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Despite Will's Prohibition, Executor Is Awarded Fee
New York Law Journal
January 13, 2009
A New York surrogate court judge has approved a $91,000 payment to an estate executor, despite a provision in the decedent's will prohibiting commissions to anyone.
Bruce L. Goldberg, who died in January 2007, barred commissions from his $7.4 million estate, "statutory or otherwise, for any executorial or trustee services rendered to my estate, in any jurisdiction."
The provision applied to any person serving as executor or a trustee, including an attorney.
Despite the prohibition, Nassau County Surrogate John B. Riordan in Estate of Goldberg, File No. 345767, ruled that executor Steven Ostrer was entitled to a $91,018 payment based on the "consent of the beneficiaries, who will be bearing the cost of the executor's commissions."
Mr. Goldberg was survived by his wife Debbie, his son Adam, and his daughter Elyssa, according to the decision. Ms. Goldberg and her two children are beneficiaries under the will and consented to the payment, along with the co-trustees Henry Klosowski and Steven Horowitz, Riordan wrote.
Klosowski, a partner in Morritt, Hock, Hamroff & Horowitz, who represented Ostrer, called the decision "highly unusual."
According to Klosowski, Mr. Goldberg was a close friend of Ostrer and named him as executor to save his family money.
After undertaking the estate duties, Ostrer realized it "was a ton of work" and asked if the family would agree to compensate him, Klosowski said.
Section 2307-a of the Surrogate Court Procedures Act governs commissions paid to fiduciaries other than trustees. The law lays out pre-set formulas for computing the total due.
"[W]here the will specifically provides that the executor is to serve without any compensation, the usual rule is that the executor has only two options: either decline to serve at all, or serve without compensation," Riordan wrote, citing Matter of Othmer, 18 AD3d 758.
Here, however, the surrogate observed, the difference was that "all of the beneficiaries have executed and submitted knowing waivers to the court that they are aware the will provides that the executor serve without commissions, but that they nevertheless consent to the executor receiving a full statutory commission."
The surrogate could find no precedent for permitting payment in these circumstances. But he noted that the courts had allowed full statutory commissions to an executor only entitled to half a commission where the beneficiaries had consented.
The judge noted that no party was under a "disability" when he or she consented to Ostrer's fee. Moreover, Ostrer had paid the specific bequests in the will and filed the required state and federal tax returns.
Accordingly, the surrogate granted Ostrer's request. Klosowski said the executor will receive another $91,000 when his work is complete.
