April 2024

Posted April 15, 2024

IMO Estate of O’Neill, C.A. No. 2022-0088-LM (March 28, 2024)

          In O’Neill, the decedent, John L. O’Neill (the “Decedent”), died testate on December 24, 2020. The Decedent was survived by three of his four adult children: Kathleen O’Neill (“Kathleen”), Kevin O’Neill (“Kevin”), and Kenneth O’Neill (“Kenneth”). The Decedent was also survived by two biological grandchildren, Kyle O’Neill (“Kyle”) and Cory O’Neill (“Cory”).

          The Decedent’s last will and testimony devised his entire estate (the “Estate”) equally to his children, per stirpes. As a result, Kathleen, Kevin, and Kenneth were each a 1/4th beneficiary of the Estate, while Cory and Kyle each received a 1/8th share.

          The primary assets of the Estate were two properties located in Wilmington, Delaware (the “Wilmington Property”) and Newark, Delaware (the “Newark Property”) (the Wilmington Property and the Newark Property shall be collectively referred to as the “Properties”). Prior to the Decedent’s death, the Newark Property served as the Decedent’s primary residence.

          After the Decedent’s death, Kevin was unable to access the Properties, as Kenneth had the keys and refused to grant Kevin access.

          When completing the Estate’s first inventory, Kevin learned that the Estate was insolvent and that the Newark Property was in danger of foreclosure. To generate liquidity for the Estate, Kevin sold the Newark Property for $525,000, $173,000 of which was profit that was allocated to the Estate.

          In addition to selling the Newark Property, Kevin and his wife began to sell the Decedent’s personal property. Kevin failed to document the items sold, their sales price, or offer these items to the other beneficiaries of the Estate.

          After learning of these transactions, Kathleen filed a petition with the Delaware Court of Chancery arguing that Kevin had breached his fiduciary duties thereby warranting his removal pursuant to 12 Del. C. § 1541(a). Section 1541 authorizes the Delaware Court of Chancery to remove a personal representative who has been found to have neglected their duties.

          When reviewing Kathleen’s petition, the Court stated that a personal representative of an estate is subject to the fiduciary duty of care. The Court explained that this fiduciary duty requires a personal representative to exercise diligence “in all aspects of estate administration” and that the personal representative should exercise the same level of care as a prudent person would with regard to their own affairs. The Court further noted that inherent within a personal representative’s duty of care is the requirement that the personal representative comply with all statutory duties and carry out all acts as prescribed under the decedent’s will.

          After discussing the applicable standards, the Court found that Kevin had engaged in a series of improper acts that constituted a breach of the duty of care. First, the Court found that Kevin had violated his statutory duties as personal representative as he failed to timely file the Estate’s inventory. Second, the Court determined that Kevin’s failure to take proactive measures to evict Kenneth from the Properties constituted a breach of the duty of care as Kevin did not safeguard, monitor, and inventory the Estate’s assets. Third, the Court found that Kevin breached the duty of care by failing to timely pay the Estate’s bills which resulted in the Estate incurring late fees. Lastly, the Court determined that Kevin’s failure to maintain records evidencing the personal property sold and its sales price resulted in Kevin filing an incomplete inventory. As a result, the Court held that Kevin had breached the fiduciary duty of care.

          Despite finding that Kevin had breached his fiduciary duties, the Court declined to remove Kevin as personal representative of the Estate, finding that his removal would further delay the administration process. However, the Court did find that Kevin’s misconduct warranted the reduction of his commission by 50% and for Kathleen’s attorney’s fees to be paid from the Estate.

Posted April 12, 2024

In the Matter of the Estate of Sherri Zamichieli, C.A. No. 2023-0292-SEM (April 5, 2024)

          In this case, Magistrate Molina issued post-trial findings and conclusions relating to the fall-out from a personal representative failing to perform certain duties leading to her removal. Subsequent to that removal, Lee Vega (the “Petitioner”), the successor personal representative, advanced a breach-of-fiduciary-duty claim against the former personal representative, Stephanie Zamichieli, (the “Respondent”). The Petitioner claimed that the breach resulted in damages to the decedent’s estate (the “Estate”) of at least $80,000.00.

          Sherri Zamichieli (the “Decedent”) died on May 25, 2020 without a will. She was survived by two daughters, the Respondent and Michelle Zamichieli (whose husband is the Petitioner).  Respondent didn’t do a very good job as personal representative (she admittedly missed deadlines, and otherwise failed to perform her duties) and the Magistrate eventually ordered that she be replaced by Petitioner.  The Estate owned real property, and the Petitioner desired to sell that to raise liquidity for the Estate.  The court approved of that sale, and Respondent—who had been living in that real property—was ejected by court order.  That sale generated slightly over $80,000 in proceeds for the Estate.

          After conducting the trial, the Magistrate concluded that the Respondent did not breach her duties regarding the real property as “[t]he Petitioner has not demonstrated that the condition of the Estate, while the Respondent was fiduciary, was such that failing to petition to sell the Property to pay the Estate’s debts was outside a good faith administration or otherwise not an exercise of ordinary care, prudence, skill, and diligence.” The Magistrate, however, did find that the Respondent’s removal of $9,566.48 of estate funds for her personal benefit was a breach and that the Respondent also improperly retained certain items owned by the Estate. But the Magistrate denied Petitioner’s request for fees.  In sum, the Magistrate concluded that, “(1) the Respondent’s share of the Estate should be surcharged in the amount of $4,783.24, which should, instead, be credited to [Michelle Zamichieli’s] share and (2) the identified personal property should be returned to the Estate unless the parties can agree otherwise.”