A New York Executor and Administrator has an obligation to collect estate assets, pay bills and expenses and then distribute the net estate to the estate beneficiaries. Estate settlement in Manhattan or Brooklyn or Queens or other New York Counties is fundamentally the same.
As part of the settlement process, the estate fiduciary will prepare an accounting of his or her activities as an Executor or Administrator or Trustee. The form of the accounting is provided in official forms for the Surrogate’s Court. The accounting reports specifically all of the assets and income collected, all of the expenses and claims that were paid and the amount of funds that ultimately remain on hand to be distributed to the beneficiaries. Such distribution is made in accordance with the terms of the probated Will or as provided by the laws of intestacy.
Prior to distribution the accounting is given to the parties entitled to distribution so they can review and approve it. A fiduciary generally will not distribute shares of an estate without an approval of the account by all necessary parties and their signed Release and acknowledgement that they approve of the job done by the fiduciary.
In many cases, the beneficiaries either object to or have questions regarding the transactions of the fiduciary. When this occurs, there are provisions in the Surrogate’s Court Procedure Act (“SCPA”) and other statutes that provide a means by which the beneficiaries can investigate any questions they have about the administration of an estate or a trust. Specifically SCPA 2211 entitled, “voluntary account; proceedings thereupon” allows a party to take oral testimony of a fiduciary to examine all of the fiduciary papers relating to the accounting. Such papers may include bank statements, deeds, tax returns, financial records, bills and receipts. Following the completion of the SCPA 2211 examination a decision can then be made as to whether to file formal objections to the accounting.
Depending upon the size of an estate, an accounting may be very lengthy and report hundreds of different financial transactions. The review and advice of experienced accountants and New York Estate Lawyers should be obtained to determine whether there exists a valid basis to object to the actions of an executor or administrator. In some cases discovery of information from third party witnesses may also be needed such as banks and other individuals who have knowledge regarding the transactions.
Generally, the New York Surrogate’s Courts encourage interested parties to resolve their disputes, including accounting contests, without extensive Court proceedings or a trial. An estate accounting is always helpful to the recipients of estate bequests or shares. It provides a clear and concise review of all of the estate receipts and expenditures so that a party can understand exactly why he or she is receiving a certain sum of money.
Since accountings are an essential part of the estate process, I always advise clients who are Executors, Administrators and Trustees to maintain clear and complete records of all of their transactions and keep copies of all papers that may be needed to provide support and back-up for the transactions.
It should also be noted that Article 81 Guardians are also required to provide annual accountings. Mental Hygiene Law Section 81.31. Thus, all fiduciaries should maintain complete records so that they can respond to any questions regarding any item that appears in their accounting.