DECISION/ORDER The decedent’s will divided his $1,500,000 estate between his daughters Wendy Sutherland (“Sutherland”) and Joan Schwer. The decedent specifically devised his manufacturing business and the real property where it was located to Sutherland. He specifically devised his two condominiums in Del Ray Beach, Florida, to Joan Schwer, together with “any cash, cash equivalents, publicly traded securities, bonds and notes.” The residuary estate is divided equally between Sutherland and her sister Joan. Joan predeceased her father by a few weeks and her children, Sage and Garrison Schwer, succeeded to her interest as beneficiary. Sage and Garrison Schwer’s interests were to be held in trust with distributions at their 25th and 30th birthdays. Letters testamentary and letters of trusteeship for the benefit of then-infants Sage Schwer and Garrison Schwer were issued to Sutherland on December 16, 2011. On June 27, 2022, Garrison Schwer (then 25 years old) filed a petition for compulsory accounting and related relief brought against Sutherland, reporting that the estate had not been fully distributed, real property owned by the decedent remained titled in the estate, and, upon information and belief, Sutherland had failed to marshall all the assets of the estate. At the return date on Garrison’s petition, his attorney agreed to accept “an informal accounting, together with copies of bills or other invoices paid” no later than October 3, 2022, which was formalized by this Court’s Order dated August 17, 2022. When counsel for the petitioner reported that the “informal accounting” offered by Sutherland lacked critical detailed financial information on the state of the estate and trusts, this Court issued its Order dated October 12, 2022 requiring that Sutherland file formal petitions for intermediate judicial settlement of the estate and trusts not later than November 14, 2022. Sutherland filed nothing and the Court determined that under SCPA 2205(1), it was in the best interests of the estate to suspend Sutherland’s letters testamentary and letters of trusteeship. The October 12, 2022 order was only the first of a series of orders, conferences and hearings undertaken in hopes of extracting something approaching a comprehensive and accurate accounting from Sutherland. In her appearance at a hearing on February 22, 2023, Sutherland again offered little in the way of testimony: for example, she did not remember with certainty what banks held deposits for the estate and trusts, what happened to those bank accounts, or what the final balance in the accounts might have been. A number of documents were entered into evidence at the conclusion of the hearing, including an unsigned and unfiled final accounting for the period beginning December 16, 2011, when Sutherland was appointed, and ending March 15, 2014. Although unsigned, unverified and unfiled, the accounting (hereinafter, the “unsigned accounting”) is viewed as reliable because it was prepared by Sutherland’s attorney at the time, an experienced trusts and estates practitioner who retired shortly after the accounting was prepared. Sutherland also filed copies of bank statements for the estate checking account for February 2012 — May 2015. These, too, are deemed reliable evidence of Sutherland’s management of the finances of the estate and trusts. Less reliable — and considerably less coherent — are a series of financial summaries and “profit and loss detail” reports created by Sutherland in August 2022. These documents are identified as “Florida Condos”, “Homestead Accounts” and “Estate Checking” and were accepted into evidence at the hearing on February 22, 2023 as respondent’s Exhibits B — F. None of the summaries refer to specific bank accounts and Sutherland could not identify the owner(s) of any of the accounts. As a result, Sutherland’s work product is of limited utility in this proceeding.1 Finding that Sutherland had refused and/or willfully neglected without good cause to obey the clear and lawful mandate of this Court, the Court required that she appear on June 14, 2023 to show cause why she should not be punished for civil contempt pursuant to SCPA 606 and 607. At the hearing on her contempt, Sutherland had little to add in the way of records or detailed recollections of her activities as fiduciary. For example, when questioned about the Inventory of Assets she signed on October 12, 2022, Sutherland could not identify the “miscellaneous” estate assets she valued at $250,00 — $500,000 in the report. Her failure to recall details of her tenure as executor is consistent with her to inability to grasp the gravity of these proceedings, which she seemed to regard alternately as an annoyance or a joke. This proceeding originated in a petition to compel an accounting. Sutherland’s inability to produce a coherent and complete record of her activities as executor and trustee has profound implications for this Court’s ultimate findings. Those findings must, however, be based on facts and reasonable inferences therefrom, and the Court is therefore compelled to use the limited facts provided by Sutherland to fashion a remedy. Despite their limited utility for purposes of accounting, Sutherland’s testimony and the documents she proffered made clear that Sutherland’s administration of her father’s estate was rife with misconduct, commingling and misuse of assets and self-dealing. Among other acts, the Court finds that Sutherland: 1. commingled estate, trust and personal funds; 2. used estate and trust funds, including “loans” from Sage and Garrison and the proceeds of the sale of real property owned by the estate, to pay real estate taxes, insurance, maintenance and repairs for an estate property she occupied rent-free for 6 years; 3. retained for herself the proceeds of the sale of an estate-owned luxury recreational vehicle without satisfying the claim of a creditor; 4. deeded the Florida condominiums specifically bequeathed to Sage and Garrison to their father (who had not been appointed as guardian of their property) instead of their trusts and continued to rent them for 4 unprofitable years after decedent’s death; 5. retained for her own benefit mineral and oil lease royalties which were specifically bequeathed to Sage and Garrison; and 6. failed to maintain or retain accurate records of the finances of the estate or trusts. Petitioner’s principal complaint is Sutherland’s failure to fund the trusts and make distributions to him and his sister on a timely basis. Based on Sutherland’s filings, the documents entered into evidence at the hearing on February 22, 2023 and her testimony at the February and June hearings, the Court finds that the unsigned accounting is a reliable starting point for determining the amounts which should have funded the trusts, had Sutherland executed her duties with the diligence and prudence required of fiduciaries. Termed a “final” account, the unsigned accounting was clearly prepared in anticipation of an imminent distribution to the trusts. The Court finds that for purposes of assessing damages, March 14, 2014 — the closing date of the unsigned accounting — was the date when Sutherland should reasonably have distributed Sage and Garrison’s shares to their trusts. Schedule A of the unsigned accounting values the gross estate assets at $1,564,019.99. Schedule H of the unsigned accounting values the interests of Sage and Garrison’s trusts at $226,373.03 each as of March 15, 2014, but these funds are no longer available for distribution. Moreover, since nine (9) years of heedless and negligent administration of decedent’s estate followed the completion of the unsigned accounting, the Court is compelled to adjust these figures to reflect Sutherland’s activities in the time that transpired since the closing date of the unsigned accounting. Assets and Income Not Allocated to the Trusts. The decedent’s bank account and other financial instruments were specifically bequeathed to Joan Schwer and should have been credited to Sage and Garrison’s trusts. These assets are valued at $5,055.25 in the unsigned accounting and $2,527.62 should be allocated to each trust. Decedent’s assets also included a 2001 luxury RV valued at $43,000 and sold for an unknown amount2, a Ford Focus automobile valued at $2,200 (which Sutherland reported was wrecked in a crash) and a 2004 BMW automobile valued at $13,000, which Sutherland has retained for her personal use. Sutherland testified that the vehicles were specifically bequeathed to her under decedent’s will, which is not true. One-half of the value of these estate assets — or $29,000 — should be allocated to each of the trusts for Sage and Garrison. In a similar vein, decedent’s personal property was bequeathed to Sutherland and her sister Joan in equal shares. Half of the $2,000 value assigned to personal property identified in Schedule E of the unsigned accounting as specifically bequeathed to Sutherland should be allocated in equal shares to Sage and Garrison’s trusts. Other assets on Schedule A include $380,202.23 in life insurance proceeds payable to the estate. Sutherland regarded these funds as her own, testifying that “[the policy] was for me”. Sutherland added that most of the insurance proceeds were used to pay attorney and accountant fees and “miscellaneous expenses.” There was no evidence that any of the insurance proceeds found their way into the trust accounts for Sage or Garrison. Decedent’s interest in mineral and oil lease royalties were specifically devised to Joan Schwer as “cash, cash equivalents, publicly traded securities, bonds and notes” and should have been allocated to her children’s trusts, the term “securities” having been held to include “oil and gas royalties” (Estate of Schepps, 102 Misc2d 360, 415 [Sur Ct 1979]). The royalties continue to be collected and held by the estate to this very day. The unsigned accounting sets a value of $6,058 for the leases in Schedule A and then reports under Schedule A-2 that income from the leases averaged $168.49 per month during during the accounting period. Sutherland can reasonably be inferred to have received $22,240.68 in royalties from decedent’s death to date, which, together with the Schedule A value of $6,058, should be allocated equally between Sage and Garrison’s trusts. The “farmhouse” or “homestead” property was part of decedent’s residuary estate3. During 2016 — 2022, Sutherland occupied the farmhouse without paying rent. The house is now renting for $3,200 per month. Sutherland testified, apparently falsely, that she personally paid the real estate taxes and maintenance expenses during her occupancy. The records she created for the farmhouse account and the estate bank records reflect that these expenses were paid in part using $10,000 in “loans” from Garrison and Sage’s trusts. This use of the trust monies to pay the carrying charges of real property occupied by Sutherland is a misappropriation of trust monies (In re Draaser’s Estate, 81 NYS2d 648 [Sur Ct Queens Cty 1948](it is “primary that no fiduciary will be permitted to use his deputed authority for the advancement of his personal ends”). The $10,000 “loan” proceeds should be refunded in equal shares to Garrison and Sage’s trusts. Sutherland testified that she paid $50,000 to the University of Delaware for Sage’s tuition and “about the same” to Syracuse University for Garrison’s tuition. The unsigned accounting reports cash payments to Sage ($40,747.06) and to Garrison ($12,595.06). Counsel for Sage and Garrison report that his clients confirmed payments along the lines described in Sutherland’s testimony, so the Court will accept as true her assertion that she paid $100,000 for the benefit of Sage and Garrison. The balance in the trust for Sage shall be reduced by $9,252.94 and the trust for Garrison shall be reduced by $37,404.94 to reflect these payments which were made after the unsigned accounting reporting period. Sutherland testified that the sale of the Florida condominiums in 2015 “lost money” and that she was compelled to use $20,000 of her personal funds for repairs due to flooding. Reviewing the limited financial records at hand, the reported condominium rentals totaled $44,883, while the monthly charges for mortgage payments, condominium association and tennis club fees aggregated $33,507. In addition, Sutherland paid Sage and Garrison’s father to manage the units, then later paid a third party $300 per month for those services. Taking into account the federal and state income taxes paid by the estate, which totaled over $15,000 in each of the two years for which the expenses are reported4, retaining title to the rented condominium units resulted in virtually no income to the estate. Nor, it appears, did the units appreciate in value between decedent’s death and their sale in 2015. When Sutherland assumed the role of executor, the estate was valued at $1,505,185.48. The Court has found that Sutherland distributed $100,000 to Sage and Garrison’s trusts. Beyond that, there is no evidence of any transfers to the trusts. Sutherland never deeded the Florida condominiums or interests in the farmhouse or other real estate to the trusts, nor did she distribute to the trusts the interests in the mineral and oil leases, or the proceeds of decedent’s life insurance policy, all of which were earmarked for distribution to Sage and Garrison in the unsigned accounting. Nine years after the estate was valued at over $1,500,000, Sutherland is unable to account for the balance of the funds set aside for distribution to her niece and nephew in 2014. As a general principal, executors are required to liquidate and settle a decedent’s estate expeditiously; the law “does not encourage indefinite holding by the executors for the purpose of speculation (Matter of Froelich, 129 Misc2d 706 [Sur Ct NY Cty 1985]; see also, Estate of Peter Thomas Zahn, 2000 NYLJ LEXIS 3629, *3 [Sur Ct Nassau Cty]). Had she considered her fiduciary duties to her niece and nephew, Sutherland would have conveyed title to the units to their trusts and sold them without investing more money in them. The purpose of an accounting is to tell the story of an estate in dollars and cents. In it is found virtually every expression of a fiduciary’s duty to those whose interests they have sworn to protect. A fiduciary’s work begins at the “moment of death,” when their duty to preserve the assets of the estate is created (Estate of Donner, 82 NY2d 574, 584 [1983]). Their accounting will reflect the extent to which they managed the estate’s assets with the “diligence and prudence which an ordinary [person] would exercise in his [their] own affairs” (Matter of Shambo, 169 AD3d 1201, 1205 [3d Dept 2019]). As estate administration proceeds, there is an on-going duty to maintain “clear and accurate accounts of the estate”, which is critical to the duty to account (Matter of Jewett, 145 AD3d 114, 115 [3d Dept 2016], citations omitted). An accounting will also shed light on the extent to which a fiduciary may have strayed from the duty of “undivided and undiluted loyalty” to beneficiaries (Birnbaum v. Birnbaum, 73 NY2d 461, 466 [2012]) or has failed to treat all legatees in like manner, making distributions impartially and without favor (Estate of Muller, 24 NY2d 336, 344 [1969]). Fiduciary self-dealing violates this final essential precept and carries with it a presumption of impropriety (Estate of Naumoff, 301 AD2d 802, 803 [3d Dept 2003]). It is impossible to quantify with any certainty all of the payments Sutherland made to herself or for her exclusive benefit from estate or trust funds. Nor is it possible to identify the total payments which legitimately served the interests of the estate, the trusts or Sage and Garrison. That the Court cannot divine these important measures is directly attributable to Sutherland’s failure to make and retain financial records for the estate and trusts. The Court finds that that $226,373.03 allocated to each of the trusts as of March 14, 2014 is the most reliable measure of the value of Sage and Garrison’s interests as of that date. These balances are adjusted based on the Court’s additional findings regarding Sutherland’s post-accounting activities as follows: The balances in each trust shall be increased by the following adjustments: $1,263.81 to account for the balance in decedent’s bank accounts at death $14,500 to account for the value of vehicles wrongly determined to be specifically bequeathed to Sutherland $500 to account for the value of the decedent’s personal property $14,149.34 to account for oil and gas royalties received by Sutherland; the leasehold interests shall be assigned to the trusts $5,000 to account for “loans” from the trusts to pay carrying charges for estate realty occupied by Sutherland as her personal residence The balances in each trust shall be decreased by distributions made by Sutherland for the benefit of Sage and Garrison: $9,252.94 reduction in Sage’s trust for payments to the University of Delaware $37,404.94 reduction in Garrison’s trust for payments to Syracuse University Sutherland shall pay as further directed herein for Sage Schwer’s benefit the sum of $257,533.24, plus interest at the CPLR 5001 rate of 9 percent from March 14, 2014 to the date of payment. Sutherland shall pay as further directed herein for Garrison Schwer’s benefit the sum of $229,381.24 plus interest at the CPLR 5001 rate of 9 percent from March 14, 2014 to the date of payment. The Court notes that petitioner’s attorney has indicated that both Sage and Garrison Schwer would prefer to have Sutherland’s interest in the farmhouse and an adjacent lot distributed to them in kind in lieu of a financial settlement, a result that would spare their aunt the financial burden of paying the amounts owed to them under the terms of this Decision/Order. REMOVAL OF FIDUCIARY. It is well settled that “a decedent’s choice of executor should be given great deference and not disregarded unless that executor is not legally qualified to act as a fiduciary” (Matter of Palma, 40 AD3d 1157, 1158 [3d Dept 2007]). A court may nevertheless order the removal of a fiduciary if he or she has “wasted the assets of the estate or has otherwise improvidently managed or injured the property committed to his [or her] charge” (Matter of Giaimo, 73 Misc 2d 130, 133 [Sur Ct Bx Cty 1972], affd 41 AD2d 600 [1973]). The Court finds that Sutherland engaged in serious misconduct and willful neglect of the assets of the estate and trusts. She is hereby removed and the letters testamentary and letters of trusteeship appointing her are revoked. She shall receive no commission or other benefit from her attenuated and deeply flawed service as fiduciary (Estate of Farone, 162 AD2d 828 [3d Dept 1990](denial of commissions appropriate only when the fiduciary is “derelict in the performance of [their] duties,” guilty of “complete indifference” or otherwise acts improperly” citations omitted). The attorneys’ fees Sutherland incurred in unsuccessfully defending herself against the petition to compel here accounting were for her benefit alone and are not compensable as expenses of the estate, but shall be charged to her personally (Estate of Gates, 120 AD2d 890 [3d Dept 1986], citing Matter of Della Chiesa, 23 AD2d 562 [2d Dept 1965]).5 The proceedings brought by the petitioner were necessitated by and attributable to the improper conduct of the executor (Matter of Rose BB, 35 AD3d 1044 [3d Dept 2006]). His attorney’s services benefitted the estate by bringing to the Court’s attention Sutherland’s dilatory and self-serving management of estate assets. The legal fees incurred by the petitioner in this proceeding shall therefore be paid by the estate which benefited from the legal services pursuant to SCPA 2110. It is, therefore, ORDERED and DECREED, Wendy C. Sutherland is hereby removed as executor and trustee by reason of the misconduct detailed herein and the letters testamentary and letters of trusteeship dated December 16, 2011 appointing her are hereby revoked; and it is further ORDERED and DECREED that Garrison Schwer and Sage Schwer shall be appointed as co-administrators cta of the Estate of James B. Crowell upon their filing of oaths and designations therefore, the filing of a formal petition for such relief being waived by the Court; and it is further ORDERED and DECREED that Garrison Schwer and Sage Schwer shall petition for the appointment of a successor testamentary trustee of their choosing; and it is further ORDERED and DECREED, Wendy C. Sutherland shall within 30 days of the date of this Order remit the sum of $257,533.24, plus interest at the CPLR 5001 rate of 9 percent from March 14, 2014 to the date such payment is tendered to Sage Schwer and Garrison Schwer as co-administrators cta for deposit into the trust for the benefit of Sage Schwer; and it is further ORDERED and DECREED, Wendy C. Sutherland shall within 30 days of the date of this Order remit the sum of $229,381.24, plus interest at the CPLR 5001 rate of 9 percent from March 14, 2014 to the date such payment is tendered to Sage Schwer and Garrison Schwer co-administrators cta for deposit into the trust for the benefit of Garrison Schwer; and it is further ORDERED and DECREED, Wendy C. Sutherland shall within 30 days of the date of this Order assign the mineral and gas leasehold interests in equal shares to Sage Schwer and Garrison Schwer as co-administrators cta for further assignment in equal shares to the trusts for each of them; and it is further ORDERED and DECREED, the attorney’s fees incurred by Wendy C. Sutherland in defending her against the petition to compel accounting shall be paid by her personally; and it is further ORDERED and DECREED, the attorney’s fee incurred by the Garrison Schwer in prosecuting his claims against Wendy C. Sutherland shall be paid by the estate as an expense of administration. This constitutes the order of the Court. All papers, including this Order, are hereby entered and filed with the Clerk of the Surrogate’s Court. Counsel is not relieved from the applicable provisions of CPLR Section 2220 relating to service and notice of entry. Documents considered: 1. Petition to compel judicial accounting of the estate and testamentary trusts of James B. Crowell III by Garrison Schwer, as amended, efiled July 13, 2022. 2. Correspondence received from Sean J. Denvir, Esq. seeking an order to compel a formal petition for judicial accounting efiled on October 5, 2022. Dated: August 16, 2023
