Did you know that you can compel distribution of property in Surrogate’s Court pursuant to SCPA 2101(4)?
There are times when an executor, administrator, or Trustee refuses to distribute the assets of a Trust or Estate. Perhaps the executor and the beneficiaries do not agree to the amount to be held in reserve for payment of any potential claims or administrative expenses. Perhaps the fiduciary just does not want to make a distribution until the estate is completely wound up.
If a fiduciary refuses to pay the distributive share, then the person entitled to said share can commence an action or proceeding, pursuant to Surrogate’s Court Procedures Act (“SCPA”) 2102(4), to compel the payment of the distributive share. The proceeding to compel distribution can be commenced after seven (7) months have passed from the time Letters Testamentary, Letters of Administration, or Letters of Trusteeship are issued. In fact, once seven months have elapsed, the estate fiduciary is under an obligation, pursuant to Estates Powers and Trusts Law (“EPTL”) 11-1.5(c), to make payment of any testamentary disposition or distributive share if there are sufficient assets to cover administration and funeral expenses and debts.
What is SCPA 2102(4)?
SCPA 2102 is an amalgam of proceedings to obtain relief against a fiduciary. SCPA 2102(4) provides, in relevant part, as follows:
“A proceeding may be commenced to require a fiduciary…to pay a claim which has been allowed, to deliver a specific bequest or property to a person entitled thereto or to pay a legacy, distributive share, interest in a trust or a claim for an administration expense, and when a trustee is unable to deliver personal property to the person entitled, to pay the value thereof.”
If the fiduciary refuses or fails to deliver a legacy, bequest, or distributive share of property, then a proceeding to compel payment or delivery of the assets may be brought pursuant to SCPA 2102(4). Indeed, when the fiduciary has failed to deliver the property after request made upon him in writing, then you can ask the Judge to Order that the property be distributed to you. This means that if you are a beneficiary under a Will or a Trust, or if you are entitled to a piece of the estate, then you can ask the Trustee, Executor, or Administrator to distribute the property to you. Note that the pendency of an accounting proceeding does not preclude a beneficiary from commencing a separate proceeding to compel payment pursuant to SCPA 2102(4).
SCPA 2102(4) is a special proceeding, that is faster than compelling an accounting and waiting for the account to be settled before demanding a distribution. In fact, if an accounting proceeding is pending, it will not preclude a beneficiary from seeking payment of all or part of the legacy, especially where a need for the funds is shown
What Kind of Property Can I Compel to be Distributed?
You can ask for money, jewelry, personal, or real property to be distributed to you. If you are entitled to the assets, then you can ask a Court to distribute those assets to you, subject only to a fiduciary having sufficient funds on reserve to satisfy any claims, debts, or estate expenses.
Interestingly, a proceeding may also be brought by a fiduciary to compel his or her co-fiduciary to cooperate in the payment of creditors and the distribution of the remainder of the estate.
What Should I do Before Commencing a Petition to Compel Distribution of Property Pursuant to SCPA 2102(4)?
Before filing a petition with the Court to compel a distribution of property, you should write a letter to the fiduciary, requesting the distribution. The letter should specifically state that it has been more than seven months since letters have been issued, that you are entitled to assets or funds from the trust or estate and that the fiduciary has an obligation to remit those funds to you. The letter should be addressed to the fiduciary of the estate and should be sent in a way that the receipt of the letter can be tracked. Remember that you do not need to ask for an accounting of the assets. You are just asking for your distribution. If you request an accounting that will be a different proceeding. There are pros and cons to compelling an accounting versus compelling a distribution.
How do I Petition to Compel Distribution of Property Pursuant to SCPA 2102(4)?
If you have sent a demand letter for distribution and have not received a response, you can file a petition to compel a distribution with the Court. You can request an Order from the Court that the fiduciary be required to distribute the assets to you within a certain number of days.
In your Petition, you have to explain who you are, when the fiduciary was appointed, what you are entitled to under the Will or the Trust, that there are sufficient assets in the Will or the Trust to satisfy the bequest to you and still have money left over to pay any claims or expenses, that the fiduciary is intentionally not distributing the assets, that more than seven months have passed, and that you are entitled to the funds.
In addition to the Petition with exhibits (including that demand letter that you should have sent the fiduciary before you started writing the Petition), you have to prepare an Order to Show Cause if you are seeking immediate and potentially injunctive relief, such as a temporary restraining order. If you are not seeking immediate relief, then you will need a Citation, instead of an Order to Show Cause. You should contact the county where you will file the papers, out of an abundance of caution to determine whether any other documents are necessary.
The petition should be filed in the County where letters were issued. If the proceeding is commenced in a different county, the Court may decline to entertain.
What Happens after I file my Petition to Compel Distribution of Property Pursuant to SCPA 2102(4)?
After you file the Petition with the Order to Show Cause or Citation and pay the fee, the Court will review it to determine whether it should be entertained. If the Petition is entertained, then you will receive a signed Citation or a signed Order to Show Cause with instructions on how to serve the papers upon the fiduciary. Following the Court date, there is typically a Court conference at which time an agreement is entered into as to when you will receive your distribution. If the fiduciary has a good reason for why he or she has not distributed the funds, the fiduciary will advise the Court.
Typically, in response to the petition and in order to avoid paying the bequest, a fiduciary may tell the Court that they do not have enough cash on hand to satisfy the request because they need the cash to pay taxes or some other expenses or debts of the estate. Indeed, where there is a small amount of cash in the hands of the executor relative to the unpaid legacies and unpaid expenses and claims, then the cases seem to show that the application will be denied.
To combat this, you should be prepared to demonstrate that there are enough assets on hand to pay any creditors or debts of the estate even after satisfaction of your bequest, and that you need the distribution.
The fiduciary may also try to say that the beneficiary is indebted to the estate in a greater amount than the legacy. You should be prepared to show that the beneficiary is not indebted to the estate and that the bequest is greater than the indebtedness.
The fiduciary may also argue that the distributee’s status is in question and that the individual seeking the share is not entitled thereto. You should be prepared to show your entitlement to the the bequest or distributive share.
For those wondering whether legal fees can be requested, be aware that even if a petitioner is successful in having the Court order the fiduciary to pay an overdue general legacy, the Court will not normally direct payment of the petitioner’s legal fees from the estate.
In conclusion, when a distributive share is being withheld, it is possible to commence a special proceeding, pursuant to SCPA 2102(4) to have the share distributed without first waiting for the lengthy accounting period.
We can help you compel distribution of property pursuant to SCPA 2102(4). Contact us to learn more.
For more information, please contact Guardianship, probate and estate planning attorney Regina Kiperman:
Or visit her at:
40 Wall Street
New York, NY 10005
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