Small Estates After Bennett Commission’s Streamlining

By Hon. C. Raymond Radigan and Adam J. Gottlieb, Esq.

In 1961, the Legislature created the Temporary State Commission on the
Modernization, Revision and Simplification of the Laws of Estates commonly known as the Bennett Commission. As one of the ways to expedite estates and simplify procedures, the Commission recommended and the Legislature enacted Article 13 of the Surrogate Court Procedure Act commonly known as Small Estates or Voluntary Administration.

There was some criticism that probate proceedings in New York were too formal causing undue delay and expense. After much research, the Bennett Commission was convinced that formal probate should be continued, but that the substantive and procedural law dealing with estates should be revised so as to be attuned to modern practice and provide for simplification. The Commission streamlined the practice by limiting parties necessary in probate proceedings; created a new fiduciary called a Preliminary Executor; devised an easier method of proving Wills by SCPA 1406 Affidavits; recommended virtual representation, which ultimately was enacted; cutting down drastically the needs for the appointments of Guardians ad Litem; streamlined accounting proceedings, discovery proceedings and other devices to provide for the
expeditious administration of estates. To expedite the administration of small estates and make them cost efficient, the Commission recommended the enactment of Article 13 of SCPA. It was anticipated that most small estates would be administered by laypersons having a beneficial interest in such an estate and that attorneys would not be involved. Once enacted, many of the larger Surrogate’s Courts established small estate departments or sub-departments staffed by clerks trained to aid those in need of
the statute.

Article 13 is basically broken down into two parts. The first part, which is covered under Sections 1301 through 1309 deal with the expeditious creation of a procedure, brought within the Court to administer small estates. The second part of the Article covered under SCPA 1310 and 1311 deal with the expeditious payment of decedent’s entitlements to various family members without Court intervention.

The main purpose of the Article is to simplify the administration of estates which are comprised of minimal assets that were to pass to designated beneficiaries without formal Court supervision whether the decedent died testate or intestate, thereby obviating the necessity of bringing on proceedings for the appointment of a formal fiduciary as an Administrator or Executor of an estate, which would waste the assets of a small estate.

Presently, a small estate as defined under SCPA 1301 is an estate of a
domiciliary or a non-domiciliary leaving personal property of Twenty Thousand
($20,000.00) Dollars or less, exclusive of any exempt property provided for under EPTL 5-3.1. Accordingly, if a decedent’s solely owned personal property consists of Seventy-Six ($76,000.00) Dollars or less and was survived by a Spouse and/or children and, even if substantial assets passed by operation of law to designees, formal probate or administration proceedings can be avoided. If there were assets that had to be conveyed from a decedent to legatees or distributees in small estates, a fiduciary called a “voluntary administrator” could apply to be so appointed on an abbreviated basis at minimal cost in order to have those assets administered and distributed expeditiously. Spouses, children, grandchildren, parents, brothers, sisters, nieces, nephews, aunts and uncles, in that order, and if there be none, a public administrator or a fiscal officer could be appointed as a Voluntary Administrator to pass personal property but not real property. However, a voluntary administrator cannot commence wrongful death proceedings.

The Voluntary Administrator could collect assets, pay debts and provide for
distribution expeditiously, and are given powers and duties in order to accomplish their charge.

In order to fulfill its purpose, the Legislature enacted SCPA 1304, setting forth
summary procedures to accomplish its goal in the handling of small estates. No waiting period after death is required to utilize the provisions of Article 13. No bond is required. A simple affidavit to qualify as Voluntary Administrator is to be submitted to the Court. Official forms are provided and the methodology for recording is simplified with filing fees kept at a bare minimum. Certificates are issued to aid the Voluntary Administrator in the collection of assets.

A recent decision In re Abrams,1 issued by Surrogate Pagones of Dutchess
County, dated August 28, 2007, demonstrates the effective use of Article 13 in bringing about the completion of an estate matter at minimal expense and procedure.

A decedent’s son was appointed Voluntary Administrator and his sibling brought a proceeding pursuant to SCPA 2205 for him to account. The Voluntary Administrator then filed a voluntary account, to which his two brothers filed objections. The objectants contended that all assets accounted for were not properly identified and certain non-testamentary assets were to be treated as estate assets.

The Court found that the only asset listed in the account was insurance
proceeds, which the Voluntary Administrator conceded he used for the partial payment of funeral expenses. The objectants alleged that a bank account in the joint names of the decedent and the Voluntary Administrator, with rights of survivorship, should have been accounted for, contending that the joint account was for convenience only and therefore should be distributed pursuant to EPTL 4-1.1. An issue was raised concerning the use of estate assets to pay legal fees.

In its decision, the Court reiterated and emphasized that the Legislature enacted Article 13 to expedite the administration of small estates. The Court noted that generally, under Article 22 of SCPA dealing with formal accounting proceedings, when formal accounts are contested, the Court usually calls for a pre-trial conference to narrow the issues for trial or possibly arrange for a settlement. In such proceedings, the Court could entertain a motion to dismiss objections under CPLR 3211, or schedule a hearing if the matter is not resolved. However, the Court noted that Article 13 does not provide for a formal accounting by a Voluntary Administrator, but simply requires the
fiduciary to file with the Clerk a statement of all assets collected and set forth payments and distributions made. Since differences among the parties appeared within the Article 13 proceedings, the Court found the parties could elect to have their differences resolved via a formal accounting. Thus, the Court found that since Article 13 does not specifically provide for such practice and procedure concerning a voluntary account filed by a Voluntary Administrator for a small estate, then pursuant to SCPA 102, the CPLR should apply. Since all proceedings in the Surrogate’s Court are special proceedings and since there are no specific procedures concerning formal accountings in Article 13 pursuant to SCPA 2203, CPLR 409 would control. That provision provides that a Court shall make a summary determination upon the pleadings, papers and admissions to the extent that no triable issues of fact are raised and that the Court may make any Orders permitted on a Motion for Summary Judgment. Therefore, if objectants fail to raise triable issues of fact by an evidentiary showing and only assert conclusory or speculative statements, a Judgment without a hearing is warranted. With that statutory provision in mind, the Court proceeded to review the Petition, Objections and the Account that was before it and found that the controversy was ripe for a summary determination.

The proof before the Court was that the decedent opened an account at a bank prior to death. The account was identified as “joint with survivorship rights”. The signatures of the decedent and the son as joint tenant appeared at the end of the form. Therefore pursuant to §675 of the Banking Law, there was a presumption that the son, as survivor, was entitled to the proceeds. The Objectant merely expressed a belief the account was for convenience without offering any proof to rebut the statutory presumption and the Court therefore dismissed the objections dealing with the joint bank account.

As to the funeral expenses, which exceeded $13,000, the Court found that the Voluntary Administrator properly used the insurance proceeds to pay a portion of the bill and paid the balance from his personal funds. In addition, the legal expenses set forth in the Accounting were paid by the fiduciary’s own son. The Court therefore found that the reporting of those expenses in the Accounting and the appropriateness of doing so were academic since they were assets that did not have to be accounted for in that they were the fiduciary’s own funds. Therefore the Court dismissed Objections relating to the payment of those expenses.

Since the Court determined that the joint bank account assets belonged to the fiduciary individually, he had the right to disburse those funds in his discretion. Accordingly the Court proceeded to dismiss those objections.

In conclusion, the Court found that within small estate proceedings, pursuant to Article 13 of SCPA, when a controversy is ripe for Summary Judgment, the Court may expeditiously make a determination without a hearing based on the evidence before the Court.

Practical Use of SCPA Article 13

In practice, SCPA Article 13 is used often in small estates to reimburse a family member who pays the funeral expenses of the decedent from his or her own funds. Specifically, when the assets of the decedent are less than the debts of the decedent, the family member can be paid before the debts are paid. See SCPA §1811. This preference of payments in an insolvent estate permits the diversion of some or all the estate assets to the family member in reimbursement of the funeral expenses, notwithstanding the existence of debts that were incurred by the decedent during his lifetime.

Conclusion

Without SCPA Article 13, a much more cumbersome procedure would be
required to administer the assets of a decedent. Article 13 is an effective tool that can assist the family of a decedent in expediting the estate matters when the value of the
estate is small.

_____________
C. Raymond Radigan is a former Surrogate of Nassau County and
Of Counsel to the Firm of Ruskin Moscou Faltischek, P.C.
He is also Chairman of the Advisory Committee to the Legislature on Estates
Powers and Trusts Law and the Surrogate’s Court Procedure Act.
Adam J. Gottlieb is Of Counsel to Ruskin Moscou Faltischek, P.C., in the Trusts & Estates Department.

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