NJ Appellate Division Modified Surcharges Imposed By Trial Court

In the Matter of the Estate of Mary Jane Lynch, Deceased, 2017 N.J. Super. Unpub. LEXIS 2793, A-5617-14T2 (N.J. Super. Ct. App. Div. Nov. 8, 2017).

This case covers a multitude of issues involving the appeal of several trial court Orders. This summary will address only some of the novel and noteworthy issues covered in the opinion.

Deborah Williams (“Williams”) appealed eight Orders entered in the underlying probate case involving the estate of her mother – the Estate of Mary Jane Lynch (the “Estate”). In the unpublished Appellate Division opinion, the Court affirmed the Orders except for the dollar amount of the surcharges set forth in a June 30, 2015 Order.  As to that Order, the Appellate Division exercised original jurisdiction under Rule 2:10-5 to modify the amount of the surcharges.

The decedent Mary Jane Lynch and her husband had two children: Williams and John Lynch (“Lynch”). Mary Jane’s husband predeceased her.  The decedent had executed a Will and Declaration of Trust in 1992.  Under the Will, her personal property was to be distributed equally to Williams and Lynch, the residuary estate was left to her Trust (the assets of which were divided equally between Williams and Lynch who are also co-trustees) and Williams Lynch were named co-executors. Id. at *2.

In 2005, decedent was diagnosed with colon cancer and died on June 19, 2007. Shortly after her death, Williams renounced her position as co-executor leaving Lynch as the sole executor of the Estate.  The opinion notes that it is unclear whether Williams also renounced her position as co-trustee.  The Estate, which consisted of a house with furnishings, a car, and various bank accounts, was valued at approximately $1.9 million dollars. Id.

The underlying litigation in this matter, involved two Verified Complaints and multiple motions, and resulted in several trial court Orders. Williams appealed each of the Orders entered in the case since 2008.  She contended, among other things, that the court should not have allowed payment of legal fees of the Estate to be paid out of the Estate and the court erred in surcharging her $47,000.00.

Lynch opposed the appeal contending the court did not err and filed a Cross-Appeal as to an Order surcharging him for $132,500.00, requesting the reversal of that portion of the Order.

The June 4, 2012 Order at issue in the appeal had allowed the revised final accounting of the Estate and disallowed as improper an enumerated listing of checks amounting to $132,500.00 that the trial court had found Lynch wrote to himself or family members while he was acting as decedent’s agent under a power of attorney and ordered that amount of those checks to be refunded or credited against Lynch’s share of the Estate. In addition, the trial court found that Williams had improperly withdrawn 47,000.00 from decedent’s bank account prior to her death and ordered that Williams refund these monies or that they be credited against her share of the Estate.  The June 4, 2012 Order also approved counsel fees and costs for the Estate. Id. at *5.

Both parties requested a review of the surcharges against them as entered as part of that June 4, 2012 Order. The Appellate Division found no error in the trial court’s decision on the formal accounting and its Order directing a surcharge, but modified the amount of the surcharges to reflect the record.  The Appellate Division reasoned that Williams and Lynch both admitted to taking money from their mother’s accounts.  However, there was no proof, save for their own statements, that decedent intended the monies as gifts.  Thus, the trial court was not required to accept these statements as proof of donative of intent. Id. at * 14.

Williams acknowledged in Certifications and her deposition that she took money from one of her mother’s accounts near the end of her life. However, the Appellate Division found it was an error to surcharge her $47,000.00 because that figure came from an unsupported statement made by Lynch’s attorney.  Thus, the Appellate Division exercised original jurisdiction under Rule 2:10-5 to revise the surcharge, noting that “the exercise of original jurisdiction is also particularly appropriate to terminate lengthy, burdensome, and unnecessary further litigation.” Id. at 14-15. (Internal citations omitted).  Williams admitted to taking $8,400.00 from decedent’s accounts and thus they revised the surcharge to reflect that figure.

As to the $132,500.00 surcharge on Lynch, the Appellate Division looked to N.J.S.A. § 17:16I-4, which states that “a joint account belongs, during the lifetime of all parties, to the parties in proportion to the net contributions by each of the sums on deposit.” Id. at *15. The court noted there was no dispute that the funds in the accounts were decedent’s funds and not Lynch’s money.  Lynch had admittedly signed checks payable to cash for himself and family members.  Lynch was properly surcharged for these inter vivos transfers and required to pay them.  However, on appeal, Lynch contended that some of the checks were signed by decedent and the record reflected supported this contention.  Those checks amounted to $22,500.00 and were to be excluded from the surcharge. Id. at *16.

The other interesting element of this decision, although it addresses other issues, is the assessment of attorney’s fees and costs. The Appellate Division found no error in the trial court’s allowance of attorney’s fees and costs for counsel for the Estate since there is clear authority for the executor to retain counsel for the estate (N.J.S.A. §3B:14-23(1)) and the court rules permit the payment of counsel fees in probate cases (Rule 4:42-9(a)(3)). Id. at *17.

Since the Appellate Division used its original jurisdiction to modify the trial court Orders as to surcharges, there was no need to remand the case and the court affirmed as modified.