BILL NUMBER: S4155

SPONSOR: HOYLMAN
 
TITLE OF BILL:  An act to amend the surrogate's court procedure act,
in relation to the granting of letters of administration and letters of
administration with will annexed

 
PURPOSE:

The proposed legislation will remedy an apparent inconsistency in the
law for issuance of letters of administration and letters of adminis-
tration with the will annexed (cum testamento annexo, or c.t.a.)  and
bring the law into accord with judicial interpretations.

 
SUMMARY OF PROVISIONS:

Section 1: Amends subdivisions 6 and 7 of section 1001 of the Surro-
gate's Court Procedure Act regarding the order of priority for granting
letters of administration.

Section 2: Amends Subdivisions 6 and 7 of section 1418 of the Surro-
              

gate's Court Procedure Act regarding the order of priority for granting
letters of administration with will annexed (c.t.a.); when and to whom
granted.

Section 3: Provides for an immediate effective date.

 
JUSTIFICATION:

Sections 1001 and 1418 of the Surrogate's Court Procedure Act (SCPA)
were originally enacted as New York Laws of 1966, Ch. 953, and became
effective on September 1, 1967. The statutes have been revised on numer-
ous occasions, with the last substantive revision to section 1418 made
by the New York Laws of 1992, Ch. 19, effective March 20, 1992; and the
last substantive revision to section 1001 made by the New York Laws of
1993, Ch. 514, and was effective on January 1, 1994.

SCPA 1418(6) provides that an administrator c.t.a. may be appointed on
the consent of all beneficiaries. This course of action is available
only if "all beneficiaries are themselves eligible." As such, in a situ-
ation in which a single beneficiary, of many, is considered ineligible
under SCPA 707, the option for appointment by consent is not available
under the current law.

This approach to appointment of an administrator c.t.a. by consent is
inconsistent with, and notably stricter than, that which is provided for
the appointment of an administrator to an intestate estate by consent of
the distributees. SCPA 1001(6) provides, in pertinent part, that
"letters of administration may be granted to an eligible distributee or
to an eligible person who is not a distributee upon the acknowledged and
filed consent of all eligible distributees, or if there are no eligible
distributees, then on the consent of all distributees...."

This statute differs from 1418(6) in two operational ways. First, the
statute requires only the consent of "eligible distributees." A s such,
in a situation where there is a class of distributees, some of whom are
ineligible, the remaining eligible distributees will retain the ability
to consent to an administrator. Second, even if all the distributees are
ineligible, they are nonetheless provided the opportunity to consent to
an administrator. On the other hand, under 1418(6), all beneficiaries
under the will must consent, and if one is ineligible, all beneficiaries
lose the opportunity to consent to the administrator c.t.a. of their
choosing. Notably, the approach taken under SCPA 1001(6) prior to 1993
was the very approach provided today under 1418(6). In 1993, the New
York legislature enacted an amendment which, in part, made the exact
changes to SCPA 1001 which are proposed herein.

This inconsistency between the statutes has no principled basis. While
it is true that 1001 applies when the decedent dies intestate and 1418
applies when the decedent dies testate with a nominated executor that is
unfit or unable to serve the role, this distinction , for the purposes
of allowing appointment of an administrator by the consent of the ulti-
mate beneficiaries of the estate, is not meaningful.  Both situations
involve the court appointment of an administrator to the estate, and
both statutes attempt to provide a process by which those who ultimately
stand to benefit from the estate are allowed to consent to an adminis-
trator rather than be forced to accept the court-appointed public admin-
istrator.

The legislative history of both SCPA 1001 and 1418 is instructive on
this matter. SCPA1418(6) was amended in 1968, replacing language which
provided that an administrator c.t.a. could be appointed by consent
"provided none of the beneficiaries are under disability," with the
current language we see today. While it was recognized that this change
would limit the ability of beneficiaries to consent, the primary purpose
was to bring the 1418 language into congruence with that of 1001 at the
time. Also, as discussed, 1001(6) was amended in 1993 to include the
language that consent to the appointment of an administrator in the
intestacy context could be made by "all eligible beneficiaries, or if
there are no eligible distributees, then on the consent of all distribu-
tees." The legislative history shows that the purpose of that amendment
was to broaden the scope of the consent provision and allow for the
appointment of an administrator by consent of the distributees in situ-
ations where there are either no eligible distributees or a mixed class
of eligible and ineligible distributees. The proposed amendment to
1418(6) seeks to do the same, bringing the law up to speed with
1001(6),just as was done in 1968.

The courts have even recognized this incongruent treatment under SCPA
1418(6). In In re Estate of Hungerford, the Surrogate held that the
"statutory requirement that all beneficiaries themselves be eligible to
receive letters before they may designate a non-beneficiary seems
harsh...." The Surrogate further suggested that legislation should be
enacted in order to allow for the designation of an administrator c.t.a.
by consent even if only one, but not all, beneficiaries are eligible. As
a result, courts have interpreted the provisions of 1418(6) more broadly
than the statutory language would seem to allow. For example, courts
have found that the amendment to 707(1)(c), which permits a non-domici-
liary alien to be considered eligible so long as they serve with a New
York resident co-fiduciary, informs the interpretation of 1418(6). Most
notably, it has been held that because a beneficiary may be considered
eligible under certain conditions, i.e. when serving with a New York
co-fiduciary, they may be considered to be eligible for the purposes of
providing consent to appointment of an administrator c.t.a. The proposed
language seeks to codify this development in New York law, both in
1418(6) and in 1001(6).

Finally, the proposed changes maintain sufficient protection of the
ultimate beneficiaries' interests. Under the proposed language, the
"eligible" beneficiaries will be entitled to consent to an administrator
or administrator c.t.a., as the case may be. As such, those considered
under the law to be fit to serve in a fiduciary capacity are permitted
to decide who shall distribute the estate in which they have a pecuniary
interest. It follows; therefore, that these competent individuals will
consent only to an administrator whom they are confident will administer
the estate properly. In fact, it is arguable that the proposed changes
in fact increase protection by allowing the beneficiaries to consent to
an administrator of their choosing, a person whom is likely to have an
interest in the proper administration of the estate above that of a
public administrator.

Beneficiaries, unlike the court, have intimate knowledge of the testa-
tor, and as such, may be in a position to appoint a person as adminis-
trator who is uniquely qualified to serve in that role.  Therefore, SCPA
1418(6) should be amended as proposed in order to bring the statute back
in congruence with SCPA 1001(6), conform with judicial broadening of the
statute, and to provide for the option of appointment by consent in
situations where one or all of the beneficiaries under the will are
ineligible as non-domiciliary aliens. Additionally, in order to fully
codify the eligibility parameters already set forth in New York law in
Matter of Estate of Lode, SCPA 1 001(6) should be amended to conform to
SCPA 1418(6).

 
LEGISLATIVE HISTORY:

New bill

 
FISCAL IMPLICATIONS: None.

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to all
proceedings occurring on or after such effective date.