While the “pro tanto” rule can play a pivotal role in Surrogates’ Court proceedings, practitioners may be more familiar with the Lone Ranger’s sidekick than with this equitable principle. The rule is a common law doctrine penalizing estate and trust beneficiaries who fail to object to accounting proceedings affecting their interests. To avoid being on the wrong side of its application, beneficiaries should assert timely objections and valid claims. Conversely, the rule provides an uncertain shield to fiduciaries with “clean hands” that satisfy their fiduciary duties. Uncertainties in the rule’s application make it difficult to rely upon; the safest strategy is for beneficiary and fiduciary alike to maintain active, alert participation.
Application of the Rule
The rule is applied in estate/trust accountings. An accounting absolves the executor/trustee from liability by disclosing his acts to all interested parties for their review and, possibly, objection. An accounting is settled informally on Receipt and Releases (sometimes buttressed by a court decree) or through a formal judicial proceeding. Informal accountings are common in amicable situations involving competent (or adequately represented) beneficiaries. If significant conflict arises, the fiduciary will generally pursue a judicial accounting, which permits interested parties to file objections.
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