Matter of EC Supplemental Needs Trust

Supreme Court, Richmond County

Decided on March 25, 2026

Index No. Redacted

Ronald Castorina, Jr., J.

This matter has remained under the supervision of the Supreme Court for decades, and the record reflects that the EC Supplemental Needs Trust (the "Trust") was established pursuant to court order as the operative vehicle for protecting the beneficiary's welfare while preserving eligibility for governmental benefits. The Trust was funded and thereafter became the recipient of additional assets, including the transfer of the real property located at XX Redacted B Avenue, Staten Island, New York, pursuant to subsequent court direction. The Court has previously appointed trustees (and successor trustees), directed accountings, and otherwise supervised administration.

By correspondence received by the Court dated January 30, 2026, the Court was advised that LA, the acting trustee, died on or about January 28, 2026. No successor trustee has qualified. The beneficiary appeared before the Court in connection with the vacancy and the continued administration of the Trust.

The Court finds, upon review of the record, that the Trust was created by Supreme Court order and has been administered subject to Supreme Court supervision. The Trust was funded with liquid assets in the approximate amount of $219,802.40 and includes, among its assets, real property at XX Redacted B Avenue, Staten Island, New York. The Trust contains provisions directing distribution upon the beneficiary's death, including reimbursement of governmental programs that provided benefits to the beneficiary during her lifetime.

The Court further finds that the death of the trustee has created a present vacancy in the [*2]office of trustee. The Court finds that the vacancy is not ministerial. A supplemental needs trust is dependent on continuous fiduciary administration to ensure that income and principal are held, invested, expended, documented, and reported in a manner consistent with the Trust's purpose and the beneficiary's eligibility for benefits. A vacancy disables the Trust's ordinary operations, including payment of legitimate expenses, maintenance of real property, preservation of insurance coverage, timely collection of rents (if any), and the preparation of records necessary for fiduciary accounting and governmental compliance.

The Court further finds, based upon the beneficiary's appearance and colloquy in open court, that the beneficiary demonstrated an understanding of the nature of the Trust, the vacancy in fiduciary administration, and the need for appointment of a successor trustee sufficient for purposes of the relief granted herein. This finding is limited to the Court's present determination concerning the orderly administration of this Trust and does not purport to adjudicate any broader question of capacity beyond what is necessary for this proceeding.

The Court's immediate task is not abstract; it is to restore lawful fiduciary administration to a court-created and court-supervised trust that presently has no acting trustee. New York law supplies multiple, complementary sources of authority for that relief.

CPLR § 7701 provides that a special proceeding may be brought to determine a matter relating to any express trust. The statutory breadth of CPLR Article 77 is suited to precisely the circumstance presented here: a practical and legal breakdown in trust administration requiring court direction so that the trust can continue to function. In addition, EPTL 7-2.7 expressly contemplates proceedings in Supreme Court for an accounting or other relief brought by a trustee or successor trustee and authorizes such proceedings to be commenced upon such notice to beneficiaries as Supreme Court may direct. The accounting and compliance relief directed below is therefore of a kind specifically anticipated by the statutory framework governing trustees in Supreme Court.

The vacancy itself implicates longstanding trust principles codified in EPTL. EPTL 7-2.3 addresses the consequences of the death of a trustee and the appointment and rights of a successor trustee. EPTL 7-2.6 further authorizes the court, in circumstances of trustee nonfeasance or absence, to appoint a successor trustee and, where there is no acting trustee, to cause the trust to be executed under the court's direction. These provisions reflect the governing premise that a trust is not to be left inoperative for want of a fiduciary and that the court may act to ensure execution of the trust in accordance with its purposes.

Although Surrogate's Court possesses jurisdiction over inter vivos trusts concurrent with Supreme Court, the existence of concurrent jurisdiction does not deprive Supreme Court of authority to act, particularly where, as here, Supreme Court has created the trust, has repeatedly exercised supervision over its administration, and is the tribunal most familiar with the record. (see Wagenstein v Shwarts, 82 AD3d 628 [1st Dept 2011]) (recognizing Surrogate's Court jurisdiction over inter vivos trust matters concurrent with Supreme Court). Where courts possess concurrent jurisdiction and the subject matter has been first and long entertained by one tribunal, New York authority favors continued exercise by that tribunal. Schuehle v Reiman (86 NY 270, 273 [1881]) states that where tribunals have equal or concurrent jurisdiction, it "should continue to be exercised by that one whose process was first issued." (see also Colson v Pelgram, 259 NY 370 [1932]) (where separate actions are instituted in courts having concurrent jurisdiction, the court first obtaining jurisdiction with adequate power to administer full justice should continue to exercise it).

With jurisdiction thus established, the principal legal and equitable considerations are the protection of the beneficiary and the preservation of the Trust estate during a period of fiduciary vacancy. The Court concludes that immediate appointment of a successor trustee is necessary to restore lawful administration, prevent waste or impairment of Trust property, maintain continuity in handling assets, and ensure that the Trust's purpose, to supplement, not supplant, benefits, can be executed in a manner consistent with the governing instrument and the Court's prior orders.

The Court further concludes that the record requires enhanced fiduciary accountability and transparency at the point of transition. Where a trustee has died and administration must pass to a successor, a complete and timely accounting is essential both to protect the beneficiary and to preserve the rights of persons and entities whose interests may be affected by Trust administration, including remainder beneficiaries identified by the Trust instrument and governmental programs identified in the Trust's payback provisions. EPTL 7-2.7 expressly authorizes a trustee or successor trustee to petition the Supreme Court for judicial settlement of the trustee's account and empowers the Court to direct such notice to beneficiaries as it deems proper. The Court therefore finds it appropriate to direct an accounting through the trustee's date of death and to impose interim reporting and record-preservation obligations to assure a complete transition.

Finally, the Court addresses the question of bond. The purpose of a fiduciary bond is protective; it is not jurisdictional. New York law does not impose a universal, automatic bond requirement for trustees in every trust context appointment; rather, the necessity of the bond depends upon the terms of the governing instrument and the Court's discretion in determining whether security is required for the protection trust estate and its' beneficiaries. In this matter, the Court concludes that the Trust estate and beneficiary can be adequately protected without a bond because the Court is imposing heightened safeguards that operate as functional substitutes for a surety undertaking: prompt qualification requirements; strict record preservation; an accelerated accounting schedule through the date of death; review by a neutral accountant; limitations on extraordinary transactions absent court permission; and continuing judicial supervision. In the exercise of discretion, and subject to the continuing authority of the Court to revisit security if circumstances warrant, the Court will dispense with bond at this time.

The Court further concludes that the death of the acting trustee requires a structured transition of fiduciary responsibility. The duty to account for the period of a trustee's service survives the trustee's death; however, the form and procedure of such accounting remain within the supervisory authority of the Court in a proceeding relating to an express trust (CPLR § 7701). Considering the modest size of the Trust corpus, the absence of any allegation of fiduciary misconduct presently before the Court, and the paramount need to preserve Trust assets for the benefit of a disabled beneficiary, the Court determines that a proportionate accounting procedure is appropriate.

A formal estate proceeding for the sole purpose of compelling a judicial accounting by the deceased trustee's estate would impose expense upon the Trust disproportionate to the apparent benefit. The Court therefore exercises its discretion to direct a reconstructed accounting based upon available records, subject to notice and opportunity to object, thereby balancing fiduciary accountability with preservation of Trust resources.

Now upon all prior papers and proceeding had herein, sua sponte,

ORDERED, that CMG, residing at Redacted Drive, Manasquan, NJ and SCP residing at Redeacted Road are hereby appointed as Successor Co-Trustees ("Co-Trustees") of the EC[*3]Supplemental Needs Trust, effective upon filing with the Clerk written acceptance of appointment and such oath or affirmation as is required by law; and it is further

ORDERED that the Co-Trustees shall serve without compensation or commissions; and it is further

ORDERED that the requirement of a fiduciary bond is dispensed with at this time, without prejudice to the Court's authority to require security upon application or upon the Court's own motion should the circumstances of administration or the condition of the Trust estate warrant it; and it is further

ORDERED that, within thirty (30) days of qualification, the Co-Trustees shall marshal Trust property and file with the Court a verified statement identifying all known Trust assets and accounts, including any real property interests, and identifying all persons or entities presently receiving notices or communications concerning the Trust; and it is further

ORDERED that the Co-Trustees shall preserve and secure all books and records of the Trust, including bank statements, ledgers, rent records (if any), invoices, receipts, and governmental correspondence, and shall take all steps reasonably necessary to prevent lapse of insurance coverage, nonpayment of essential charges, or impairment of the Trust's real property interests pending further order of the Court; and it is further

ORDERED, that within thirty (30) days of qualification, the Co-Trustees shall take all reasonable steps to obtain and secure the books and records of the Trust for the period of service of LA, from January 1, 2019 to the present, including but not limited to bank statements, cancelled checks, deposit records, ledgers, tax filings, invoices, receipts, correspondence, electronic records, and documents relating to the Trust's real property; and it is further

ORDERED that any person, institution or bank in possession, custody, or control of books and records relating to the EC Supplemental Needs Trust during the tenure of LA as Trustee from January 1, 2019 to present, is hereby directed to deliver such books and records to the Co-Trustees no later than thirty (30) days of service of this Order with notice of entry; and it is further;

ORDERED that the Co-trustees shall hand deliver to the offices of Daniel Kuhn, Esq, currently designated as Court Examiner, located at 2 Green Street Staten Island, NY, all books and records of the Trust, including but not limited to bank statements, ledgers, rent records, invoices, receipts, government correspondence, no later than April 10, 2026; and it is further

ORDERED that Daniel Kuhn, Esq is hereby discharged as Court examiner and appointed as Referee ("Referee") to review the 2019-2024 accountings completed by LA ("LA Accountings") and all financial records through January 28, 2026 (the date of the LA's death) or to the present time and treat same as a Cumulative Final Accounting; and it is further

ORDERED that the Referee shall prepare and file with the Court a detailed report of the Trust regarding the Cumulative Final Accounting within sixty (60) days after review, and shall include a statement of assets at the beginning and end of the period, a schedule of receipts and disbursements, a schedule of investments, any documents sufficient for review, and an explanation of any gaps in documentation that could not reasonably be remedied; and it is further

ORDERED that the Co-trustees shall fully cooperate with the Referee; and it is further

ORDERED that the Court may, as appropriate, refer the Referee's report for further review consistent with the Court's prior practice in this matter; and it is further

ORDERED that notice of the filing of such report shall be served upon the remainder beneficiaries identified in the Trust instrument and upon any governmental entity possessing a [*4]potential reimbursement interest pursuant to the Trust's payback provisions, and proof of service shall be filed; and it is further

ORDERED, that any objections to the accounting shall be filed within forty-five (45) days of service of notice of filing; and it is further

ORDERED, that in the absence of timely objections, and upon submission of a proposed order by the Referee and review by the Court, the accounting shall be deemed settled and the tenure of LA as trustee shall be judicially concluded by discharging LA and the bond, without prejudice to the right of any interested party to seek relief upon a showing of fraud, concealment, or material error; and it is further

ORDERED, that the Co-Trustees on or before May 31st of each year shall file in the Guardianship Office of Richmond County, an annual report for the preceding calendar year, and same shall be served upon the Referee and the Department of Social Services-HRA; and it is further

ORDERED, that nothing herein shall be construed to impose personal liability upon the Successor Trustees for acts or omissions occurring prior to qualification; and it is further

ORDERED that, pending settlement of the accounting and further order of the Court, the Co-Trustees shall not sell, mortgage, or otherwise encumber the Trust's real property, nor make any extraordinary distributions or transfers of principal outside the ordinary course of paying for the beneficiary's permitted needs, without prior court authorization; and it is further

ORDERED that notice of this Order, with notice of entry, shall be served by the Referee upon the remainder beneficiaries identified by the Trust instrument and upon any governmental entity with a potential reimbursement interest as reflected in the Trust's payback provisions, and proof of such service shall be filed; and it is further

ORDERED that this Court retains jurisdiction over the Trust and all matters relating to its administration, including proceedings pursuant to CPLR Article 77.

This constitutes the Order of the Court.

Dated: March 25, 2026

Staten Island, New York

HON. RONALD CASTORINA, JR.

JUSTICE OF THE SUPREME COURT