There are many different obligations and aspects to the role of an estate executor or administrator. Their primary duty is to collect assets and satisfy estate obligations. In most instances, the assets owned by a decedent are easily identified and collected, such as bank accounts, real estate, financial accounts and retirement funds. Likewise, the identification and satisfaction of obligations is typically uncomplicated with regard to items such as credit card bills, car loans, mortgages and other consumer debt obligations.
A recent Manhattan case decided by Manhattan Surrogate Rita Mella on August 18, 2022 entitled “Estate of Buhannic” involved a number of important aspects regarding estate settlement.
In Buhannic, the Court had issued letters to the fiduciaries which contained restrictions prohibiting the fiduciaries from disposing or selling estate assets without the further order of the Court. This is a common type of restriction which often appears in letters of administration in intestate cases. Such language requires that the administrator seek Court approval for a transaction. Thus, interested parties in the estate would receive notice of the request for approval made to the Court and may review the appropriateness of the matter. Any Objections can then be dealt with. In the Buhannic case, the fiduciaries sought to sell shares of stock in order to pay estate obligations. The parties ended up agreeing on the sale and the Surrogate required that the fiduciaries obtain a surety bond to secure their use of the funds.
The primary need for the proceeds of the sale was to pay various costs associated with a cooperative apartment. As part of their application to the Court the Buhannic fiduciaries also sought permission from the Court to pay estate debts and various expenses of administration. The Court declined to provide an order allowing such payment. It recognized that the payment of debts and expenses was an obligation of a fiduciary for which the fiduciary was mandated to exercise discretion. The Court refused to substitute the Court’s judgment in the place of the legal responsibilities imposed on the appointed estate representative. The Court specifically referred to the powers granted to a fiduciary under Estates Powers and Trusts Law Section 11-1.1(6)(22) and Surrogate’s Court Procedure Act Sections 1412(3)(a) and 903(1).
It should be pointed out that in the typical case the Surrogate’s Court will not substitute its judgment in the place of a representative’s decision making duties. However, there are special circumstances where the Court will consider a proposed course of action by a fiduciary and determine whether the action should be taken. SCPA Section 2107 entitled “Court may direct as to value, manner and time of sale of property and give advice and direction in extraordinary circumstances”, provides a procedure whereby the Court, in its discretion, may review and provide direction. The utilization of this procedure may avoid estate litigation at a later date when estate beneficiaries may object or complain or about actions taken by a representative. However, the statute itself provides that in the usual situation, the Court will not substitute its judgment in the place of a fiduciary.
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New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 40 years resolve issues relating to guardianship and probate and estate settlement throughout New York City including the Bronx, Queens, Brooklyn, Manhattan, Nassau and Suffolk County. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial free consultation.