Articles Posted in Estate Settlement

nycSurrogates-1The settlement of a New York estate is comprised of a number of stages.  At the outset, a determination must be made as to whether a decedent had a Last Will and Testament or died intestate.  This is important since the procedures to obtain Letters Testamentary in a probate proceeding, or Letters of Administration in an intestate administration proceeding, are different.  While this initial process appears uncomplicated, there are many cases where the determination as to whether a decedent left a Last Will to be probated is unclear.

First and foremost, a search needs to be performed to locate the original Will.  It may be that the document, if there is one, was retained by a decedent at home or with an attorney.  Sometimes, the only paper to be found is a copy of a Will.  This presents problems since it is very difficult to probate a copy of a Will.  Surrogate’s Court Procedure Act Section 1407 entitled “Proof of lost or destroyed will” contains specific rules regarding the probate of Wills which are lost.

Assuming that the issue regarding the appointment of an executor or administrator is resolved, the actual day-to-day management of the estate needs to be accomplished.  In this regard, assets need to be identified and collected.  Also, estate debts, claims and taxes must be dealt with and satisfied.  Depending upon the estate, some assets may present complicated issues, particularly where a decedent had various business or other valuable interests.  Valuation issues may arise if the estate is subject to Federal or New York State estate tax.  The New York Probate Lawyer Blog has published numerous articles concerning estate settlement.

Estate-Settlement-300x200A decedent’s estate consists of many different types of interests and assets.  These items may include bank accounts, security or other financial accounts, real estate interests, various retirement accounts such as individual retirement accounts, pensions and 401(k) plans, and business interests in partnerships or limited liability companies.  There can also be interests in creative works, trademarks and copyrights.

At the inception of an estate, a determination must be made as to whether a Last Will and Testament exists which needs to be probated.  In the event there is no Will, then letters of administration would be required to settle the estate under the intestacy statutes.  The appropriate proceedings must be filed in the Surrogate’s Court.  In either case, a fiduciary is needed to have the authority to handle the estate assets.  Assets that are owned by a decedent in his name alone pass through the estate.  When an asset has a named beneficiary or a joint owner with survivorship rights, these items are distributed directly to the other named party.

A fiduciary, whether an executor or administrator, has various powers and authority regarding estate affairs.  The Estates, Powers and Trusts Law Section 11-1.1 entitled “Fiduciaries’ Powers” provides a detailed list of powers.  These include powers to take possession of estate property and to sell or dispose of such property.

Estate-Settlement-300x200The New York Probate Lawyer Blog has published many articles concerning estate settlement.  Factors that can affect a New York estate are enumerable.  In the first instance, a determination must be made as to whether a Last Will and Testament needs to be probated.  If no Will exists, than an intestate administration must be commenced.  Different aspects and procedures apply to these types of proceedings and the filings which are required by the Surrogate’s Court.  Also, the rights of potential estate beneficiaries are determined either by the provisions of a Will or the statutory inheritance directives in the Estates Powers and Trusts Law Section 4-1.1 entitled “Decent and distribution of a decedent’s estate.”

Another very important consideration affecting all estates concerns the issue of which jurisdiction’s laws control matters regarding estate administration.  The topic referred to is known as “domicile.”  Domicile is basically a determination of the place where a person or decedent has their primary home.  A person may have many residences but can have only one domicile.  This Probate Blog has published previous posts concerning this issue.

For example, a person who dies and has a New York domicile will have his estate controlled by the laws of New York, for the most part.  Determining a person’s domicile is not always easy.  Someone may have an apartment or house in New York and also Florida, or another state or country.  Domicile is a matter of where a person intends to have his primary home.  However, there are a number of independent factors which go into the determination, such as where a person filed local taxes, the location of their employment, where their car was registered and driver’s license was issued.

shutterstock_204507106-300x254The New York estate laws contain provisions concerning the various relationships between family members.  There are statutes concerning spousal rights and also inheritance rights relating to other family members.  For example, a New York spouse has the ability to make a claim against the other spouse’s estate if they are disinherited. Estates, Powers & Trusts Law Section 5-1.1-A entitled “Right of election by surviving spouse” provides that a disinherited spouse can file a right of election to claim one-third (1/3) of a decedent’s net estate.  The New York Probate Lawyer Blog contains many articles concerning a spouse’s right of election.

On the other hand, a person has an absolute right to disinherit any other person, including children.  Children have no right to receive a share of a parent’s estate if a person leaves a child out of a Last Will and Testament or does not have a child as a beneficiary of an asset that passes by operation of law.

There are additional considerations where a decedent does not have a Last Will.  Estate settlement and distribution will be controlled by the laws of intestacy.  EPTL Section 4-1.1 entitled “Descent and distribution of a decedent’s estate” sets forth the manner by which an intestate estate is to be paid.  There is a priority among the decedent’s family members and a spouse and children are at the top of the list.

nycSurrogatesAn executor or administrator is responsible to complete estate settlement.  There are many aspects to settling an estate.  The fiduciary must identify estate assets and actively seek to collect the assets.  Additionally, an estate representative must ascertain the various debts and claims which may be outstanding.  Also, expenses of administering an estate must be paid.  These expenses include various costs such as amounts needed to protect assets and to pay attorneys’ fees and accountant fees.  There may also be costs associated with the sale of assets such as a house.

The fiduciary is obligated to perform these tasks for the benefit of the estate as a whole and cannot favor one beneficiary over another.  There is a fiduciary duty to act properly to avoid a breach of fiduciary duty.  The Estates, Powers and Trusts Law Section 11-1.1 entitled “Fiduciaries:  Powers, Duties and Limitations” provides various rules in this regard.  The New York Probate Lawyer Blog has published many articles concerning the role of an administrator, executor and trustee.

As noted earlier, a fiduciary must pay estate expenses.  While expenses are paid from estate assets, sometimes there are not enough liquid assets to allow for payment.  In such a case, assets may need to be sold.  While in many cases, the sale of assets such as a house owned by a decedent may be a straightforward transaction, this is not always so.  An interesting situation recently arose in an Erie County estate.  Matter of Manchester, which was decided by Erie County Surrogate Acea M. Mosey on August 18, 2022, involved a proceeding to settle the accounting of the executor.  One of the issues concerned the real estate which was owned by the decedent.  The decedent’s Last Will and Testament had specifically devised the property to his daughter.  Although the decedent died in 2013, the deed transferring the property to the daughter was filed in 2018.  The problem, however, was that at the time of the deed transfer, there were extensive unpaid estate claims and administrative expenses.  The real property was the only estate asset which could be used to pay these expenses.

One of the most valuable assets in an estate is typically real estate.  This asset is usually the decedent’s residence.  Since real estate predominates as an estate asset, many aspects of real estate law can be involved in estate settlement.  Also, estate litigation in the Surrogate’s Court often concerns this asset.  Issues that arise may concern the following matters:

  1. Title or ownership of the property.
  2. Claims against the property. These claims may be in the form of an outstanding mortgage or liens which arise due to judgments against the decedent or unpaid taxes or property violations.

shutterstock_1021207423-300x200A decedent’s estate may consist of many types of assets.  These may include bank and other types of financial accounts, retirement funds and real estate.  Another very common asset owned by decedents is an interest in a cooperative apartment.  A cooperative apartment, or co-op, is not real estate.  In fact, the owner of a co-op owns shares of stock in a cooperative corporation.  Due to such ownership, a person is entitled to be a lessee under a proprietary lease.  The interest in a co-op is personal property just like owning shares of stock in Microsoft.

A co-op owner is subject to and controlled by the terms of the proprietary lease.  Most importantly, unlike real property, typically a co-op cannot be transferred to another owner without the approval of the cooperative corporation.  As a result, the transfer of a co-op either by a Last Will and Testament or through intestate administration is a very problematic issue in estate settlement.  There is no assurance that the beneficiary in a Will or the decedent’s next of kin will qualify or be approved by the co-op management to become an owner.  In the event there is no approval or the designated beneficiary does not want to become the owner, the co-op would need to be sold.  The New York Probate Lawyer Blog contains numerous articles regarding the settlement of an estate, co-ops, and estate real estate.

If a co-op needs to be sold, board approval is required.  The approval process for a purchaser can be very stressful for an estate executor or administrator.  This is especially so where the co-op is subject to a mortgage and the estate does not have liquid assets to make the current payments.  Also, monthly co-op maintenance charges must be paid.  The co-op sale approval process may take months to complete.  The co-op may reject the buyer with whom the estate contracted to sell the co-op.  In such a case, the estate fiduciary would need to go back to square one and find a new buyer and endure the co-op approval process again.  All the while, mortgage payments and maintenance charges may be accumulating and foreclosures may be threatened.

original_1074565532-300x107There are essentially two (2) different paths to follow for the appointment of a fiduciary after someone dies.  In order to administer and settle an estate, there must be an executor or an administrator.  If the decedent left a Last Will and Testament, then a probate proceeding is going to be filed in the Surrogate’s Court.  This involves filing the original Will along with a petition for probate and other supporting papers.

In cases where there is no Will, the decedent is considered to have died intestate.  As a result, a petition for letters of administration is presented to the Surrogate’s Court.  The New York Probate Lawyer Blog contains many informative articles discussing issues concerning probate and intestate estate proceedings.

Unfortunately, the process to obtain full letters testamentary or letters of administration can take a number of months.  Will Contests, kinship disputes, and other matters involving estate litigation may delay the finalization of these proceedings for long periods of time.  The dilemma faced by a potential fiduciary and others interested in an estate is how to deal with current problems which can affect estate assets.  For example, there may be pending proceedings in litigation concerning a decedent, or the need to sell or secure assets before values are compromised.

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.

Estate-Settlement-300x200During the course of the administration of a New York Estate, an executor or administrator may be confronted with various issues.  For example, there may be numerous debts that need to be satisfied, such as credit card bills, medical bills, car loans, mortgages and utility bills.  Each of these items needs to be examined and the estate fiduciary must determine whether and to what extent payment should be made.  Sometimes these bills can be reduced through negotiation.

During life, a decedent may have been a defendant in a pending lawsuit.  In these situations, the administrator or executor needs to be substituted into the Court action so that the estate’s interest can be protected.  Another important area of concern is whether the decedent’s estate is subject to a claim or lien from Medicaid.  If the local Medicaid provider paid for services on behalf of the decedent, there may be claims for reimbursement from the estate, such as for nursing home care.

Dealing with a creditor claim can be a complex and lengthy process and can delay the settlement of an estate since a final distribution may not be made to beneficiaries until the net value of the estate is determined.  These issues may take months or years to resolve.  One type of claim that reoccurs in estates concerns an assertion by a person that the decedent promised to pay the claimant for services that were rendered for the care of the decedent before his death.  In these cases there is usually no written contract or agreement regarding the services or the amount of the compensation to be paid.  As a result, a fiduciary must defend against a claim which is typically supported only by the oral declarations of the claimant.

Contact Information