Opinion ID: 2091941
Heading Depth: 1
Heading Rank: 2

Heading: Surrogate's Court Procedure Act

Text: Under article 22 of the Surrogate's Court Procedure Act, fiduciaries such as executors and trustees have an obligation to account for their actions. Executors ordinarily account at the conclusion of estate administration while trustees account when the trust is terminated or when they cease to serve (Turano, Practice Commentaries, McKinney's Cons Laws of NY, Book 58A, SCPA 2205, at 18). Although the SCPA does not require a fiduciary to give periodic or intermediate accountings, where trusts are managed over a lengthy period trustees often account periodically. [2] A fiduciary may voluntarily proceed to obtain formal judicial settlement of an account under SCPA 2208. [3] Additionally, certain persons, including beneficiaries under a will or trust, may initiate a proceeding to compel a formal accounting ( see SCPA 2205). The court may also compel a judicial accounting on its own initiative ( see SCPA 2205). Judicial settlement serves the interests of both the fiduciary and the beneficiary in that it provides full disclosure of the fiduciary's financial transactions and, upon issuance of a decree, the fiduciary is released from liability for those transactions ( see 6 Warren's Heaton, Surrogates' Courts § 91.02 [1], at 91-4 [6th ed rev]). Where a fiduciary commences a judicial accounting and accounts to a trustee, it is generally not necessary to serve process on the beneficiaries of that trust because the trustee represents the beneficiaries' interests ( see SCPA 2210 [7]). But SCPA 2210 (10) provides an exception to this rule for a fiduciary who simultaneously fulfills more than one role: [w]here an accounting fiduciary accounts to himself in a separate capacity as the fiduciary of a deceased beneficiary of the estate, or as trustee . . . process shall issue to all persons interested in the estate of the deceased beneficiary, . . . or the trust of which the accounting party is trustee. Thus, under the statute, if the fiduciary seeking to account also serves as a trustee, the fiduciary must notify trust beneficiaries directly of any accounting proceeding. [4] Long before the enactment of SCPA 2210 (10), this Court addressed the significance of notification to beneficiaries in accounting proceedings involving multicapacity fiduciaries. In Fisher v Banta (66 NY 468 [1876]), this Court held that, where a fiduciary seeks to account to itself in another capacity, an accounting decree will be conclusive only where persons ordinarily represented by the fiduciary in its alternate capacity have been made parties to the accounting ( id. at 482). The Fisher multicapacity fiduciary rule was codified in SCPA 2210 (10), recognizing that an accounting fiduciary may not account to itself in a separate capacity absent the intervention of the beneficiaries. Thus, SCPA 2210 (10) performs a dual purpose: it requires multicapacity fiduciaries to give beneficiaries notice of the opportunity to raise objections to an accounting and, as a result of account settlement, fiduciaries obtain finality with respect to their actions.