Matter of Kaskawits
Annotate this CaseDecided on October 5, 2009
Sur Ct, Westchester County
In the Matter of the Accounting of INGRAM S. CARNER as Trustee of a Trust Created Under Paragraph FOURTH of the Last Will and Testament of Irwin Kaskawits, Deceased, For the Benefit of Cara Alswanger.
1993-1820/E
Arthur Levine, Esq.
Attorney for Petitioner
211 East 43rd Street, Suite 2000
New York, NY 10017
Burton Citak, Esq.
Citak & Citak, Esqs.
Attorneys for Objectants
270 Madison Avenue, Suite 1203
New York, NY 10016
Elmira J. Jackson, Esq.
Guardian ad litem
194 Wood Hollow Lane
New Rochelle, NY 10804
Anthony A. Scarpino, J.
Pending before the court are four contested intermediate accounting proceedings by Irgram S. Carner (Petitioner), the former trustee of trusts created under Article FOURTH of the will of Irwin Kaskawits (decedent). The parties have submitted the matter for determination based upon an agreed statement of stipulated facts and exhibits.
Petitioner seeks to settle his accounts for the period from April 15, 1994 through June 30, 2008 and requests that: (i) the court fix and allow professional fees and disbursements; (ii) allow him to repay the trust excess commissions which he took without court order; and (iii) allow him to pay a stated amount of interest on money he borrowed from the trust, also without court order.
Decedent died testate on July 29, 1993. Under his will, decedent gave the sum of $50,000 to each of his grandchildren to be held in separate trusts until each grandchild attains the age of 30. Four grandchildren survived decedent: Cara Alswanger (Cara) born April 25, 1985 and Julie Alswanger (Julie) born October 9, 1992, issue of decedent's daughter Susan; and Daniel Kaskawits (Daniel) born June 28, 1981 and Stephen Kaskawits (Stephen) born February 15, 1984, issue of decedent's son Richard. Julie is an infant for whom a guardian ad litem was appointed. Objections to the accounts have been filed by the respective beneficiary of each trust and by Susan Alswanger, as guardian of the property of her daughter Julie.
Letters of trusteeship issued to petitioner on April 15, 1994. In a related proceeding, petitioner resigned as trustee. Successor letters of trusteeship issued as follows: Susan Alswanger as trustee of the trusts for the benefit of Cara and Julie; and Richard Kaskawits as trustee of the trusts for the benefit of Stephen and Daniel.
Under his will, decedent granted the trustee discretion to pay income and/or principal for a grandchild's health, support, maintenance and education. Upon a grandchild attaining the age of 21, he or she is entitled to annual distributions of income. Each beneficiary is also entitled to distributions of principal as follows: 1/3 at age 21; ½ of the balance at age 24; and the balance at age 30. Decedent specifically restricted the investment of the trust assets to municipal bonds rated at the time of investment as Double-A or better, U.S. Treasury Bills or notes, government insured bank certificates, and government insured bank deposits (Article EIGHTH [b]). He also directed the trustee to provide the beneficiary of his and her respective trust with an annual cash statement for each trust (Article NINTH [E]).
Over the course of the accounting period, the beneficiaries repeatedly sought information from petitioner. Petitioner disregarded their requests. In May, 2008 objectants commenced proceedings to remove petitioner and to compel him to account. Following a conference with the court, the parties entered into an agreement whereby petitioner agreed to resign as trustee and to file his accounts. Thereafter, counsel for the beneficiaries filed four separate proceedings for petitioner's resignation and for the appointment of a successor trustee of each trust. Petitioner filed his accounts in November, 2008.
Objectants seek to deny petitioner commissions and to surcharge him for the following acts: [*2]i) the failure to create separate trusts; ii) the failure to fully fund the trusts in the amount of $50,000 each for a total of 200,000; iii) taking commissions without court order; iv) making an unauthorized loan to himself in the amount of $137,000; v) paying himself administrative fees without court order; vi) failing to maximize the return on investments; vii) failing to provide the beneficiaries with annual statements as directed under the will; viii) failing to distribute trust funds in accordance with the will; ix) failing to file timely income tax returns; and x) for their legal fees related to these proceedings.
It is well established that the most fundamental duty owed to the beneficiaries by a trustee is the duty of loyalty. Implicit in a trustee's duty of loyalty is the duty not to self deal. As the Court of Appeals held in Meinhard v Salmon, 249 NY 458 [1928], "a trustee is held to something stricter than the morals of the marketplace. Not honesty alone but the punctilio of an honor most sensitive, is the standard of behavior." More recently in Matter of Wallens, 8 NY3d 806 [2007], the Court of Appeals applied such standard noting that the trustee's standard is a "sensitive and inflexible rule of fidelity, barring not only blatant self-dealing, but also requiring the avoidance of situations in which a fiduciary's personal interest conflicts with the interest of those owed a fiduciary duty. . . . The trustee must administer the trust for the benefit of the beneficiaries and cannot compete with the beneficiaries for the benefits of the trust corpus."
To prevail on a surcharge, objectants must show that petitioner failed to act prudently with regard to handling the administration of the trusts (Matter of Donner, 82 NY2d 574 [1993]; Matter of Janes, 90 NY2d 41 [1997]). Where such showing is made, SCPA 2211 grants the court broad discretion to make "such order or decree as justice shall require." (See Matter of Acker, 128 AD2d 867 [1987].) Applying such rule, the court may fashion any remedy it deems necessary to redress a successful objectant including but not limited to: surcharge; denial of all or some commissions; and imposing interest on a surcharge. Where warranted, the court may grant all of the available remedies (Matter of Lippner, 135 Misc 2d 34 [1987]).
The four accounts reflect petitioner's attempt to reconstruct the administration of the funds as though four separate trusts were created. Each account is replete with the euphemism "to record" for transfers which petitioner concedes he must make but has failed to. For example, petitioner characterizes his withdrawal of $137,000 from the trust as a "loan" and the interest he still owes is referred to as "to record interest owed on Ingram S. Carner's loan of [a specified date]." Four years after taking the money, petitioner returned the funds to the trust without paying any interest. Similarly, petitioner paid himself excessive commissions without court order. He has not refunded the conceded excess, nor has he paid any interest. On Schedule J of each account (Other Pertinent Facts) petitioner attempts to balance the four accounts and indicates an amount he has computed as due and owing for the respective beneficiary's share of the overpayment of commissions and unpaid interest.
Objectants prepared the stipulated facts and exhibits which are in effect an attempt to reconstruct petitioner's actions during the sixteen year period he acted. The exhibits include statements of the account where petitioner held the funds. Objectants have in effect taken and stated petitioner's accounts.
The undisputed facts are as follows.
Petitioner never established separate trusts for each grandchild as directed under decedent's will. In April, 1994 petitioner received from the executor a check in the amount of $200,000 which he deposited into his personal account at Citibank. On July 20, 1994 petitioner opened an account [*3]with Gruntel and Company, now GMS Group (GMS account) entitled "Trust UW Irwin Kaskawits, Ingram Carner TTEE." From August 10, 1994 through November 21, 1994 petitioner made numerous withdrawals from his Citibank account and deposited such funds into the GMS account for a total of $199,427.24. With respect to the discrepancy in the funds, petitioner contends that the "Estate of Irwin Kaskawits," not him, owes the trust the difference which he sets forth as $143. The correct discrepancy is $572.06.
From 1994 through June 28, 2002, when Daniel turned 21 years of age, petitioner did not make any distributions to the beneficiaries. Following Daniel's 21st birthday, petitioner did make two distributions of principal to Daniel and thereafter made distributions to Stephen and Cara upon their attaining the age of 21. At no time did petitioner provide any of the beneficiaries, or their respective parents, with annual cash statements.
During the period of the trust, petitioner withdrew funds to pay himself commissions and what he characterizes as administration fees. Petitioner took annual commissions notwithstanding his failure to provide the beneficiaries with annual statements. The total of the commissions taken far exceed what may be allowed under the governing statute, SCPA 2309.
On May 12, 2004 petitioner withdrew $137,000 and deposited the funds into an account entitled "Ingram S Carner Rev Trust." In an undated letter to GMS, petitioner wrote "[t]his loan will be repaid within the next four (4) weeks with interest." Petitioner did not repay the loan as promised. After objectants commenced the proceeding to compel him to account and for related relief, on June 11, 2008 petitioner paid $137,000 to the trust without interest. Five days later on June 16, 2008 petitioner paid himself $49,663 which he deposited into his personal account. Petitioner states that he was advised by an accountant, Raymond J. Passero, CPA, that he was owed such funds as commissions and administrative fees.
During the period petitioner acted, the beneficiaries sought on numerous occasions to obtain distributions and information concerning the trust. The following exchange reflects petitioner's contempt for such requests. On November 30, 1998 Richard Kaskawits wrote petitioner "Ingram: How dare you hang up on me. You have some nerve. What I need is a complete accounting of the trust funds. Where the money is, what their values are, etc. These facts are necessary for college applications. In addition, I need confirmation from you that you will adhere to the language of the will. . . Your prompt reply will be appreciated." On December 11, 1998, petitioner wrote to GMS for the purpose of obtaining a four percent fee for his services related to the account. The next day petitioner replied to Richard " . . . After a careful review and consultation with counsel I regret to inform you that no provision for the college education of your children is specified. All of the terms and conditions of the trust will be strictly adhered to as your fathers (sic) executed choice of someone other than you to administer his wishes for his grandchildren to have a legacy when they achieve maturity." Petitioner alleges that he then sought advice from Mr. Passero, an accountant, concerning his commissions, following which, he proceeded to pay to himself.
Petitioner was appointed to perform a duty, to administer four trusts in the best interests of the respective beneficiaries. Notwithstanding his admission of the foregoing facts, petitioner maintains that he did not breach his fiduciary duty. Petitioner characterizes his actions as unintentional, that he acted in reliance upon provisions under the will, or in accordance with incorrect advice from professionals, and suggests that little or no harm resulted to the beneficiaries. While he acknowledges certain transgressions, such as the withdrawal of $137,000 from the trust [*4]funds, he has failed to make the beneficiaries whole by paying interest during the period he used the funds. There is no support whatsoever for petitioner's weak defense. Petitioner's advanced age and poor health, which he references as relevant, does not excuse the gross dereliction of his duties over the course of sixteen years.
The record establishes that petitioner engaged in self-dealing, neglected the trust and was unfaithful to the beneficiaries. For sixteen years he treated the trust funds as his own property. The beneficiaries were damaged and as a result they are entitled to be made whole (see Matter of Rothko, 43 NY2d 305 [1977]).
We turn first to petitioner's payments to himself in the amount of $6,767.54 which he characterizes as"administrative fees." He has not proffered any proof as to the nature of such fees, nor is there any showing that such "fees" constitute administration expenses. There is no legal authority for taking "administrative fees." If such fees reflect reimbursement of expenses, then petitioner has the burden to establish the propriety of such expenses (Matter of Shulsky, 34 AD2d 545 [1970], appeal dismissed 27 NY2d 743 [1970]; Matter of Seabury, NYLJ, May 17, 1995, at 28, col 3). Notwithstanding objectants' demand for support, e.g., bills, cancelled checks, nothing has been produced. No proof having been presented as to the claimed administration "fees," they are disallowed. Accordingly, petitioner is directed to repay the successor trustees the sum of $6,767.54 together with interest computed at the rate of 9% from the date of his taking such fees (CPLR 5004).
Additionally, petitioner failed to account for the $572.06 discrepancy in the funds he received from the executor and later withdrew from his personal Citibank account and deposited into the GMS account. The record establishes that petitioner received from the executor the sum of $200,000 and that he failed to transfer all of the funds into the trust account. Accordingly, petitioner is directed to repay the successor trustees the sum of $572.06 together with interest computed at the rate of 9% from the date the trusts should have been funded.
It is axiomatic that a trustee may not help himself to trust funds (see Matter of Schiach, 55 AD2d 914 [1977], leave denied 42 NY2d 802 [1977]; Matter of Rees, 277 App Div 857 [1950], aff'd 302 NY 647 [1951]). Petitioner's admission that he took trust funds, coupled with his failure to pay interest on the improper withdrawal, establish his wrongdoing. Accordingly, petitioner is surcharged interest on the amount of $137,000 at the rate of 9% to be computed from the date of his wrongful taking to the date he deposited such amount into the trust account (CPLR 5004).
Equally apparent is that a trustee is prohibited from co-mingling trust funds with his own (see Matter of Lincoln Rochester Trust Co., 201 Misc 1008 [1928]; Matter of Goerler, March 12, 1997, at 31, col 4). Accordingly, petitioner is surcharged interest at the rate of 9% for the period the trust funds were held by him in his personal account (CPLR 5004).
Petitioner incurred $26.31 in interest and penalties for failing to file timely income tax returns. He is directed to pay the trusts the amount of $26.31 plus interest at the rate of 9% from the date fixed by the taxing authority as triggering the liability (Matter of Newoff, 107 Misc 2d 589 [1980], aff'd 107 AD2d 417 [1985]; CPLR 5004).
Objectants seek to surcharge petitioner for his failure to invest the funds for a higher return than that earned by his investment in municipal bonds and a low yielding money market account. Petitioner's investments however complied with decedent's direction under his will. Accordingly, objectants have not established that petitioner failed to exercise reasonable care in the investment of trust funds. Such objections are denied. [*5]
We turn now to the request to surcharge petitioner for objectants' legal fees for services rendered by Citak & Citak. The court may fix legal fees incurred by a party as a surcharge against an errant fiduciary where it is established that such fees reflect services solely to establish the fiduciary's misconduct and to recover funds from him or her (Matter of Buxton, NYLJ, Oct 13, 2006, at 32, col 3 and citations therein; Matter of Miller, NYLJ, Aug 30, 1995, at 26, col 1). The record is clear, the services of Citak & Citak were necessary to establish petitioner's misconduct and resulted in significant recovery to the beneficiaries.
The determination of the reasonableness of professional fees awarded in an estate matter is within the sound discretion of the Surrogate's Court (see SCPA 2110; Matter of Graham, 238 AD2d 682). In determining the reasonableness of the fees, the court has considered all of the relevant factors, including: (i) the size of the estate; (ii) the difficulty of the questions presented; (iii) the skills required; (iv) the attorney's experience, ability and reputation; (v) the responsibilities involved; and (vi) the benefit resulting to the estate from the services rendered (see Matter of Freeman, 34 NY2d 1; Matter of Potts, 213 App Div 59,aff'd, 241 NY 593).
Citik & Citak's services include the following: preparation and filing of the petition for compulsory accounting and related relief; numerous appearances before the court; filing a motion to suspend and/or revoke petitioner's letters; engaging in settlement discussions which resulted in petitioner's resignation; preparation and filing of four proceedings for petitioner's resignation and the appointment of successor trustees; preparation and filing of objections; conducting discovery which included obtaining of bank account records and related documents to reconstruct the account; preparation of the stipulated facts and exhibits for determination herein together with a brief and reply brief. The firm seeks $86,412.49 for 317.34 hours and disbursements in the amount of $2,711.69. The court finds the requested fees fair and reasonable particularly in light of the necessity for such services and the results achieved. Disbursements are allowed in the reduced amount of $2,248.80 (Matter of Diamond, NYLJ, July 14, 1993, at 30, col 1, aff'd 219 AD2d 717 [1995]). Accordingly, petitioner is surcharged in the amount of $88,661.29 which he is directed to pay to the firm Citak & Citak.
With regard to the objection that petitioner paid himself commissions without court order, SCPA 2309 (2)(3) entitles a trustee to retain annual commissions provided he has furnished each beneficiary with an annual statement of the trusts funds. Paying out commissions may also be allowed upon making distribution of principal at a rate of 1% (SCPA 2309 [1]). Where excess commissions fees have been taken, the fiduciary may be surcharged at the legal rate of interest (see CPLR 5004; Matter of Hildreth, 274 App Div 611 [1949] aff'd 301 NY 705 [1950]; Matter of Crippen, 32 Misc 2d 1019 [1961]).
Here, petitioner failed to provide the beneficiaries with annual statements, as directed by decedent, and also in contravention of SCPA 2309. Additionally, objectants have established that petitioner improperly paid excess commissions. Accordingly, petitioner is directed to repay the successor trustees the amount of the excess commissions together with interest at the rate of 9% computed from the date such excess commissions were taken (CPLR 5004).
Concerning the balance of the commissions, the court has discretion to deny commissions, in whole or part, depending upon the breach of trust. The record is replete with breaches by petitioner of his fiduciary duties. He improperly diverted trust assets (Matter of Etoll, 101 AD2d 935 [1984]), failed to make timely distributions to the beneficiaries (Matter of Alpert, NYLJ, Nov. 7, 1986, at 12, [*6]col 5, aff'd 146 AD2d 974 [1989], appeal dismissed 74 NY2d 712 [1989]), overpaid himself commissions without court order (Matter of Barsch, NYLJ, June 27, 2008, at 40, col 5), failed to maintain books and records (Matter of Penzato, 200 Misc 751 [1951]; Matter of Israel, 64 Misc 2d 1035 [1970]), and failed to file an accurate account (Matter of Vanacore, NYLJ, Oct. 14, 1988, at 27, col 2). Put simply, petitioner completely disregarded his fiduciary duties. Accordingly, petitioner's request for a statutory commission is denied. Petitioner is directed to repay the successor trustees the balance of the commissions disallowed herein together with interest at the rate of 9% computed from the date such commissions were taken (CPLR 5004).
Likewise, petitioner's requests to pay his attorney's fees and accountant's fees from the trust are denied in their entirety (Matter of Newhoff, 107 AD2d 423 [1985], mot leave to appeal denied 66 NY2d 605 [1985]). The legal services rendered in defense of the trustee's egregious misconduct will not be borne by the trusts. Nor will the trusts bear the expense of the accountant's services which were solely for the benefit of petitioner and resulted in actual harm to the beneficiaries.
The total of the refunds and payments directed herein shall be paid to the successor trustees to be divided equally among the four trusts.
Finally, the guardian ad litem's fee shall be fixed in a separate decision following the filing of her report. Within 60 days of the decree to be made herein, the guardian ad litem shall file a supplemental report showing whether the decree has been complied with insofar as it affects her ward (22 NYCRR 207.13 [b]).
Settle decree within 60 days from the date hereof (22 NYCRR 207.37 [a]).
Dated: White Plains, NY
October, 2009
________________________________HON. Anthony A. Scarpino, Jr.
Westchester County Surrogate
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
