Discovery Proceedings, Creditor’s Claims & Other Miscellaneous Proceedings

Frank W. Streng, Surrogate’s Court Lawyers
by Frank W. Streng on 06/09/1997

Westchester County Bar Association

Trusts & Estates Section

June 9, 1997


Discovery Proceedings, Creditor’s Claims and Other Miscellaneous Proceedings



Gary E. Bashian, Esq.

Smith, Ranscht, Connors, Mutino

Nordell & Sirignano, P.C.

235 Main Street

White Plains, NY  10601

Tel. No. 914-946-8800


Donald S. Klein, Esq.

7-11 South Broadway

White Plains, NY  10601

Tel. No. 914-686-6120


Frank W. Streng, Esq.

McCarthy, Fingar, Donovan,

Drazen & Smith, L.L.P.

11 Martine Avenue

White Plains, NY  10606

Tel. No. 914-946-3700





1.         Claims Against Estate: SCPA Article 18: Fiduciary’s Perspective v. Creditor’s



  • What is a creditor’s claim?
    • conventionally, a creditor’s claim is a claim that existed against the decedent during the decedent’s lifetime
    • to protect your client, construe the definition of a creditor’s claim liberally; do not make judgment calls as to whether any claim, including a specious claim, is valid
  • Timing and form of Submission of Claim (SCPA 1803)
    • Format of claim
      • format is irrelevant; any notice is sufficient
      • but a fiduciary should be diligent in paying any claim; seek documentation and/or information before payment
    • Personal liability for fiduciary (SCPA 1802; see also SCPA 1807)
      • be very careful during the period of seven months from issuance of letters, or place fiduciary in position of personal liability
      • SCPA 1807 placed personal liability on fiduciary if there is “fraud, negligence or collusion”
      • As to tax matters, be very careful, as there may be a big picture to keep in mind and make application to abate penalties that may be assessed by taxing authorities; perfect excuse: decedent was ill and, in fact, is not dead and executor has insufficient information to support paying penalties
  • Decision of Fiduciary to Reject or Accept Claim (SCPA 1806)
    • A claim is deemed rejected within 90 days of presentation
    • Always respond to claims; never ignore claimants; never permit your client to become a reactive executor/administrator
  • Creditor’s Remedies on Rejection of Claim
    • Proceeding/Action to Determine Claim (SCPA 1810)
      • Claimant can seek forum outside of Surr. Ct. within 60 days of rejection (or deemed rejection)
      • If real estate is involved, SCPA 1812 required a creditor to obtain leave of Surr. Ct. before obtaining execution on judgment
      • if fiduciary believes that claim is correctly rejected, beat creditor to punch by proceeding under SCPA 1809 to determine claim
      • if fiduciary was active, he has asked creditor to supply substantial information and/or documentation as to claim
    • Proceeding to Compel Estate Accounting (SCPA 2205(a); SCPA 1808(5))
      • avoid scenario where creditor can coerce an accounting from fiduciary
  • Executor’s Remedies/Duties on Rejection of Claim
    • Proceeding to Disallow Claim (SCPA 1809)
      • See above discussion
      • do not ignore conventional bars to claimant, such as statutes of limitation, etc.
      • consider operation of dead man statute (CPLR 4519)
    • Disclosure of Rejection in Accounting and Process Issued to Creditor (SCPA 1808)
      • Schedule D of accounting requires disclosure as to rejected claimaints and process must issue to permit creditor and opportunity to be heard
      • never permit beneficiaries of estate to encourage the fiduciary to ignore the creditor
  • Old law-creditors’ rights
  • Changes in statute
  • Contingent claims
    • reserves for estate taxes; avoid the fiduciary having problems after distributions: you never get the money back
  • Department of Social Services and liens
    • for purposes of the 7 month limitation period, there is presumed notice of Social Services liens if decedent was in nursing home
  • Enforceability as to Nonprobate assets
    • Joint accounts, if “convenience” accounts
    • Totten trusts



2.         Right of Election: EPTL 5-1.1-A: Fiduciary’s Perspective v. Spouse’s Perspective

  • Timing and manner of submission of election (EPTL 5-1.1-A(d)(1))
    • six months from letters, but no later than two years from date of death
    • fiduciary should make sure that election was timely made; if not seek to vacate under SCPA 1421
    • be cautious as to distributions from estate; consider elective share claimant to be in same category as a creditor
    • the claim is personal, but can be made in representative capacity with court approval (EPTL 5-1.1-A(c)(3) 
  • Calculation of maximum elective share (EPTL 5-1.1-A(a))
    • greater of $50,000 or one-third of estate, less properties passing to such spouse such as joint accounts, etc.
    • keep in mind that elective share is eligible for estate tax marital deduction and should, in the case of a valid election, be so claimed on Schedule M of estate tax return
  • Testamentary substitutes (EPTL 5-1.1-A(b))
    • broad definitions of “inter vivos” disposition that are covered; however, insurance proceeds are still not covered
    • fiduciary’s diligence in marshaling assets and preparing estate tax returns will serve to identify test. Sub.
  • Effect of elective share on Q-Tip trusts
    • old law permits elective share trust; new law requires outright elective share
    • spouse must choose between q-tip and outright elective share
    • make sure that you represent fiduciary and spouse has separate counsel
  • Waiver or release of right of election (EPTL 5-1.1-A(e))
    • for planning purpose, despite broad language of statute (unilateral waivers without consideration are sufficient), encourage disclosure of information and careful discussion (and separate counsel) before execution of waivers,
  • Validity of election and claimant’s qualification as “spouse” (see SCPA 1421)
    • abandonment


3.         Discovery Proceeding: SCPA 2103: Fiduciary’s Perspective v. Respondent’s


  • Options re difficulties in identifying or collecting assets
    • fiduciary charged with making a diligent search for assets
    • use all conventional means to identify assets (tax returns, safe deposit boxes  mail, etc.)
    • interview various people, including family members, with information as to assets
    • write letters to people who may have information
  • Inquiry stage of proceeding (SCPA 2103(3))
    • if a person has information on assets (or asset itself), write to that person for information (or turnover)
    • typical scenarios: gifts, joint accounts, possession of cash or other estate assets
    • prepare petition describing information and supplement it with affidavit by executor or others
    • in inquiry stage, court exercises subpoena power; serve order with subpoena fee
  • Turnover stage of proceeding (SCPA 2103 and SCPA 2104)
    • technically speaking, if, upon examination, there is an issue as to the respondent’s possession of property, then court directs answer
    • practically speaking, you so-called inquiry petition should pray for turnover if respondent has property
    • if respondent is out of state, then while you can get court to exercise subpoena power, it is expensive
  • Interim relief, including restraining orders on property
    • court now requires a supporting affidavit to support tro and will deal with tro on separate track


4.         Reverse Discovery Proceeding: SCPA 2105: Petitioner’s Perspective v. Fiduciary’s


  • Example: fiduciary’s possession of tangible persoal property purportedly given away by decedent
  • Consider dead man statute (CPLR 4519)

5.         Relief Against Fiduciary: SCPA 2102 & SCPA 2205: Fiduciary’s Perspective v.

Petitioner’s Perspective

  • Proceeding to compel fiduciary to supply information on estate (SCPA 2102(1))
  • a fiduciary should always respond to written requests for information and supply information on request, e.g., estate tax returns
  • but . . . do not permit beneficiaries and fiduciary to run estate by committee
    • Proceeding to compel fiduciary to pay specific bequest, legacy, amongst others (SCPA 2102(4))
    • avoid scenario where this type of application is necessary
      • Proceeding to make advance payment to beneficiary of estate (SCPA 2102(5))
      • application in will contest; make sure that, when this is necessary, that you have a court order and that statute is met
        • Proceeding to pay interest on general dispositions (SCPA 2102(7))
        • avoid scenario where this is necessary
          • Proceeding to compel estate/trust accounting (SCPA 2205)
            • do not resist the court; but work with court to have appropriate date for filing


6.         Construction/Reformation Proceeding: SCPA 1420: Fiduciary’s Perspective v.

Beneficiary’s Perspective

  • Construction/reformation proceedings pre-final accounting
    • Estate tax apportionment issues
    • Bequests that impact on estate tax returns
    • Generation-skipping tax issues
    • Other scenarios
  • Construction/reformation proceedings as part of final accounting



7.         Proceedings for Advice and Direction: Fiduciary’s Perspective v. Respondent’s


  • Advice and direction as to real estate matters (SCPA 2107)
  • Advice and direction arising out of conflict of interest scenarios
  • Enlargement of fiduciary powers during will contest
  • Other areas in which advice and direction is sought



8.         Proceedings for Continuation of Business: SCPA 2108: Fiduciary’s Perspective v.

Respondent’s Perspective

  • Corporate ownership v. sole proprietor
  • Need of estate to obtain loans for business
  • Restructure of business for tax or other reasons