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Contested Accounting in New York
A contested accounting is a judicial accounting to which a beneficiary has filed objections. An executor or administrator is not required to account on their own initiative; most New York estates are distributed against receipts and releases. An accounting becomes necessary when a beneficiary demands one, when the fiduciary wants a court decree discharging them, or when the court requires it because someone with an interest cannot sign a release. If you are the executor and the beneficiaries are edging toward objections, or you are the beneficiary who is not satisfied with the numbers, this page explains what a contested accounting costs both sides and how to keep it from becoming one. Our estate accounting practice covers each stage, and our page on defending a contested accounting covers the proceeding itself.
What a contested accounting costs
The first cost falls on the fiduciary. Preparing a judicial account means reconstructing every receipt and disbursement from the date of death forward, on the court’s schedules, and then answering objections and sitting for an examination under oath. That is months of work drawn from the executor’s own professional and personal time, and the executor is not paid extra for it; commissions are the same whether or not an accounting is contested.
The second cost is money. Attorneys, accountants and appraisers are ordinarily involved, and their fees can add up to tens of thousands of dollars. Those fees usually come out of the estate, which means the beneficiaries pay too. Beneficiaries then complain that the executor is spending too much on lawyers and accountants, even though the objections are what created the expense, and the argument over fees becomes one more thing to fight about. Whatever is spent on the proceeding is money the family does not share.
The third cost is exposure. Once the account is filed, the objectant’s attorney combs it for inconsistencies, because every unexplained entry is leverage for a settlement. The prospect of a long proceeding can squeeze an executor into giving up part of a share the executor is rightfully entitled to, simply to end it. A beneficiary with a real grievance has the same incentive in reverse: the longer the case runs, the more of the estate goes to professionals.
The informal accounting as an off-ramp
Because a beneficiary has asked, some form of account is going to be delivered. The question is whether it is delivered informally to the beneficiaries or filed in Surrogate’s Court. An informal accounting is a good way for the executor and the beneficiaries to find common ground and close the estate without the expense and time of a formal proceeding. The differences matter:
| Point | Informal accounting | Contested judicial accounting |
|---|---|---|
| Format | No court-mandated schedules; a summary of income and expenses with supporting records is enough | Every item of receipt and disbursement on the statutory schedules, filed with the court |
| Cost | Lower attorney and accountant fees | Attorneys, accountants and sometimes appraisers for both sides, usually paid from the estate |
| Atmosphere | Less contentious; easier to work things out | Objections, an examination under oath, discovery and possibly a trial |
| Result | Receipts and releases signed by each beneficiary; more money left for distribution | A decree that binds everyone cited, after the fees have been paid |
A beneficiary who will not sign a release can still be cited in a judicial accounting, so the informal route only works if the numbers persuade. That is a reason for the executor to make the informal account complete and candid, and a reason for the beneficiary to read it carefully before deciding whether objections are worth the cost.
Include every expense
An accounting is like a business tax return: leaving out expenses costs you. Every dollar the executor spent for the estate and cannot document looks, to an objectant, like a dollar that belongs to the beneficiaries. Go through the estate accounts, the decedent’s personal bank accounts and, with your attorney’s guidance, your own accounts if you paid estate bills from them. Small expenses add up to large sums, and no expense should be left unaccounted for.
Stay involved
It is tempting to let the attorney and the accountant handle the whole thing; they are being paid to do it, and an executor has to delegate. But when the account is filed it is the executor, not the professionals, who is in the crosshairs. Check their work. The executor is the one person who knows what actually happened with the money and is best placed to catch an entry that will not survive scrutiny.
Do not procrastinate
Start compiling the account as soon as a citation for a compulsory accounting is served, if not before. It takes months to put together an accounting, but once the court orders one it typically allows only thirty to sixty days to file. Courts give so little time because the executor could have started before the order was signed. The sooner you start, the more time you have to find and fix problems before the beneficiaries’ attorney does, and even if the beneficiaries ultimately settle on an informal account, the same work has to be done.
Talk to us
We prepare and defend estate accountings, and we file and prosecute objections to them, in the Surrogate’s Courts of New York, Kings, Queens, Bronx, Richmond, Nassau, Suffolk and Westchester counties. Uncontested accountings are handled for a flat fee; contested matters are billed at $600 per hour. Call the Law Offices of Albert Goodwin at 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].
