Surcharging a Fiduciary

A fiduciary, whether a trustee or a personal representative, is generally required to produce an accounting prior to making distributions to the beneficiaries. If a fiduciary is ordered by a judge to render an accounting, then naturally it is prudent for the fiduciary to do so. Otherwise, liability can arise for this omission. A recent unpublished appellate decision involved a fiduciary who failed to provide an accounting to the court, when required to do so, and suffered the consequences.

On September 12, 2005, appellant filed a petition to be appointed executor of her father's estate. Appellant's petition was granted and she was appointed executor in November 2005. "After letters were issued, appellant proceeded to implement the transfer of the property listed in the will. Relevant to this appeal, in September 2006, appellant executed deeds for three properties the will stated should be transferred to Hulsey and Holtermann as joint tenants. Thereafter, in October 2006, appellant filed an ex parte petition seeking a final discharge of the probate. In November 2006, the probate court struck the letters it had issued to appellant after realizing the steps necessary to close the probate had not been taken by appellant." 

"No further filings were made in this matter until November 2019 when Holtermann filed a petition to reopen the administration of the estate."

In December 2019, "[n]oting he needed an accounting before he could enter any final orders closing the estate, the judge also issued an order instructing appellant to appear and provide an accounting. Appellant was not present at this hearing. The hearing on the petition was then continued to June 2020."

During a September 14, 2020 hearing, the trial court judge believed that "an accounting would help resolve outstanding issues before closing probate, the judge continued the matter to December 28, 2020, and directed appellant, through her attorney, to file an accounting by November 30, 2020. Prior to that hearing, Holtermann's attorney submitted a declaration to the court documenting attorney's fees he generated while pursuing the case for Holtermann."

"At the December 28, 2020, hearing, the judge learned no accounting had been submitted by appellant. The judge warned appellant's attorney that his client had a fiduciary duty to prepare the accounting before probate could be closed and might be subject to a surcharge if one was not provided. The court then continued the hearing, once again, to February 8, 2021."

"An accounting was not provided by appellant at the February 8, 2021, hearing."

"The order also awarded Holtermann $3,500, designated as a "surcharge" against appellant for failing to provide an accounting to the court."

On appeal, the $3,500 surcharge was upheld. 

Holtermann v. Irvin, Tulare County Superior Court, case # VPR042397