Parkinson, III, in lieu of any commission to which he might otherwise be entitled, received a sum equal to 2% of the gross income (excluding capital gains) while his co-trustee, Philip James Roosevelt, who is not an executor, was allotted $6,000 a year.

Objection No. 1 asserts the executors are not entitled to commissions on the assets received from the trust because:

(1) no trust assets, except for distributions required to pay taxes and administration expenses, were received by the executors until March 23, 1983 or almost one year after decedent's death;

(2) the executors only had responsibility for the two million plus in assets used to fund the three residuary trusts established under decedent's will for the period from March 23, 1983 to November 3, 1983 or 223 days; and

(3) the will and trust agreement, if properly drafted, would have added the probate estate to the revocable trust which should have contained the continuing trusts for decedent's family members.

In essence, respondent's real complaint is that poor estate planning swelled the probate estate by over $4,500,000 and subjected that principal to the payment of executorial commissions.

The court has no power either to reshape decedent's plans or to remake the instruments she executed. The provision of the trust that its assets shall revert, upon the creator's death, to her estate is too plain and direct to be made the subject of construction. The clear and obvious intent of the donor of the trust cannot be ignored and must be given effect. ( Bank of New York & Trust Company v. Hamersley, 210 App.Div. 57, 58, 205 N.Y.S. 544, aff'd. 240 N.Y. 558, 148 N.E. 704).

On the settlement of his accounts a fiduciary is allowed for his services as a fiduciary commissions for the receipt and disbursement of money coming into his hands (SCPA 2307[1], [2] ). Sums received and paid out, by statute, are made the basis of computation ( Phoenix v. Livingston, 101 N.Y. 451, 5 N.E. 70; Matter of Hurst, 111 App.Div. 460, 97 N.Y.S. 697).

No commissions are payable if the property does not come into the fiduciary's hands at least in legal effect or in contemplation of law ( Matter of Runk, 181 App.Div. 461, 168 N.Y.S. 970, aff'd w/o opn. 224 N.Y. 570, 120 N.E. 875; 4B Warren Heaton On Surrogate's Courts, 6th ed. sec. 419 par. 2[a] ) except as may otherwise be provided by statute (see SCPA 2307[2] ). The payment of commissions is not a gratuity but compensation for services rendered in collecting and administering the assets of the estate and in distributing its net proceeds ( Matter of Ellmers' Estate, 180 Misc. 835, 837, 43 N.Y.S.2d 91).

Despite respondent's denigration of their services, the executors here unquestionably actively undertook and processed the administration of the estate. The executors in consideration of the distribution to them of the cash and securities constituting the trust principal agreed, subject to the approval of the trustees, to wind up the trust and to pay the expenses thereof. Under the leadership of Citibank and with the cooperation of Mr. Roosevelt, the co-trustee of the inter vivos trust, the executors controlled and directed the distribution of assets from the trust to the estate, and developed an overall tax plan for the trust, estate and the three residuary trusts created under the decedent's will. Under the plan, the winding up of the trust was deferred to allow it to sell off securities so that the gains realized would be taxed at the more advantageous graduated rates available to a trust. A deferral of income tax liability was thereby also made possible. It is important to note that on Mrs. Parkinson's death the trust by its terms terminated, and the property held in trust by express direction of Mrs. Parkinson reverted to her estate. This fact differentiates this case from those on which respondents place reliance (see Matter of Warner, N.Y.L.J., June 22, 1977, p. 16 cols. 3-5; Matter of Heilprin, N.Y.L.J., February 6, 1976, p. 12 col. 1; Matter of Perry, N.Y.L.J., August 5, 1975, p. 14 cols. 1-4) in which the court found the trust funds were never intended by the testatrix as donor to become part of her...