PAVLYAK, MICHELE M., MTR. OF ( 2016 )


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  •         SUPREME COURT OF THE STATE OF NEW YORK
    Appellate Division, Fourth Judicial Department
    179
    CA 14-02157
    PRESENT: CARNI, J.P., LINDLEY, DEJOSEPH, NEMOYER, AND TROUTMAN, JJ.
    IN THE MATTER OF THE PETITION FOR JUDICIAL
    SETTLEMENT OF THE ACCOUNT OF MICHELE M. PAVLYAK,
    AS TRUSTEE OF THE PAVLYAK LIVING TRUST, UNDER      MEMORANDUM AND ORDER
    AGREEMENT DATED JUNE 19, 1998.
    ------------------------------------------------
    MICHELE M. PAVLYAK, PETITIONER-APPELLANT;
    GEORGE M. PAVLYAK, OBJECTANT-RESPONDENT.
    LONGSTREET & BERRY, LLP, FAYETTEVILLE (MICHAEL J. LONGSTREET OF
    COUNSEL), FOR PETITIONER-APPELLANT.
    GEORGE M. PAVLYAK, OBJECTANT-RESPONDENT PRO SE.
    Appeal from an order of the Surrogate’s Court, Onondaga County
    (Ava S. Raphael, S.), entered October 9, 2014. The order, inter alia,
    granted in part the written objections to the trust account filed with
    the court.
    It is hereby ORDERED that the order so appealed from is
    unanimously modified on the law by dismissing objection Nos. 5(O) and
    5(P) in part, thereby approving reimbursement to petitioner for travel
    expenses related to trust administration in the amount of $6,934.85,
    and by dismissing objection Nos. 5(K), 5(U), 5(X), 5(Y), 5(Z), 5(AA),
    5(BB), and 5(DD), and as modified the order is affirmed without costs.
    Memorandum: In a proceeding for the judicial settlement of the
    account of petitioner as trustee under an inter vivos trust,
    petitioner appeals from an order that, inter alia, granted certain
    objections following a hearing.
    Initially, we reject petitioner’s contention that objectant, in
    his capacity as a remainderman, lacked standing to challenge the
    administration of the trust from the date of the death of the first
    settlor. At that time, the trust became irrevocable under its express
    terms and objectant obtained a pecuniary interest in the trust under
    its express terms (see generally Matter of Malasky, 290 AD2d 631,
    632). Contrary to petitioner’s further contention, we conclude that
    Surrogate’s Court did not impose an improper initial burden of proof
    on petitioner. It is well settled that, “[i]n a proceeding to settle
    a fiduciary’s account, ‘the party submitting the account has the
    burden of proving that he or she has fully accounted for all the
    assets of the estate, and this evidentiary burden does not change in
    the event the account is contested. While the party submitting
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    CA 14-02157
    objections bears the burden of coming forward with evidence to
    establish that the account is inaccurate or incomplete, upon
    satisfaction of that showing the accounting party must prove, by a
    fair preponderance of the evidence, that his or her account is
    accurate and complete’ ” (Matter of Doman, 110 AD3d 1073, 1074, lv
    denied 23 NY3d 903; see Matter of Schnare, 191 AD2d 859, 860, lv
    denied 82 NY2d 653). Here, we conclude that the record establishes
    that the Surrogate properly applied those standards.
    We agree with petitioner, however, that the Surrogate erred in
    concluding that petitioner failed to account for expenses incurred in
    updating and preparing the trust’s residential real property for sale.
    The record unequivocally establishes that petitioner accounted for all
    such expenses, that petitioner incurred them in good faith, and that
    they subsequently resulted in a gain, not a loss, to all interested
    parties (see generally Matter of Klausner, 
    192 Misc 790
    , 793). We
    therefore modify the order by dismissing objection No. 5(K).
    Inasmuch as the terms of the trust provided for the reimbursement
    of reasonable travel expenses incurred by the trustee in administering
    the trust, we also agree with petitioner that the Surrogate abused her
    discretion in disallowing all of the listed travel expenses. Upon our
    review of the record, we conclude that the claimed travel expenses
    should have been equally apportioned by petitioner between those
    incurred with respect to trust obligations and those related to the
    personal care of petitioner’s mother, which is not a trust obligation,
    even though petitioner’s mother was one of the trust settlors. In our
    view, the amount of $6,934.85 reflects an appropriate allowance for
    reasonable and necessary travel expenses incurred for trust
    administration purposes, and we therefore modify the order accordingly
    with respect to objection Nos. 5(O) and 5(P).
    We likewise conclude that the Surrogate abused her discretion in
    disallowing fees paid for professional accounting services rendered on
    behalf of the trust. Surrogate’s Court Procedure Act § 2309 (1)
    provides that, upon the settlement of an account, the Surrogate must
    allow all reasonable and necessary expenses actually paid by a
    trustee. The Uniform Rules for Surrogate’s Court (22 NYCRR) § 207.40
    (g), provides that “[t]he cost of producing and delivering a full
    accounting to persons interested in the estate shall be deemed a
    proper disbursement and allowed as an expense of administration.”
    Under the circumstances presented, we conclude that professional
    accounting services incurred by the trust over the span of six years
    in the total sum of $15,059.67 were both reasonable and necessary in
    the administration of the trust, and we therefore further modify the
    order by dismissing objection No. 5(U).
    With respect to the denial of petitioner’s statutory commissions,
    SCPA 2309 (1) provides that, “[o]n the settlement of the account of
    any trustee the court . . . must allow to the [fiduciary] . . . a
    commission.” Here, the record establishes that petitioner did not
    engage in fraud, gross neglect of duty, intentional harm to the trust,
    sheer indifference to the rights of others, or disloyalty, and there
    is no evidence that petitioner’s services resulted in pecuniary loss
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    CA 14-02157
    to the trust. We thus conclude that it was an abuse of discretion for
    the Surrogate to disallow petitioner her statutory commissions for her
    service as trustee (see Matter of Lasdon, 105 AD3d 499, 500, lv denied
    22 NY3d 856), and we therefore further modify the order by dismissing
    objection Nos. 5(X), 5(Y), 5(Z), 5(AA), 5(BB), and 5(DD).
    Entered:   May 6, 2016                         Frances E. Cafarell
    Clerk of the Court
    

Document Info

Docket Number: CA 14-02157

Filed Date: 5/6/2016

Precedential Status: Precedential

Modified Date: 10/7/2016