NYSBA Trusts and Estates Law Section Journal: Accounting for a Controlling Interest in an Entity

By David A. Bamdad

More than 70 years ago, the Court of Appeals explained that “where a trustee holds a working control of the stock in an estate corporation he is accountable in the probate court for the administration of the corporate affairs.” In other words, if fiduciaries, in their individual and/or fiduciary capacities, own a controlling interest in an entity, they have a duty to account to the beneficiaries of the estate or trust for the transactions of such entity. However, at that time, the court did not directly address the manner in which the fiduciary must account, and there has been a dearth of case law on the issue since that decision. That is, until 2018, when the Nassau County Surrogate’s Court addressed the issue head on in In re Kalikow and provided a great deal of latitude to fiduciaries in accounting for such entities. This article will explore the basis for a fiduciary’s obligation to account for entities owned by an estate or trust, the limited case law concerning the manner in which the fiduciary must account, and the impact of In re Kalikow on fiduciaries and beneficiaries.

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Reprinted with permission from the New York State Bar Association © 2023.

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