On July 11, 2012, In the Matter of the Estate of Schmidt, Superior Court ofNew Jersey, Appellate Division, Docket No. A-0210-11T2, onJuly 11, 2012, the Court affirmed the trial court’s decision to deny counsel fees to an unsuccessful contestant in a probate litigation matter.
In Schmidt, the defendant, who was the decedent’s nephew, had power of attorney for the decedent. After the decedent’s death, her niece filed a Complaint to compel an accounting of the nephew’s actions as POA.
The nephew provided an informal accounting, the niece filed a motion to enforce litigant’s rights relating to the accounting.
By way of background, the nephew was the sole residuary beneficiary and maintained – throughout the litigation – that there were sufficient funds to satisfy the niece’s $20,000 specific bequest. Nevertheless, the Court permitted the niece to press on with her Complaint, based on the theory that if she had established wrongdoing on the nephew’s part, she could recoup her fees.
The trial judge noted that the POA kept poor records and made various checks payable to cash, including in payment of home health aides; however, the court found that such actions were for the benefit of the decedent with the exception of an unreimbursed loan. Ultimately, the court approved the nephew’s accounting, subject to an $8,000 adjustment for the loan that the nephew had not repaid to the decedent.
In the end, the trial court found that the nephew’s actions did not harm the estate and found the $8,000 exception to be fairly minor. The court further found that the niece had failed to establish her claims and that the estate had not at all benefits from the long, unsuccessful litigation.
The niece filed a motion seeking over $48,000 in fees, plus costs and investigator services. The court rejected her claim and she appealed.
On Appeal, the niece argued that she was entitled to fees and costs based on In re Estate of Lash, 169 N.J. 20 (2001), because there had been a finding that the nephew had misappropriated estate assets. Also, she argued that pursuant to R. 4:42.9(a)(a) she was entitled to fees from a fund in court which is utilized if it would be unfair to impose sole financial responsibility on an individual who, as a result of litigation, created a benefit to others.
The Appellate Division affirmed. The decision notes that N.J.S.A. 46:2B-8.13(b) requires attorneys-in-fact to maintain accurate books and records of all financial transactions. Although the POA failed to do so, the trial judge was satisfied that the accounting was nonetheless accurate. The decision also notes that R.4:42-9(a)(2) does allow a fund in court to be utilized if it would be unfair to impose the sole financial responsibility on an individual who, as a result of litigation, creates a benefit for others. However, here, this estate was not enhanced by years of litigation.