In re the Trusts for McDonald
Opinion of the Court
Appeal from an order of the Surrogate’s Court, Erie County (Barbara Howe, S.), entered December 20, 2010. The order found that Idalynn Luppino McDonald had abused her fiduciary responsibilities as trustee.
It is hereby ordered that the order so appealed from Is unanimously reversed on the law without costs and the petition is dismissed.
Memorandum: In appeal No. 1, respondent (hereafter, trustee) appeals from an order determining that she failed to observe the terms of two testamentary trusts and abused her fiduciary responsibilities with respect to each trust and setting forth a date upon which the matter would be deemed finally submitted,
Petitioners, who are twin sisters, commenced this proceeding seeking, inter alia, to remove their mother as the trustee of each testamentary trust created for them by the last will and testament of their grandfather, who was the trustee’s father. Petitioners were 19 years of age when the petition was filed. Petitioners’ central claim is that the trustee refused to make discretionary distributions from the trusts for payment of their college expenses and for the purchase of an automobile for each of them.
Insofar as relevant to these appeals, the trusts provide that “[t]he Trustee shall pay or apply to or for the use of each such living grandchild of mine so much of the income, accumulated income and principal of such share at any time and from time to time as the Trustee deems advisable in [the Trustee’s] sole discretion not subject to judicial review, to provide for such grandchild’s maintenance, support, education, health and welfare, even to the point of exhausting the same.” The trusts also provide for periodic fractional distributions of principal and accumulated income when the beneficiaries reach the ages of 30, 32 and 35, at which time the trusts terminate. On the return date of the order to show cause that initiated the proceeding, the trustee appeared with counsel who served a letter response to the petition and made a representation in court that it was to be considered as the trustee’s answer. No objection was raised by petitioners thereto, and we thus conclude that they “proceeded on the theory that [they] had to prove [their] claim as if it stood controverted. [They] did not seek to proceed as if upon a default” (Matter of Bemis v Larkin, 249 App Div 762, 763 [1936]). Petitioners further waived any objection to the lack of verification by failing to reject the trustee’s pleading pursuant to CPLR 3022 in a timely manner (see Matter of Rouson, 32 AD3d 956, 959 [2006]). Thus, we conclude that the Surrogate erred in sua sponte determining that the trustee was in default in pleading and in proceeding to decide the merits of the petition as if it was uncontroverted (see generally DiPietro v Seth Rotter, P.C., 267 AD2d 1, 2 [1999]).
Notwithstanding the extended discretion granted to the trustee by the testator, the exercise of the trustee’s judgment in making discretionary distributions should be evaluated in light of the availability of other resources, including public benefits and the parental duty of support (see Restatement [Third] of Trusts § 50, Comment e on subsection [2]; Matter of Roberts [New York City Health & Hosps. Corp.], 61 NY2d 782, 783-784 [1984]; Matter of Escher, 52 NY2d 1006, 1008 [1981]). Here, the record establishes that the trustee, in her capacity as petitioners’ parent, was the custodian of a New York 529 College Savings account for each petitioner and that the account balances were more than adequate to provide for petitioners’ college expenses. We also note that the college costs of petitioner Kelly McDonald for the 2010-2011 academic year were fully paid by
Finally, we dismiss the appeal from the order in appeal No. 2, and we reverse the order in appeal No. 4. Insofar as the order in appeal No. 2 denied that part of the motion for leave to reargue, no appeal lies from the order (see Empire Ins. Co. v Food City, 167 AD2d 983, 984 [1990]) and, insofar as the order in appeal No. 2 denied that part of the motion for leave to renew, the appeal is moot in view of our determination in appeal No. 1 (see McCabe v CSX Transp., Inc., 27 AD3d 1150, 1151 [2006]). With respect to the award of, inter alia, attorney fees to petitioners in appeal No. 4, we note that “it is well settled that a Surrogate has the discretion to order a fiduciary to pay [attorney] fees” (Matter of Manufacturers & Traders Trust Co. [Adams], 72 AD3d 1573, 1574 [2010]; see generally Matter of Garvin, 256 NY 518, 521-522 [1931]), but such fees are not awarded “where there is no agreement, statute or rule providing for such fees and where the losing party has not acted maliciously or in bad faith” (Matter of Saxton, 274 AD2d 110, 121 [2000]). In light of our determination in appeal Nos. 1 and 3, we conclude that petitioners are not entitled to an award of attorney fees. Present — Centra, J.E, Peradotto, Garni, Lindley and Sconiers, JJ.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.