Exceptions to Accounting Rejected by Appellate Division
In re T/U/W of Wen, Docket No. A-3675-22, (N.J. Super. App. Div. Jul. 8, 2024)
Peter Wen (“Peter”) was the son of the decedent, Wu Huai Wen. The case focused on a trial court order approving the first interim accounting of the trust (“Trust”) established under the decedent’s last will, for the period August 1, 2014, through December 31, 2022.
The decedent died on November 14, 2009. Pursuant to his will, the Trust was established, and provided for income and discretionary principal payments to the decedent’s spouse during her lifetime. Following the spouse’s death, the remainder was to pass to the decedent’s living descendants, including Peter.
Although the spouse and children were named as trustees, in view of litigation the court appointed an attorney as the temporary substitute trustee (“Trustee”). The Trustee sought approval of an interim accounting. Pursuant to the accounting, the Trust’s principal assets amounted almost $1.5 million.
Peter filed an answer to the accounting with several exceptions.
In response to Peter’s submission, the Trustee supplied Peter with supplemental documentation despite noting that Peter’s exceptions did not comport with Rule 4:87-8. In turn, Peter reiterated his exceptions and requested more detailed information. For example, he challenged monthly distributions of principal to the decedent’s widow of $11,000. Peter believed the monthly distribution requests came from another family member, and he accused that person of deceptive and improper conduct. Although Peter acknowledged that the Trustee had denied certain requests, Peter requested that the Trustee conduct a further investigation into the propriety of the expenses as well as other sources of income and support available to the widow.
The Trustee defended the distributions as appropriate and in line with the explicit provisions in the Trust. The trial judge agreed and ruled according in a summary fashion.
Peter appealed.
On appeal, Peter argued that the trial judge overlooked the Trustee’s duties only to the lifetime beneficiary but also to the remainder beneficiaries of the Trust. He contended the judge failed to adequately scrutinize the Trustee’s discretion in light of the claims of manipulation of his mother. Peter also asserted that the matter should not have been summarily decided but further discovery and a plenary hearing was needed.
The Appellate Division began its analysis by noting, “an action to settle an account on an estate trust is a formalistic proceeding, unique to probate.” Higgins v. Thurber, 205 N.J. 227, 229 (2011); R. 4:87-1 to -9.
- 4:87-8 allows an interested person to file written exceptions to an accounting within the parameters of that Rule. The appeals court continued:
“[T]he accounting procedure in general and the hearing on exceptions in particular” are “limited” in nature. Perry v. Tuzzio, 288 N.J. Super. 223, 230 (App. Div. 1996). The action proceeds as a summary matter, R. 4:83-1, conducted in accordance with Rule 4:67-5. See N.J.S.A. 3B:2-4 (allowing actions by fiduciaries to proceed in a summary manner); see also Garruto v. Cannici, 397 N.J. Super. 231, 241-42 (App. Div. 2007) (providing an overview of probate proceedings in New Jersey). “[A] court must make findings of facts, either by adopting the uncontested facts in the pleadings after concluding that there are no genuine issues of fact in dispute, or by conducting an evidentiary hearing.” Courier News v. Hunterdon Cnty. Prosecutor’s Off., 358 N.J. Super. 373, 378-79 (App. Div. 2003); see also Pressler & Verniero, Current N.J. Court Rules, cmt. on R. 4:87-8 (2024). If there are genuine issues as to any material fact, the court should conduct an evidentiary hearing on those disputed issues. Tractenberg v. Twp. of W. Orange, 416 N.J. Super. 354, 365 (App. Div. 2010) (citing R. 4:67-5); Courier News, 358 N.J. Super. at 378.
Wen at *8.
In addition, an action to settle an account as a proceeding that “involves a line-by-line review on the exceptions to an accounting.” Higgins, 205 N.J. at 229 (citing R. 4:87-1(a)). However, “[e]xceptions which state no reason for criticism of the whole report, specify no items of which the exceptant complains, and no particulars wherein the master is alleged to have erred, cannot be entertained.” In re Estate of Herrmann, 127 N.J. Eq., 65, 68-9 (Prerog. Ct. 1939)(internal citations omitted). The court continued, “As indicated in In re Estate of Oliver, ‘[t]he rule is well settled that in all matters of charge against the accountant the burden of proof is upon the exceptant. But in matters of discharge the burden is upon the accountant.’ 3 N.J. Misc. 453, 463 (Orphans’ Ct. 1925) (citation omitted) (citing Kirby v. Coles, 15 N.J.L. 441, 444 (1836)).” Wen at *11.
Ultimately, the Appellate Division affirmed, finding no abuse of discretion on the part of trial judge. The appeals court agreed that the Trustee exercised her discretion in making principal distributions in accordance with the terms of the Trust. Moreover, Peter’s exceptions were insufficient as a matter of law and properly rejected in summary fashion.