Before the Court in this contested accounting proceeding are cross motions for summary judgment. Objectants have moved for partial summary judgment on several issues detailed in their motion papers and the administratrix has cross moved for summary judgment dismissing all the objections to her accounting filed October 1, 2004.

Jung Chao Liu died August 31, 1999 without a will domiciled in Vestal, NY, but with dual citizenship in the U.S. and Taiwan. He was survived by his wife, Su-Lien Chen, and 5 children. Three of the children, James, Jean and Mark Liu, were from his first marriage and they are the objectants herein. The other two children, Victor and Esther Liu, are children of his marriage to Ms. Chen. Su-Lien Chen was appointed administratrix of the estate on May 16, 2000 and posted bond of $850,000.00.

His gross estate was $6,669,377.97, consisting of approximately $2,000,000 in U.S. assets and over $4,000,000 in stocks in Taiwan companies and real estate located in Taiwan. A major U.S. asset was a TIAA-CREF retirement account of over $1,000,000 on which James, Jean and Mark Liu and a brother of decedent were equal beneficiaries.

The objections consist of 19 paragraphs. These cross motions will be dealt with in the order set forth in the paragraphs of the objections since both motions relate to many of the same issues. It should be noted that objections were also filed by Edward A. Rantanen, Esq., as guardian ad litem for Esther Liu, including the same objections plus three additional objections. No motion for summary judgment has been made on behalf of Esther Liu.

"To grant summary judgment, it must clearly appear that no triable issue of fact is presented. This drastic remedy should not be granted where there is any doubt as to the existence of such issues." Wanger v Zeh 45 Misc 2d 93 (Sup. Ct. Albany Co. 1965) aff'd 26 AD2d 729 (3rd Dept. 1966). As stated by another court "issue finding, rather than issue determination, is the key to the procedure." Esteve v Abad 271 AD 725; (1947) accord, Stillman v Twentieth Century Fox 3 NY2d 395 at 404 (1957). If issues of fact are found, then summary judgment must be denied. Zuckerman v City of NY 49 NY2d 557 (1980)."

Objection 1 is that administratrix delayed over 6 months before petitioning for and securing temporary letters of administration, and that during that period the value of estate assets declined causing losses to objectants. The administratrix replies that there were delays in securing consents to no bond and that a final death certificate was not issued until early March 2000 and that Letters could not be obtained until then. The Uniform Rules for Surrogates Court §207.15 do require the submission of a death certificate, but also provide "Alternate evidence of death may be accepted in the discretion of the court."

In Matter of Yarm 119 AD2d 754 (2nd Dept. 1986) the co-executors contended they had no liability for losses incurred "during the period after decedent's death and before the issuance of letters testamentary." The court held citing EPTL §11-1.3 that the executors had a duty to prevent losses by taking prompt measures to preserve the estate assets. See Warren's Heaton on Surrogate Courts, 7th ed, §70.15(3)(a).

As with Yarm, there are issues of fact as to the reasonableness of the measures taken by administratrix to preserve estate property prior to issuance of letters, whether or not the delay was excessive, and the amount of loss incurred, if any.

Summary judgment on this objection is denied.

Objection 2 is that the administratrix did not pay the Federal and New York estate tax on [*2]time resulting in interest charges. It is clear the fiduciary is obligated to file the estate tax returns and is personally liable for paying the tax due. IRC §§2002 and 6018(a)(1); NY Tax Law §§971, 974, and 975. Where there is no will with a tax apportionment clause, the administrator must then apportion the tax to the persons interested in the estate liable for payment and collect their share of the tax from them. EPTL §2-1.8; Tax Law §§974 and 975. It is equally clear the ultimate liability for payment of the tax apportioned to them rests upon the persons who share in the estate. EPTL§2-1.8; IRC §6324(a)(2); Tax Law §975(e); Matter of Gilligan 247 AD2d 383 (2nd Dept. 1998); Matter of Ratta 128 Misc 2d 683 (Surr. Ct. Nassau Co. 1985).

The administratrix claims that objectants knew they would be liable for tax and that they had funds available which should have been advanced to pay the tax. All three objectants testified at their depositions they knew in November 1999 that they would be liable for tax on their share of the estate. (Westfall Affidavit filed April 17, 2007, Exhibit A, p.7, Exhibit B, pp. 5-6, Exhibit C, p.8).

The administratrix alleges objectants had available funds with which to pay their share of the tax from the TIAA-CREF accounts of which they were beneficiaries, but refused to do so. Administratrix also alleges that Allen Hall, Esq., as attorney for objectants, agreed with Beth Westfall, Esq., attorney for the estate, that the funds in the TIAA-CREF accounts would be used by objectants to pay their share of the tax. (Westfall Affidavit, filed February 15, 2007 at paragraph 13). Objectants deny Hall made any such agreement. Since there is no affidavit or deposition on this point from Mr. Hall, the Westfall affidavit stands uncontradicted by direct evidence. Objectants state that since the TIAA-CREF funds were retirement accounts they would be subject to substantial income tax upon withdrawal of those funds, although the exact amount is not stated. This latter argument is of no consequence since they were ultimately liable for the tax. Matter of Guattery 238 AD2d 820 (3rd Dept. 1997); Matter of Singer 363 NYS2d 746 {80 Misc 2d 1006} (Surr. Ct. Nassau Co. 1975). They could pay their share of the tax out of the TIAA-CREF account, out of other funds they might have available, or even borrow the money. Repeated demands were made by the attorneys for the estate for the objectants to pay the share of the estate taxes apportioned to them. (Westfall Affidavit filed February 15, 2007, Exhibit H).

In Matter of Rodgers 147 Misc.344 at 350 (Surr. Ct. New York Co. 1933), the residuary beneficiaries received income and other monies from the estate. Penalties accrued for unpaid taxes. The Surrogate held the executor would not be surcharged for these penalties because "The residuary legatees are directly responsible for these penalties because they used for themselves the money which should have been devoted to the payment of taxes." Since ultimate liability for the tax is upon objectants, and the objectants refused to use monies they had available to pay taxes when they knew they were liable for those taxes any interest charges that accrued are their responsibility.

Summary judgment on Objection 2 is granted and the objection is dismissed.

Objection 3 is that there was a delay in May 2000 in selling 1500 shares of IBM stock resulting in a loss. The prudent investor rule is a rule of conduct, not outcome or performance. EPTL §11-2.3(b)(1). In order for there to be a surcharge, objectants must prove the fiduciary was negligent or failed to exercise prudence. Matter of Clark 257 NY 132 (1931); Matter of Iversen, NYLJ 8/15/96 at p.34 (Surr. Ct. Westchester Co.). The IBM stock was liquidated to correspond [*3]with the due dates for the New York and Federal tax payments. (Westfall Affidavit filed February 15, 2007, Exhibit C). The Account filed herein shows gains on Schedules A-1, losses on Schedule B with a net loss of $9,761.15. The prudent investor rule requires that we look at the facts as they existed at the time of the decision by the fiduciary. EPTL §11-2.3(b)(1). Selling stock as taxes become due resulting in relatively small losses in a large estate is not imprudent.

Summary judgment dismissing this objection is granted.

Objection 4 is that the administratrix has provided no receipts for funeral and bond expenses reimbursed to her. Adequate documentation is set forth at Exhibit K to the Westfall Affidavit, filed February 15, 2007 and also on Schedule J to the Federal Estate Tax Return filed as an Inventory.

Summary judgment dismissing this objection is granted.

Objection 5 states that no information has been supplied that alternate values were computed in order to determine if they would reduce the tax. The Westfall Affidavit filed February 15, 2005 at paragraph 33 states her office computed the alternate values and they were higher. No evidence other than this bare assertion has been submitted. If such proof is submitted summary judgment could be granted, but until such submission is made summary judgment is denied.

Objection 6 makes three claims. First, that commissions are now being claimed by the administratrix, but were not deducted on the estate tax return. Commissions are not payable until the fiduciary account is settled. They can be claimed by her at any time up until then. SCPA §2307. Thus the administratrix is not obligated to claim the commissions until the estate is completed, nor is she required to claim them as an estate tax deduction. If and when paid they can still be claimed as a deduction on the fiduciary income tax returns, and if the deduction exceeds income can be passed through to the beneficiaries for deduction on their personal returns. IRC §642(g) and (h).

Summary judgment is granted dismissing this part of Objection 6.

The second claim is similar, that a $5,300 bond premium was not taken as an estate tax deduction. It was taken as an income tax deduction. (Mertens Affidavit filed April 17, 2007 at p.4). Objectants would have to prove this action was unreasonable. The difference in the taxes related to this item, if any, is de minimis.

Summary judgment is granted dismissing this part of Objection 6.

Third, it is claimed the $15,000 set off allowed to the spouse by EPTL §5-3.1 was not taken as a marital deduction on estate tax. This item will be discussed as part of the marital deduction discussion under Objection 8, infra.

Objection 7 raises two claims. First, that the administratrix paid herself the $15,000 set off while estate taxes were unpaid. EPTL § 5-3.1 states clearly that set offs "are not assets of the estate." Since the set off is not an estate asset, it is not subject to the control of the fiduciary except for payment of decedent's funeral expenses. EPTL §5-3.1(a)(5). Since the set off is not an asset of the estate, it is available to pay estate taxes only if the estate does not have sufficient other assets to pay the tax. Matter of Forness 4 AD2d 168 (4th Dept. 1957). Summary judgment is granted dismissing this part of Objection 7.

The second claim is that the administratrix distributed $15,270 to herself without first making provision for payment of estate taxes. As noted above, the administratrix is personally [*4]liable to pay the tax, but the beneficiaries bear the ultimate responsibility for paying the share of taxes apportioned to them. IRC §2002; EPTL §2-1.8. The Tax Court has held that a fiduciary who distributes estate assets before paying federal estate taxes he should have known were due, is personally liable for the unpaid taxes to the extent of the distribution. Beckwith v Comm'r TC Memo 1995-20.

Summary judgment is granted to objectants on the liability of the administratrix on this part of objection 7. The amount of any loss is undetermined and is reserved for trial.

Objection 8 is that the marital deduction was not properly computed resulting in more estate taxes than should have been paid. IRC §2056; EPTL §4-1.1. Primarily it is alleged this resulted from failure to include one half the real estate listed on Schedule A of the Federal return in the marital deduction computation on Schedule M of the return and also the set off mentioned above. EPTL §5-3.1. (Hayes Affirmation filed February 20, 2007, p. 4 and Hayes Affirmation filed April 24, 2007 pp 1-2).

As noted the fiduciary is required by the tax law to file the estate tax return. IRC §6018(a)(i); Tax Law §971. With that responsibility comes a duty to file a correct return to "minimize the over-all tax burden on the estate and its beneficiaries." Matter of Rappaport, 121 Misc 2d 447 at 450 (Surr. Ct. Nassau Co. 1983); Matter of Robbins, NYLJ 9/23/92 at p.23 (Surr. Ct. New York Co.); In re Phelps Will 55 Misc 2d 290 (Surr. Ct. New York Co. 1966); Warren's Heaton on Surrogate Courts, 7th ed., §165.01(2) at p. 165-5.

Mertens is correct when he states in his affidavit at page 2 that only the net value of property that actually passes for the benefit of the surviving spouse qualifies for the marital deduction. IRC §2056; Reg. 20.2056(c)-2. But since the decedent was a New York domiciliary who died without a will it is the New York law of intestate succession that determines the total amount that passes to the surviving spouse, including both US and Taiwan assets. EPTL §4-1.1. Cf. Matter of Rougeron 17 NY2d 264 (1966). It is also true, however, that the net value of the amount passing to the surviving spouse must be reduced for any taxes paid out of the spouse's share. IRC §2056(b)(4); Reg. 20.2056(b)-4(c). Apparently in Taiwan the spouse's share is subject to the estate tax.

The Estate Distribution Agreement which it is claimed was a final agreement in regard to the Taiwan estate is dated October 23, 2002. (Westfall Affidavit filed February 15, 2007 , Exhibit M). An estate tax return can be amended and a refund claimed for up to three years from the date the return is filed. IRC §6511. In this case that would be November 30, 2003. (Westfall Affidavit filed February 15, 2007, Exhibit J). Thus there was ample time to correct the tax computation and the marital deduction after the alleged final settlement was reached in Taiwan.

The parties have filed clashing affidavits by their attorneys as to the correct calculation of the marital deduction. (Mertens Affidavit filed April 17,2007; Hayes Affirmation filed April 24, 2007). The marital deduction is a matter of law. IRC §2056. However, its computation and the computation of the estate tax due depend upon the facts of the particular estate. At this time, there are unresolved questions as to whether the alternate valuation date should have been used and the correct amount passing to the surviving spouse, particularly from Taiwan assets.

The administratrix claims the objectants should be estopped from contesting the tax computation because copies of the return were submitted to objectant's counsel before filing. In addition, objectants counsel were apprised of the progress of the IRS audit of the estate tax [*5]return. (Westfall Affidavit filed February 15, 2007, paragraphs 19-26.) Nowhere in the affidavits is there any statement that objectant's counsel approved the returns or concurred in the positions taken on the audit.

"To constitute estoppel...the person sought to be estopped must do some act or make some admission with an intention of influencing the conduct of another...The other party, too, must have acted upon the strength of such admission or conduct." Werking v Annuity Estate Inc. 2 NY2d 43 at 53 (1956); Waldman v Cohen 125 AD2d 116 (2d Dept. 1987). Objectant's counsel might have a duty to speak to point out errors in the tax returns, but only if failing to do so would deceive administratrix or her counsel. Matter of Tanenbaum Textile Co. v. Schlanger 287 N.Y.400 (1942); Fisher Bros Sales v United Trading Co. 191 AD2d 310 (1st Dept. 1993). Since the obligation to file the estate tax returns was on the administratrix, IRC §6018(a)(1), Tax Law §971, objectants or their counsel had a duty to inform administratrix of assets in their possession that would affect the computation of the tax, but not to tell administratrix' counsel how to prepare and file the return or correctly compute the tax due thereon.

"Overpayment of estate tax can result in surcharge unless the executor can show exercise of common skill, prudence, and care." Warren's Heaton on Surrogate Courts, 7th ed. §165.01(2) at p. 165.5. Exercise of skill and prudence is a question of fact.

Summary judgment on Objection 8 is denied.

Objections 9 and 10 essentially allege that delays by the administratrix in administering and settling decedent's Taiwan estate and the taxes due thereon resulted in substantial losses in the value of those assets to the detriment of objectants. Objectants allege this was due to 1) administratrix' failure to report decedent's death to the Taiwan government to start proceedings there, 2) failure to promptly file documents with the Taiwan government to get the tax fixed, and 3) failure to cooperate in distribution and sale of Taiwan securities and real estate. (Affidavit of Jean A. Liu filed January 29, 2007 at p.6). Administratrix denied there was any unreasonable delay and submits a letter from her counsel in Taiwan claiming there was no unjustified delay. (Westfall Affidavit, filed February 15, 2007, Exhibit N). A question of fact is thus presented as to whether the proceedings in Taiwan were completed in a timely manner.

All parties agree that under Taiwan law no sale or transfer of the assets in Taiwan could take place until the Taiwan estate tax was computed and paid to the Taiwan tax authority. Administratrix claims this was done and a so-called "Estate Distribution Agreement" was signed by the parties on October 23, 2002. (Westfall Affidavit filed February 15, 2007, Exhibit M). The legal effect in Taiwan of this agreement is unclear. It is signed only by the parties and not the Taiwan government and so it does not prove the Taiwan tax proceedings were final and completed. Nor does the agreement contain any language by which objectants release the administratrix from liability for her administration of the estate in Taiwan, nor state the agreement is a final settlement.

Since this agreement affected the Taiwan estate and assets located there, its legal effect must be determined under Taiwan law. The court will take judicial notice of the law of a foreign country, but it is the obligation of the parties to provide the court with such law in English translation. CPLR §4511; Prince-Richardson on Evidence, 11th ed., §2-303, p.48. Letters from counsel retained by the parties are not sufficient, since such a letter suffers from the obvious bias of being prepared by an advocate for the client. Unless the parties can resolve this problem, it [*6]may be necessary for the court to appoint an expert on Taiwan law, at the parties expense, to provide an opinion on the Taiwan estate tax law and the effect of the "Estate Distribution Agreement." See Matter of Atkinson 117 AD2d 843 (3rd Dept. 1986).

As discussed above, the prudent investor rule is a rule of conduct, not performance. EPTL §11-2.3(b)(1). It is necessary for objectants to prove negligence or imprudence by the fiduciary that resulted in losses to the Taiwan estate portfolio. EPTL §11-2.3(b); Matter of Clark, supra ; Matter of Iversen, supra .

Inasmuch as there are questions of fact and also of Taiwan law relating to these objections summary judgment is denied.

Objections 11 and 12 are that the administratrix failed to collect and account for rent on two properties in Taiwan, the so-called Hospital and the Taipei house. Jean Liu in her affidavit filed January 29, 2007, pages 8-10, says there was at least one tenant, a Mr. Lin, in the Hospital paying rent and that the Taipei house was either kept vacant or occupied by administratrix' sister rent free. An Affidavit of YiYun Liu, aunt of objectants, dated March 14, 2007, alleges she spoke by telephone to Mrs. Lin who stated administratrix had directed them to send the rent money to administratrix' sister. Clearly this affidavit is hearsay and is disregarded. In an affidavit, administratrix denies collecting any rent, until after the Hospital property was transferred to her as part of the estate settlement (Chen Affidavit, filed April 17, 2007). There are still disputed questions of fact regarding whether or not rents were collected or should have been collected.

Summary judgment is denied on these issues.

Objection 13 is that administratrix received $30,000.00 as a final distribution from the estate of decedent's parent or parents. The burden of proof in an accounting proceeding rests upon objectants to come forward with evidence to show the Account is not complete in this regard. Once that burden is satisfied the fiduciary has the burden of proving the Account is accurate and complete. Matter of Curtis 16 AD3d 725 (3rd Dept. 2005); Matter of Robinson 282 AD2d 607 (3rd Dept. 2001). Objectants have presented no evidence to support this objection and have not met their burden of proof.

Summary judgment is granted dismissing this objection.

Objection 14 is that decedent owned life insurance policies on his life which should have been included in the estate. Again objectants have produced no evidence to support this objection. This claim is also denied (Westfall Affidavit, filed February 15, 2005, Paragraph 39).

Summary judgment is granted dismissing this objection.

Objection 15 is that the administratrix refused to cooperate in the sale of real estate located in Taiwan resulting in losses. As stated above all parties agree the real estate in Taiwan could not be sold until the Taiwan estate tax was paid. The objection does not state when the alleged failure of cooperation occurred, whether before or after the tax was paid. To the extent it was before, this objection is subsumed within and duplicative of Objections 9 and 10 claiming there was delay in administering the Taiwan estate.

Apparently even after the tax was settled and paid some assets were distributed to the parties jointly and there were further negotiations regarding sale of such assets. Since the parties were joint owners, to the extent the claimed lack of cooperation took place after the tax was paid, this is a complaint about actions of Ms. Chen in her individual capacity, not her fiduciary [*7]capacity and it is not a proper objection to the Account.

Furthermore objectants have submitted no separate direct evidence of this lack of cooperation and so have not met their burden of proof.

Summary judgment is granted dismissing Objection 15.

Objection 16 is that objectants had to obtain legal counsel in Taiwan because of the failure of the administratrix to proceed promptly with administration in Taiwan. They seek reimbursement for the legal fees paid. The general rule is that legal fees for services to a beneficiary are not payable from the estate. The exception is when those services benefit the estate as a whole, such as by bringing additional assets into the estate or reducing claims against the estate. Matter of Kinzler 195 AD2d 464 (2nd Dept. 1993); Matter of Altman 1 Misc 3d 566 (Surr. Ct. Bronx Co.-2003). Harris, New York Estates, 5th ed., paragraph 18:112 at p. 18-26. A question of fact is thus presented as to whether the legal services of objectants' attorneys in Taiwan benefitted the whole estate.

Summary judgment on this issue is denied.

Objection 17 claims that the share of estate taxes apportioned to objectants was computed incorrectly. It must be noted that no share of the taxes can be apportioned to Ms. Chen personally because her share of the U.S. estate is non-taxable due to the marital deduction.

EPTL §2-1.8(c)(2). The tax must be apportioned only between the three objectants, decedent's two other children and decedent's brother, James Liu, who received a share of the TIAA-CREF annuity. However, objectants agreed to pay the share of taxes due from their uncle James Liu (Westfall Affidavit, filed April 17, 2007, Exhibit A, pp. 38-9, Exhibit B, p. 18, Exhibit C, p. 17).

The correct computation of the apportionment requires a determination of the exact size of the estate and the amounts paid to each beneficiary from both probate and non-probate assets. EPTL §2-1.8. Such computation can only be made after issues in this contested accounting have been resolved that might affect the size of the estate or the size of the share of each beneficiary. Accordingly, summary judgment on this issue must be denied.

Objection 18 is that Victor & Esther Liu, children of decedent and administratrix have not received any portion of their inheritance. Inasmuch as they have not joined in this motion for summary judgment this issue is not properly before the court at this time. Their correct shares will be determined by the Decree finally settling the Account. This objection is dismissed.

Objection 19 is that administratrix has not accounted for household furnishings, automobiles, or other tangible personal property. The surviving spouse is entitled to set off of household furnishings up to $10,000, computers, etc. up to $1,000, and a motor vehicle up to $15,000. EPTL §5-3.1. The set off items are not assets of the estate and vest immediately in the surviving spouse. EPTL §5-3.1(a). Only to the extent the value of the set off items exceeds the stated dollar limits could the objectants benefit therefrom. As discussed above the burden is upon objectants to come forward with evidence to show the Account is incomplete in this regard. Matter of Curtis, supra ; Matter of Robinson, supra . They have produced none: No appraisal, no inventory, no estimate of value, nothing.

Summary judgment is granted dismissing this objection.

Finally, in their motion papers objectants have raised two issues that were not included in their objections. First, travel expenses claimed by the administratrix are alleged to be excessive. [*8]Second that the administratrix failed to invest monies advanced on January 3, 2005 by objectants to pay taxes causing a loss to objectants of interest income. It is clear the Account and the objections constitute the pleadings in an accounting proceeding. Matter of Curtis, supra . Nowhere in the objections filed on January 25, 2005 are either of these items set forth. The time to amend the pleadings has long since expired. CPLR §3025. Items not raised in the objections are not subject to trial. Matter of Wagner 25 AD2d 796 (3rd Dept. 1966). Furthermore, objectants have not met their burden of coming forward with evidence to support these claims. Matter of Curtis, supra .

Summary judgment is granted dismissing these two claims.

It is hereby:

ORDERED, that the objections in paragraphs numbered 2,3,4,13, 14, 15,18 and 19 of the objections filed on January 25, 2007 by Jean A. Liu, James Liu and Mark Liu are dismissed; and it is further

ORDERED that the objections filed on January 29, 2007 by Jean A. Liu, James Liu and Mark Liu in paragraphs numbered 6 and 7 are dismissed in part as set forth above; and it is further

ORDERED, that the complaints in the Affidavit of Jean A. Liu, in support of the motion, filed January 29, 2007, relating to travel expenses and interest for delay in paying remaining estate taxes are dismissed.

Dated:May 16, 2007________________________________________

Surrogate