Master Recommends the Removal of Executor

In Re: Estate of Bennie P. Farren C.A. No. 8714-MA (June 18, 2015)

Master Ayvazian, in her final report in this matter, modified an earlier draft report to recommend that a petition to sell real estate to pay a decedent’s debts be dismissed without prejudice so that “the executor would not be precluded from filing another petition under 12 Del. C. § 2701.” To ensure “the proper administration of the decedent’s estate,” the Master dismissed the petitioner’s exceptions to her earlier draft report “as waived under Rule 144 because [the petitioner] failed to order the transcript of [the Master’s] draft report issued from the bench.” However, the Master addressed the petitioner’s exceptions to determine whether “the executor… demonstrated that the personal estate of the decedent [was] insufficient to pay his debts,” so as to allow the executor to petition to sell the estate’s real property to satisfy the decedent’s debts under 12 Del. C. § 2701.  The Master recommended that the petition to sell the real property be denied because of the executor’s breach of his fiduciary duty, for his failure to contest the claim, and for his reliance on “an illegal calculation of compound interest.” Furthermore, the Master recommended granting a petition to remove the decedent’s son as the executor of the estate for his attempt to shift the burden of contesting a claim against the estate to the beneficiaries.

The decedent’s will established a trust for his “lady friend,” his close companion of thirty years, and her son (the beneficiaries). The trust granted the beneficiaries a life estate in the decedent’s residence and the income required to maintain the home. The decedent’s son was named the executor of the estate. The executor’s mother, the decedent’s ex-wife, filed a claim against the estate for $228,459.47 “purportedly for past due child support with interest therein.” The claim was accepted by the executor as a just debt. The executor, relying on 12 Del. C. § 2701, filed a petition to sell the decedent’s real property to satisfy the decedent’s debts. The beneficiaries objected to the executor’s petition to sell the property and filed a petition to remove the decedent’s son as executor for breaching his fiduciary duty to the beneficiaries by failing to contest or verify his mother’s claim against the estate. The beneficiaries alleged that the executor’s mother’s claim was not based upon a foreign judgment, and that the records used by an independent certified public accountant to calculate the amount owed to the claimant “contained double hearsay.” The executor conceded that the claimant’s calculation of compound interest was in error during oral arguments.

The Master’s recommendations relied on the executor’s handling of the decedent’s debts. The Master took exception to the fact that the executor rejected a separate claim for a significantly lower amount that was tied to legal fees incurred by the decedent in connection with a U.S. Bankruptcy Court Judgment Order and a Final Order of Custody and Support in the Florida Circuit Court against the estate, but accepted his mother’s claim without contesting the claim or its validity. Furthermore, the Master determined that the executor tried to shift the burden of opposing his mother’s claim to the beneficiaries when the estate’s attorney advised counsel for the beneficiary that, unless the beneficiary agreed to pay all the costs of opposing the claim, the executor planned to accept it.

The Master rejected the executor’s argument that the Court “can and should perform… the clerical or ministerial act of calculating simple interest on child support arrears.” Although the child support claim filed against the estate far exceeded the decedent’s personal estate, the net personal estate of the decedent (valued at $27,600) would have been sufficient to satisfy a debt of $24,300 (the amount owed in child support arrears by the decedent according to a certified copy of the Arrearage Affidavit). Therefore “the estate would have had sufficient assets to pay [the] claim without having to petition to sell the realty.” However, the Master explained that it was unclear whether the record of the amount owed by the decedent, provided by the claimant, included “interest or not,” and, “whether the claimant is entitled to any interest on [that] amount as a matter of law.” Moreover, the Master recognized that under 13 Del. C. § 507(a), “Delaware Family Court has exclusive jurisdiction over” the payment of child support, the determination of arrears owed by the decedent, and the reduction of “those arrears to a judgment provided that the proper proofs are made.”

The Master acknowledged “[t]he fact that Family Court lacks the authority to enforce such a judgment against the personal representative of the decedent’s estate,” but explained that the Family Court’s lack of authority “does not render the claimant’s action… futile because the claimant may return to this Court to enforce the judgment.” The Master therefore recommended the dismissal of the petition to sell real estate to pay the decedent’s debts without prejudice, to allow the executor to file another petition under 12 Del. C. § 2701 “if the Family Court reduces the child support arrears to a judgment in an amount exceeding the remaining personal estate.”