{Read in 5 Minutes} To those parties interested in an Estate, information is golden. Whether they are beneficiaries or creditors, everyone wants to know the same thing. When are they going to get paid?
The job of an Executor or an Administrator is to collect all of the assets, and after paying all proper expenses, distribute the funds to the people who are entitled to them. However, if an Executor or Administrator is not particularly communicative with the interested parties, they may get frustrated and seek relief from the Surrogate’s Court to force the Executor to provide information.
This proceeding is called a compulsory accounting proceeding. The compulsory accounting proceeding is a petition by an interested party asking the Court to direct the Estate’s Executor or Administrator to provide the details of all of the assets that they have collected and all of the expenses that they have paid out. An accounting proceeding can either be a voluntary accounting or a compulsory accounting. A voluntary accounting is when the Executor or Administrator takes it upon themselves to seek the direction of the Court in approving all the transactions that they made as the Estate’s fiduciary. A compulsory accounting is when an interested party, such as the beneficiary or creditor described in this article, asks the Court to order the Executor or Administrator to account so that they can get access to information concerning the assets remaining in the Estate and the timeline for payment of their claims or inheritances.
Parties looking to compel an accounting should keep a few things in mind:
1. It’s always advisable to try to work it out directly with the Executor or the Administrator prior to bringing the proceeding to compel an accounting. Court proceedings are always costly and involve a fair amount of delay. If one can get information and results directly from the Estate’s fiduciary, that is always preferable.
2. If the Estate’s fiduciary has been silent and is not responding to phone calls, putting something in writing, whether it be a letter or an email, is always helpful and gives the Estate fiduciary a deadline (usually a minimum of two weeks) to respond as well as advising the fiduciary that you will seek the intervention of the Court if the fiduciary fails to respond.
3. A party seeking a compulsory accounting needs to decide as to whether or not they wish to retain an attorney to bring a proceeding, or if they feel comfortable doing it themselves. For those people who are inclined to do it themselves, the New York State court system provides fill-in-the-blank forms on their website. However, an attorney can help guide a person through the process of paying the court fees and arranging for service of process upon the Estate’s fiduciary.
Once the Court processes the papers, the Court will generally issue a Citation directing the Estate’s fiduciary to show cause at a certain time and date before the Court, as to why the Court should not order the Estate’s fiduciary to account. At the court date, the parties should be prepared to speak informally and see if they can settle with the Estate’s fiduciary, providing some immediate disclosure and timelines for payment requests and creditors’ claims — again, avoiding the cost and delay of a Court proceeding is always beneficial to everybody. If not, the judge will likely hear on whether or not the Court should order the Estate’s fiduciary to account.
While every Court is different, in my experience, Courts generally do order the Estate’s fiduciary to account, and they normally give them a timeline within which to do that. That may be as short as 30 days or as long as 120 days. But again, every judge is different. If the Estate’s fiduciary fails to meet this deadline, the next remedy is to ask the Court to hold them in contempt of court.
So in conclusion, the compulsory accounting proceeding can be a very effective tool for beneficiaries and creditors to get information from the Estate fiduciaries, but given the cost and delay involved in a court proceeding, it’s always best to avoid it if at all possible. However, for those that have no other recourse, I hope that the information in this article is helpful.
For more information on this topic, please contact me.