Articles Posted in Estate Settlement

One of the aspects involved with administering an estate in New York is the identification and collection of estate assets.  A decedent may have owned bank accounts, security investments, real estate or business interests.  In many cases, it is rather easy for an executor or administrator to obtain information regarding assets.  A decedent may have various records at home or at a business office.  Also, bank statements or other information may be received in a decedent’s mail.  Another source of information are items contained in a decedent’s income tax returns such as the names of banks or financial institutions which paid interest income or dividends.  If the decedent had an accountant, this person may be in possession of asset information.

One problem that is faced in many estates is that a decedent may have transferred assets prior to death.  When this occurs, it may be difficult to determine the identity of these assets.  Also, once the assets can be identified, issues arise as to whether such transfers were valid or should be revoked due to lack of capacity or undue influence.

The New York Probate Lawyer Blog has published many articles concerning the discovery of assets belonging to a decedent.  An administrator in an intestate estate or an executor in a probate situation can utilize the process provided by Surrogate’s Court Procedure Act 2103, entitled “Proceeding by fiduciary to discover property withheld or obtain information”.  This statute allows the estate fiduciary to commence a proceeding to discover possible estate assets held by third parties and to have the Surrogate’s Court determine whether the assets should be found to be part of a decedent’s estate.

The essence of administering any estate begins with the appointment of an estate fiduciary.  Estate settlement cannot occur without a party who is legally authorized to act.  There are many variables which come into play regarding fiduciary appointment.

In some cases, the decedent left a Last Will and Testament.  This document typically names a person who is to be appointed as the executor.  There may be designations of successor or alternate executors, as well.  When a person dies intestate, without a Will, the provisions of Surrogate’s Court Procedure Act Section 1001 entitled “Order of priority for granting letters of administration,” sets forth the individuals who have the priority right for appointment as an estate administrator.  In the vast majority of matters, there is someone who is either designated in a Will or otherwise has a right pursuant to the estate statutes to be appointed, who will petition the Surrogate’s Court for the authority to act as the estate fiduciary.  In fact, it is not uncommon for there to be estate litigation among competing parties for appointment.  These disputes can be based upon claims that the applicant is unfit or unqualified for appointment or that there are competing documents which the Court should consider in making the appointment.

Once in a while, there are estates where there is no one either qualified, authorized or willing to step forward to initiate estate settlement proceedings.  These matters typically occur where the decedent did not leave a Will and there are no known next of kin who have the authority to commence a proceeding for the appointment of a fiduciary.  There may also be situations where all of the named parties in a Will are deceased or their whereabouts are unknown.  The usual result in these cases is that a Public Administrator is notified.  A Public Administrator is a county official whose role is to administer estates where there is no one either qualified or willing to do so.  The Public Administrator engages its own attorneys who handle the proceedings in the Surrogate’s Court.

The administration of a New York estate can involve many different aspects relating to the decedent’s lifetime affairs.  For example, after the Court appoints an executor or administrator, issues relating to a business may need to be resolved.  The business may have been in the form of a corporation or other entity such as a limited liability company or partnership.  There may be litigation or claims between the decedent’s estate and other business owners.

Over the years, questions arose as to the extent to which the Surrogate’s Court had the jurisdiction to resolve disputes and issues relating to such matters.  It is now well established that all such issues can be dealt with by the Surrogate.  The Court generally looks to see whether the issue affects the administration or interests of an estate.  If a nexus is found, the Surrogate will usually accept jurisdiction.

Utilizing a broad approach facilitates estate settlement.  It is more efficient to have one Court oversee the many diverse issues affecting an estate and the interests of the beneficiaries.

There are many issues associated with the settlement of a New York estate.  In many cases it is not clear as to who is the authorized or designated person entitled to administer an estate.  If a decedent left a Last Will and Testament, the document typically nominates an Executor to handle estate affairs.  When a decedent dies intestate without a Will, usually the next of kin step forward and take action to receive letters of administration.

However, there are frequent situations when there is no Will and no one takes any action to begin estate settlement.  In these cases, a Public Administrator accepts the role of handling an estate.  A Public Administrator is a government official whose job it is to administer the estates of people where there is no one either willing or eligible to do so.  Each county has its own separate official.

When an estate is un-administered for a period of time, it may be subjected to adverse consequences.  For example, taxes may go unpaid and there may be penalties and interest charges.  Mortgages may be delinquent and a foreclosure can occur.  One of the duties of an estate fiduciary is to collect and protect assets.  Also, an estate administrator, like a Public Administrator, needs to determine the identity of a decedent’s distributees (next of kin) so that a proper distribution of estate funds can be made.  All of the aspects of finalizing an estate can become very involved.

When a person dies leaving a Last Will and Testament, he is said to have died testate.  This is unlike a situation where there is no Will.  In such case, the person is said to have died intestate.  In order for a Will to control the disposition of a decedent’s estate, the document must be filed with the Surrogate’s Court and validated as being authentic.  This is known as the probate process.  The New York Probate Lawyer Blog has published numerous articles containing information about all aspects of probate in New York.

In the typical case, a Will contains many different provisions concerning the disposition of a decedent’s assets.  There may be specific bequests, the creation of testamentary trusts and residuary dispositions.  Additionally, a Will typically has a provision in which the proposed executors, and if appropriate, trustees are identified.  The designation of fiduciaries and substitute appointments by a testator is very important because it gives priority to the named persons to act in the capacity for which they are nominated.  The Courts are very protective regarding respecting these appointments because the goal is to have the decedent’s choices honored unless there is a very good reason for deviation.

Sometimes, the admission of a Will to probate can be delayed due to a Will contest or other issues such as a kinship determination.  If this happens, Surrogate’s Court Procedure Act Section 1412 entitled “Preliminary letters testamentary” provides the procedure for the appointment of a Preliminary Executor.  A Preliminary Executor can be appointed by the Court to act temporarily before probate is complete.  Such appointment insures that estate settlement can go forward and assets can be protected and collected during the time the full probate is being completed.  A preliminary executor essentially has all of the powers and authority as a permanent executor except for the authority to make distributions to beneficiaries.  Obviously, this is very beneficial to the estate.  Also, the Will may have a provision for the waiving of a bond by the executor.  The Surrogate sometimes requires the preliminary executor to post a surety bond.

Whether a decedent dies intestate without a Last Will and Testament, or with a Will, the retention of an experienced estate attorney can be essential to settling an estate efficiently.  In the case of intestacy, a proceeding to obtain letters of administration will be required to collect assets that are held in the name of the decedent.  A petition for letters of administration requires that all of the decedent’s distributees (next of kin) be identified by name and address.  In many cases, the identity and location of distributees is unknown.  An experienced estate lawyer is familiar with the process of locating unknown heirs and retaining the services of professional genealogists when needed.  Obtaining an Order from the Surrogate’s Court to allow the publication of a Citation for unknown distributees requires a demonstration of a due diligence search.

An attorney can be an essential part of the process in completing kinship issues in these situations.  Sometimes representation in a kinship proceeding may be needed.

As to probate proceedings, the probate process can be complicated.  There are many aspects to having the Surrogate’s Court admit a Will to probate.  A probate attorney is able to examine a Will to see if it was executed properly according to the estate laws.  Estates, Powers and Trusts Law Section 3-2.1 entitled “Execution and attestation of wills; formal requirements” provides the requirements for executing Wills.  Additionally, persons who are dissatisfied with Will provisions may file a Will contest to challenge the validity of the document.  A probate lawyer is familiar with procedures that occur in contested Will cases.  These include dealing with issues such as undue influence and testamentary capacity.  Also, deposition testimony of the attesting witnesses to a Will and the attorney who drafted the Will is part of the Will contest process.

The process of determining the identity of assets which belong to an estate is a fundamental responsibility of an executor or administrator.  In most cases it is easy to locate a decedent’s bank or financial accounts or real estate.  There are typically statements or deeds or other documents which clearly show the ownership of the asset.  Also, account balances or real estate valuations are available on a routine basis.  Most fiduciaries appointed by the Surrogate’s Court can complete the asset investigation process without much delay.

However, there are numerous instances where asset identification and collection can be complicated and involve estate litigation.  The New York Probate Lawyer Blog has published many articles concerning assets and estate settlement.  In situations where it appears that a third party is withholding assets which belong to an estate, the Surrogate’s Court Procedure Act provides some remedies.  SCPA Section 2105 entitled “Proceeding to compel delivery of property by a fiduciary which is claimed by another or others” allows a fiduciary to engage in discovery measures to ascertain if estate property is being withheld.  Deposition testimony and document review is available to assist in this investigation.  If it appears that assets of an estate are being withheld, the Court can hold a hearing to determine proper ownership.

Another Surrogate’s Court method of review regarding asset collection involves the accounting process.  Accounting proceedings require the administrator or executor to provide to estate beneficiaries all information regarding asset collection and expenditures from an estate.  This allows a beneficiary to examine whether estate assets have been properly collected and disposed of.  A recent Ulster County estate case entitled Estate of Oakley, decided by Ulster Surrogate Sara McGinty on February 9, 2022, concerned an interesting issue regarding estate asset ownership.  In Oakley, an executor had provided an accounting.  Among the contested items relating to the accounting were checks totaling $95,000.00 which appeared to have been signed by the decedent right before death.  These checks were made payable to the executor.  The executor claimed that the checks were given to him by the decedent as gifts.  In reviewing the alleged gift transactions, the Court found that neither of the two checks comprising the $95,000.00 total were credited to the executor’s bank account prior to the decedent’s death.  The Court pointed out that in order for an alleged gift to be completed, the subject of the gift needs to be delivered.  A gift in the form of a check becomes complete when a check has been deposited into and credited to the payee’s account during the lifetime of the donor / payer.  Where the donor dies before the completion of the deposit and the credit, a gift is incomplete.  Since the funds represented by the checks were not transferred, they remained part of the decedent’s assets..  The $95,000.00 was an estate asset.

New York estate administration involves the collection of assets and the payment of the decedent’s debts and obligations.  Assets may include bank accounts, financial holdings in brokerage accounts, pension funds, 401(k) accounts and life insurance.  One of the major assets typically found in an estate is real estate.  This asset is usually the home where the decedent lived.

Among the many types of debts and obligations, there may be credit card balances, hospital or medical bills, car loans and other outstanding debt obligations.  The major source of a debt obligation is most commonly the unpaid mortgage balance on a decedent’s home.

In many cases, mortgage debt cannot be paid without selling the real estate against which it is filed as a lien.

Following the death of an individual, there may be a need to create a formal estate to deal with the decedent’s assets and affairs.  The creation of an estate is typically either a probate estate where the decedent leaves a Last Will and Testament or an administration estate where the decedent dies intestate.

There are different methods to determine the identity of the individual who is to be appointed as the estate fiduciary.  In the case of a probate where there is a Will, the document provides for the nomination of an executor.  When there is no Will, the New York estate laws, specifically, Surrogate’s Court Procedure Act Section 1001 entitled “Order of priority for granting letters of administration,” provides the direction as to who can be appointed as estate administrator.  In either situation, the initial consideration for the person who might be appointed as fiduciary is whether they understand the responsibility about to be accepted and whether they want to accept the position.

Acting as an estate fiduciary is a big responsibility.  The executor or administrator must process a petition through the Surrogate’s Court to effectuate the appointment.  This process may entail a lot of work, particularly in cases where there may be a Will contest, kinship issues or disputes among parties as to whom should be appointed by the Court.  In all of these matters, the assistance of experienced estate lawyers familiar with Surrogate’s Court litigation should be obtained.

In the typical estate situation, the Surrogate’s Court will appoint either an Administrator or Executor to handle estate affairs.  An Executor is appointed when the decedent leaves a Last Will and Testament.  When a decedent dies intestate without a Will, an Administrator is appointed.

The right to be appointed as a fiduciary of an estate is restricted.  Executors and Successor Executors are typically designated in a Will.  The Surrogate’s Court gives great deference to the selection made by a testator as to fiduciary appointment.  The Court is very reluctant to ignore a designated person and will appoint such designee unless there are very strong reasons not to do so.  The mere dislike of nominated executors by Will beneficiaries, or even conflicts of interest, generally does not result in disqualification.

As to administrators, the right to be appointed is controlled by Surrogate’s Court Procedure Act (SCPA) Section 1001 entitled “Order of priority for granting letters of administration”.  Pursuant to this statute, the kinship status of the next of kin such as a spouse, children, grandchildren, etc. provides the right of such person to be appointed as estate fiduciary.  In the event a person does not qualify under this statute, the Court will not appoint him as an administrator.  The New York Probate Lawyer Blog contains many articles dealing with the probate of Wills and estate administration.