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Judicial Accounting in New York. What is Involved. How You Can Avoid It.
A judicial accounting is an accounting filed in Surrogate’s Court and settled by decree. The fiduciary files the account with a petition, everyone with an interest in the estate is cited, objections may be filed by the return date, disputed items are examined, negotiated or tried, and the court issues a decree that settles the account, directs the distribution and discharges the fiduciary. The decree binds everyone who was cited. That finality is its point, and also its cost: the proceeding takes longer and costs more than an informal accounting closed by receipts and releases. This page walks through the proceeding step by step, from the choice to file through the decree. It is part of our section on trust and estate accountings.
When a Fiduciary Chooses It, and When There Is No Choice
No executor, administrator or trustee has to account unless asked, and most estates close on releases without any court filing. The judicial route is used in three situations.
The fiduciary wants a discharge
After a contentious administration, or where a beneficiary has signalled that they will not sign a release, the fiduciary petitions for judicial settlement so that the account is approved by the court and every claim is cut off by the decree. See what happens if a beneficiary refuses to sign a release.
A beneficiary compels it
Seven months after letters, a beneficiary who has asked for an accounting and not received one petitions under SCPA 2205. The court orders the fiduciary to file an account within a set time, and the compulsory proceeding turns into an accounting proceeding once the account is filed. A fiduciary who ignores the order faces contempt and removal under SCPA 711 and 719. See compelling an accounting.
The court requires it
Where an interested party cannot sign a release, because they are a minor, under a disability, unknown or missing, or a charity, or where the Public Administrator serves, the account has to be settled judicially. There is no one who can release the fiduciary on that party’s behalf.
A fiduciary who can close on releases usually should. The account is prepared the same way in either case, in the schedule format described on our page on how to prepare a New York estate accounting, so an informal account that is not accepted can be filed without being redone. What cannot be avoided is the accounting itself: once a beneficiary has asked or the court has ordered it, the only question is whether it closes by releases or by decree.
Step 1: The Account and the Petition Under SCPA 2206
The fiduciary files a verified account in the SCPA 2208 schedules, covering the period from letters (or the last settled account) to a recent closing date, with a petition for judicial settlement under SCPA 2206. The petition asks the court to approve the account, fix the fiduciary’s commissions and the attorney’s fees, approve the proposed distribution, and discharge the fiduciary. It can also ask for related relief: approval of a sale, determination of a disputed claim, apportionment of estate tax, and, where the heirs are uncertain, a kinship determination. The petition is accompanied by an affidavit of the accounting party, a proposed citation, waivers and consents from any parties who have signed them, and a filing fee scaled to the size of the estate. If the account is being filed under a compulsory order, the court has set a deadline; a fiduciary who cannot meet it should ask for more time before it expires rather than after.
Step 2: Citation, and Who Must Be Cited
The court issues a citation to every person whose interest may be affected by the decree and who has not signed a waiver and consent. The fiduciary’s Schedule H is the list.
| Who is cited | When |
|---|---|
| Beneficiaries and distributees | Everyone who takes under the will, or every distributee in an administration, who has not been paid in full and released |
| Unpaid or rejected creditors | Anyone whose claim the account shows as unpaid or rejected |
| Other fiduciaries | A co-fiduciary, a successor fiduciary, and the fiduciary of a beneficiary who died during the administration |
| The Attorney General | Whenever a charity is a beneficiary or any disposition is charitable |
| The Public Administrator | Where there may be unknown distributees |
| A person under a disability | Served personally; the court appoints a guardian ad litem to review the account for them |
The guardian ad litem is a lawyer appointed by the court to review the account on behalf of a minor, an incapacitated person, or an unknown or missing heir, and to file objections if the account warrants them. Their fee is paid from the estate and fixed in the decree. The Attorney General reviews the account on behalf of charitable beneficiaries and files objections on the same footing as anyone else. Both take their role seriously; an account with charitable or minor beneficiaries should be prepared on the assumption that a stranger will read every line.
A party who was not cited is not bound by the decree, so a fiduciary who leaves someone off Schedule H has bought an incomplete discharge.
Step 3: The Return Date
The citation names a return date. It is not a trial date. On the return date the parties or their lawyers appear before the court attorney, who confirms that everyone has been served, notes who has appeared, and sets a schedule. A party who does not appear and does not file objections by the return date is in default and will be bound by the decree. The court attorney will usually grant a short adjournment to a party who appears and asks for time to file objections or to examine the fiduciary first, but the return date is the deadline that matters.
Step 4: Examination of the Fiduciary Under SCPA 2211
Before filing objections, any party cited may examine the fiduciary under oath about the account and demand production of the records behind it: bank and brokerage statements, closing statements, invoices, tax returns, correspondence with brokers and appraisers. The examination is conducted like a deposition, before a reporter, and is usually the first time the beneficiary sees the full record. Objections are then drafted from what the examination showed rather than from suspicion. A fiduciary who has kept clean records finds the examination tedious but harmless; one who has not finds it the turning point of the case.
Step 5: Objections Under SCPA 2209
Objections are filed by the return date, or by the date the court sets after the examination. They must be specific: which schedule and which entry, on what ground, and what relief is sought. A general statement that the account is wrong is not an objection. Typical objections are that an asset was omitted or undervalued, that a sale was below market or to an insider, that an expense was personal or unsupported, that a claim was paid without proof, that commissions were computed on the wrong base, that an investment was imprudent under the Prudent Investor Act, that a distribution was unequal or premature, or that the fiduciary’s delay cost the estate money. Each objection asks the court to surcharge the fiduciary with the resulting loss, disallow the item, or recompute the figure. Our page on objecting to an accounting covers the drafting. The fiduciary files a reply, and the objections define the issues for the rest of the proceeding.
Step 6: Discovery
Once objections are filed the proceeding runs like civil litigation. The parties exchange documents, serve interrogatories, and depose the fiduciary, the accountant, the broker who sold the house, the appraiser, and anyone else with knowledge. Long administrations produce voluminous records and the analysis takes time. Where investment prudence is at issue, each side usually retains an expert to say what a prudent portfolio would have been and what it would have earned. Where the fiduciary is also a beneficiary, the Dead Man’s Statute (CPLR 4519) limits their testimony about conversations and transactions with the decedent, which affects how disputed lifetime transfers can be proved. Where assets are alleged to have been taken before letters issued, a discovery proceeding under SCPA 2103 may run alongside the accounting.
Step 7: Settlement
Most objections settle once the records are on the table. The court attorney holds conferences, often more than one, at which the parties narrow the issues: an objection to commissions is resolved by a recomputation, an objection to an expense by the fiduciary absorbing it, an objection to a sale by a modest surcharge or a withdrawal once the appraisal is produced. A settlement is put on the record or reduced to a stipulation, the account is amended to reflect it, and the court signs a decree on consent. Both sides have reason to settle what the records make clear.
Step 8: The Hearing
Objections that do not settle are tried before the Surrogate, without a jury. The objectant has the burden of showing that the account is wrong; once they do, the fiduciary has the burden of justifying the entry. The Surrogate rules on each objection, fixes any surcharge, decides whether commissions are reduced or denied for misconduct, fixes the attorney’s fees under SCPA 2110, and directs how the account is to be amended. See defending a contested accounting and surcharge.
Step 9: The Decree and the Discharge
The decree judicially settles the account as filed or as amended, fixes commissions and fees, directs the distribution of what remains, and discharges the fiduciary as to everything covered by the account. The fiduciary makes the distribution, files receipts, and is released from the bond if one was posted. The decree binds every person who was cited or who appeared, including those who defaulted, and cannot be reopened except for fraud, newly discovered evidence or a jurisdictional defect. For a fiduciary that is the value of the proceeding: after the decree, no beneficiary can come back years later with a new complaint about the accounting period. For a beneficiary it is the reason to object in time: a decree entered without objections is as final as one entered after a trial.
Timeline and Cost
An uncontested judicial accounting, where everyone is cited and no one objects, usually runs several months from filing to decree: the time to serve the citation, the return date, the guardian ad litem’s or Attorney General’s review, and the court’s processing of the decree. A contested accounting runs a year or more, and a heavily contested one longer, depending on the volume of records, the number of objections and the court’s calendar.
The estate pays the filing fee, the guardian ad litem, and the fiduciary’s attorney for preparing the account and defending it in good faith. The objectant pays their own lawyer, unless the court charges fees to a fiduciary who acted in bad faith. We prepare uncontested judicial accountings for a flat fee; contested proceedings are billed at $600 per hour, and we take strong objectant cases in large estates on contingency. Legal fees paid from the estate appear on Schedule C and are themselves subject to the court’s review, which is a reason for both sides to keep the fight proportionate to what is at stake.
Pitfalls
On the fiduciary’s side, the first mistake is waiting for the order before starting the account: a compulsory order gives weeks, not months, and the account should be in progress as soon as a beneficiary asks. The second is leaving an interested party off Schedule H, usually an unpaid creditor, the Attorney General, or the estate of a beneficiary who died during administration; the decree is only as complete as the citation. The third is fighting everything, because legal fees come out of the estate and are reviewed in the same decree, and a fiduciary who litigates a small, obvious error at large expense may find the fees disallowed.
On the beneficiary’s side, the mistakes are missing the return date, since a beneficiary who does not appear or object in time is bound by the decree, and filing objections so vague that they do not identify the entry and the ground, which are stricken or ignored.
We prepare and file judicial accountings for executors, administrators and trustees, and we represent beneficiaries, guardians ad litem and others who have been cited in them, in the Surrogate’s Courts of New York, Kings, Queens, Bronx, Richmond, Nassau, Suffolk and Westchester counties. Call 212-233-1233 or email [email protected].
About the Author
Albert Goodwin Esq. is a licensed New York attorney with over 18 years of courtroom experience. His extensive knowledge and experience make him well-qualified to write authoritative articles on a wide range of legal topics. He can be reached at 212-233-1233 or [email protected].
