Can a beneficiary recover the cost of attorney’s fees from estate litigation?

Generally, the fiduciary is entitled to recover the cost of attorney’s fees as a reasonable and necessary administration expense.  However, SCPA 2110 also authorizes the court to award attorney’s fees for legal services rendered to a beneficiary.  The court may direct payment directly from the estate or from another beneficiary’s share in the estate (SCPA 2110 [2]).

            In Matter of Rose BB., 35 AD3d 1044, 1045 (3d Dept 2006), for example, the court reiterated the well-recognized rule that “Surrogate’s Court may award counsel fees in situations where the misconduct of a fiduciary brings about the expense.”   There, the court affirmed the fee award, pointing to the other party’s “numerous instances of obstructing and prolonging an otherwise uncomplicated proceeding and his violation of his fiduciary duties.”  The record evidence also supported Surrogate’s Court’s finding that “with the exception of the ordinary administration of decedent’s estate, the proceedings … were necessitated by and attributable to … improper conduct.”

            Similarly, in Matter of Graves, 197 Misc 638, 639-640 (Sur Ct, Monroe County 1950), the court awarded fees out of the estate where, “without the performance of the services, the estate would have been charged additional commissions in the sum of $11,245.31.”  The court held that “where legal services have been rendered for the benefit of the estate which result in enlargement of the distributive shares of the estate beneficiaries, reasonable compensation should be granted out of the estate for such services” (id.).  “In such case the personal interests of the executors cause them and their counsel, in effect, to step aside and permit those whose interests are not inimical to the estate in general to protect the rights of the estate” (id.; see also Matter of Berg, 91 Misc 2d 939 [Sur Ct, New York County 1977] [awarding fees even though the court sustained only 3 of the objections and denied approximately $89,000 of the $100,000 surcharge requested]; Matter of Geller, 167 Misc 578, 578 [Sur Ct, Kings County 1938] [holding that the court may allow fees of an attorney for an interested party to be charged against the estate if the services were necessitated by the neglect of the fiduciary of his duties]).

            “The theory which justifies payment by the estate to the attorney of a beneficiary is that the attorney has represented the fiduciary who has defaulted in protecting or collecting the assets of the estate and, therefore, what would have been a proper charge for legal fees if the executor had acted, is a proper charge when the executor fails to act because of an adverse interest, disinclination or neglect” (Matter of Bellinger, 55 AD2d 448, 449-454 [4th Dept 1977]; see e.g. Matter of Berg, 91 Misc 2d at 939 [awarding fees even though the court sustained only 3 objections and denied approximately $89,000 of the $100,000 surcharge requested]; see also e.g. Matter of Del Monte, 37 AD2d 827, 827 [1st Dept 1971] [benefit to the estate for saving the estate disallowed commissions])


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