Authored by: Dorothy J. Santos
One major responsibility of an estate fiduciary is to collect the assets of the estate. Normally, this process is relatively straightforward, especially if the fiduciary is knowledgeable about different types of assets and comfortable dealing with various types of financial institutions. However, there are undoubtedly times when the fiduciary has to fight to collect an asset or assets belonging to the estate. This can occur when there are merely different beliefs as to the technical ownership of property or when property was somehow diverted from the decedent or estate by a third party.
In New York, a fiduciary may bring what is known as a “discovery” or “turnover” proceeding in order to recover property belonging to the estate. There may be two stages of such a proceeding, depending on how confident the fiduciary is that a third party has estate property. The inquisitorial stage is used when the fiduciary is not sure whether a third party has estate property. During this stage, the Court may order the third party to appear before the Court and be examined about the property allegedly belonging to the estate. In other cases, where the fiduciary is sure that the third party has estate property, the Court conducts a hearing to determine whether the third party in fact has property belonging to the estate.
CASE STUDY: In Good Company?
In a recent New York case, Matter of Coviello, 911 N.Y.S.2d 106 (2nd Dep’t 2010), the Second Department affirmed the decision of the Surrogate’s Court requiring the turnover of estate property. The decedent was survived by his wife (from whom he was separated) and three daughters. One of the decedent’s daughters, as fiduciary of the decedent’s estate, brought a turnover proceeding against the decedent’s live-in companion to recover property allegedly belonging to the estate. The Court found that sizable payments made by the decedent on his companion’s behalf during his life constituted property of his estate because the money was loaned to her rather than given to her as she contended. Accordingly, the decedent’s companion had property belonging to the estate and was ordered to turn it over. It is interesting to note that in a related, but separate proceeding, a Will drafted for the decedent by this same companion was ultimately denied probate on the ground of fraud.
Whether there is a disagreement as to the proper title to property, outright theft or something in between, the fiduciary of an estate may bring a turnover proceeding to obtain more information and if appropriate, recover the property. If you have an interest in an estate and believe that a third party has property that belongs to the estate, please contact us.