93 Va. Cir. 162
Charlottesville Cir. Ct.2016Background
- Decedent Robert T. Denommé died in 2011; longtime attorney James N. Deinlein qualified as Executor and submitted inventories and three accounts.
- The Commissioner of Accounts questioned several Executor actions by letters in 2013–2014: hours/expenses for rehabilitating real estate, unsecured loans the Executor made to a trust he administered, and payments of pre‑death legal bills to the Executor.
- Instead of answering directly, the Executor retained counsel; the Commissioner advised such legal costs were not allowable estate expenses.
- The Commissioner ultimately disallowed and demanded repayment of certain attorney fees, identifying $17,295.92 attributable to responses to his inquiries.
- The residuary beneficiary declined to challenge some items (notably the real‑estate rehabilitation expenses) but did not affirmatively approve payments of old legal bills or the unsecured loan.
- The court reviewed the pleadings and evidence and found fees related to real‑estate rehabilitation were allowable, but fees for counsel related to the unsecured loan and payment of old legal bills (and apportioned unapportioned fees) were primarily for the Executor’s personal benefit and must be refunded, resulting in a $10,320 repayment order.
Issues
| Issue | Executor's Argument | Commissioner's/Respondent's Argument | Held |
|---|---|---|---|
| Allowability of attorney fees incurred to respond to Commissioner’s inquiries | Fees for responding to inquiries were necessary estate administration expenses; Executor had right to counsel; some matters were resolved in his favor | Fees were unnecessary, excessive, and primarily for Executor’s personal benefit; not proper estate charges | Split: fees tied to real‑estate rehabilitation allowed; fees tied to unsecured loan and old legal bills disallowed and must be refunded (total $10,320) |
| Fees for counsel regarding rehabilitation/marketing of real estate | Rehabilitation benefited estate and justified time/fees | Commissioner questioned reasonableness of hours and costs | Allowed: court finds good‑faith benefit to estate; $1,585 not required to be repaid |
| Fees for counsel regarding unsecured loan to another trust | Executor contends loan was permissible under prudent investment authority | Commissioner deemed loan improper and queried authority; no estate benefit shown | Disallowed: loan should have been secured; counsel fees for this matter must be repaid ($422.50) |
| Fees for counsel regarding payment of pre‑death legal bills to Executor personally | Executor claims these were continuations of services and thus payable; statute of limitations not run | Commissioner challenged propriety and timeliness; beneficiary’s acquiescence not equivalent to approval | Disallowed: payment method improper and primarily benefited Executor; counsel fees for this must be repaid ($602.50) |
Key Cases Cited
- Willson v. Whitehead, 181 Va. 960 (1943) (trustee who is exonerated from misconduct may be reimbursed for defense costs)
- Ward v. NationsBank, 256 Va. 427 (1998) (trustee entitled to fees when suit fails and trustee acted in good faith and prudently)
- Clare v. Grasty, 213 Va. 165 (1972) (attorney fees may be denied where fiduciary’s conduct primarily benefits the fiduciary; partial fees may be allowed)
- Wiglesworth v. Taylor, 239 Va. 603 (1990) (fiduciary should not be reimbursed for litigation costs when the fiduciary caused the litigation)