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In re Summerlyn

January 11, 2000

IN THE MATTER OF THE ESTATE OF DORIS SUMMERLYN, DECEASED.


The opinion of the court was delivered by: Eichen, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted December 15, 1999

On appeal from the Superior Court of New Jersey, Chancery Division, Essex County.

This is an appeal from that part of an order entered in the Chancery Division fixing the executor's commissions on corpus in the administration of the estate of Doris Summerlyn, and a subsequent order denying reconsideration. The executor contends that the judge erred in requiring him to personally pay the fees of the certified public accounting firm (CPA) and attorneys he retained to assist him in preparing the account and various tax returns for the estate, or suffer a reduction of the amount of his corpus commissions by the amount of the fees.

The allowance of corpus commissions is a discretionary determination which will not be disturbed unless there has been an abuse of discretion. In re Estate of Moore, 50 N.J. 131, 149 (1967). If, however, in making the allowance the court did not utilize "the proper legal approach," which requires giving "due appreciation and consideration of all the legally significant factors," then "it is not a question of abuse of discretion but rather one of more fundamental error." Ibid.

We have carefully reviewed the record in this case and, applying these principles, conclude that the judge utilized an improper "legal approach" in approving corpus commissions.

These are the undisputed facts. The testator died July 5, 1997 leaving an estate valued at $477,875.40, which consisted primarily of securities left to fourteen charitable organizations, and personal property bequeathed to her niece. The will appointed David Jameson, who was the testator's friend, as executor of the estate. It expressly authorized him as executor to retain any professionals he deemed necessary or helpful to assist him in administering the estate, and directed that the expenses of employing such professionals not "be deducted from any commissions or other compensation payable to my fiduciary."

At the unopposed hearing on the executor's "Complaint for the Settlement of Account," *fn1 the executor sought allowance of $9,800 to the CPA for preparing the account and the estate's federal and state tax returns; $4,262 to counsel for the estate for preparing the inheritance tax returns; an additional $500 as a counsel fee to another attorney for certain undefined services rendered to the estate; $19,725.64 corpus commissions; and $468.39 income commissions.

The Chancery Division judge impliedly found that the professional fees were not excessive and approved them, as well as the full amount of commissions on corpus sought by the executor; however, the judge ordered that the various professional fees "shall be paid by the Executor personally or as a reduction of the Executor's [corpus] commissions."

In making this ruling, the judge explained his reasons, in part, as follows:

[a] fiduciary [who] wants to get complete corpus commissions, ... must be considered, at least by this Court, as having the ability to completely fulfill [his] fiduciary functions, and amongst those functions would be the preparation of [the] ... Tax Returns and accountings, if necessary.

On appeal, the executor argues that the judge erred in failing to follow the direction of the will that professional fees not be deducted from the executor's commissions. He also argues that even if there was no such testamentary direction, in view of his lack of training and experience in such matters, he was entitled to retain professionals to assist him in preparing the account and tax returns without incurring personal responsibility for their fees. He argues that a lay person is not expected to have the professional skills needed to perform such services and, therefore, the judge erred in ordering him to pay the fees personally or suffer a reduction of his corpus commissions.

We agree that the will authorized the executor to retain professionals to assist him in preparing the account and tax returns in administering the estate, and that the expenses for such services should be a charge against the estate and not a personal charge. See, e.g., In re Risica's Estate, 179 N.J. Super. 452, 455 (App. Div. 1981). However, we disagree that the judge could not reduce the amount of the executor's corpus commissions, notwithstanding the provision in the will directing against such reduction.

The amount of corpus commissions allowable to a fiduciary is a matter controlled by statute, subject to the court's discretionary review. Although a testator may direct that commissions not be reduced by the amount of professional fees sought in an account, that direction does ...


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