Articles Posted in Estate Settlement

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.

When a person is appointed by the Surrogate’s Court as an Administrator or Executor of a decedent’s estate, he assumes a great deal of powers and responsibilities.  Estates, Powers and Trusts law Section 11-1.1 entitled “Fiduciaries powers” sets forth an extensive statement of authority which an estate fiduciary may exercise.  The statute includes such powers as a right to invest estate property, collect rents, sell property, mortgage property, make repairs, contest or settle claims for the estate and to distribute estate assets, just to name a few of the many areas of authority.

While an executor or administrator may have these numerous powers, there is also a requirement that the fiduciary act properly and responsibly.  If he abuses his powers he may be found to have breached his fiduciary duties and be held personally liable for any loss or damage caused by his actions.

There are many situations where a fiduciary who is settling an estate needs to make decisions but the outcome of his action is not clear.  The fiduciary knows he needs to act but does not want to proceed if things go wrong and he is held to account for any loss or harm to the estate.  For example, an estate may hold property or assets which need to be sold to pay estate obligations or to effectuate distribution to beneficiaries.  The executor or administrator may not know whether the potential sales price is sufficient so as to avoid criticism from the parties interested in the estate.  Obviously, if a fiduciary can obtain pre-sale approval from the Surrogate’s Court, he may be able to avoid estate litigation or a contested accounting proceeding.

Kinship in New York is always an important factor affecting estate settlement.  Most of the proceedings in the Surrogate’s Courts require that a decedent’s distributees or next of kin be included as interested parties.  For instance, where a person dies intestate without a Last Will and Testament, the estate is distributable to distributees according to Estates, Powers and Trusts Law Section 4-1.1 entitled “Descent and distribution of an intestate estate.”  The persons who have a right to be appointed as administrators in an intestate estate are similarly established pursuant to their status as next of kin in accordance with Surrogate’s Court Procedure Act Section 1001 entitled “Order of priority for granting letters of administration.”

In a situation where a decedent leaves a Will, all of the decedent’s distributees must be identified in a probate petition and provided with notice of the probate proceeding.  The reason for this is that the distributees have a right to contest a Will.  If a Will is determined to be invalid, the estate would then pass to the next of kin through intestacy.  The New York Probate Lawyer Blog has published numerous blog posts regarding probate and intestate estate administration.

Proving kinship is usually a difficult process.  Marriage records, birth certificates, and other documentary evidence, as well as testimony from individuals with first-hand knowledge of a decedent’s family, are required.  Due diligent efforts must be made to obtain this information.  In the case of a non-marital person, the job of establishing paternal kinship is even more difficult.  The important statute dealing with this issue is EPTL 4-1.2 entitled “Inheritance by non-marital children.”  This statute describes the various avenues for proving such kinship.

When an executor or administrator is appointed to settle an estate, there are many tasks which need to be accomplished.  Among the most basic fiduciary duties is the collection of assets and the resolution or payment of the decedent’s debts and monetary obligations.  The New York Probate Lawyer Blog discusses many of these matters in numerous posts.

While the payment of debts may seem rather routine, the process can be very difficult.  To begin with, the estate representative must identify the debts and obligations which exist.  These may include credit card or other credit obligations such as mortgages, car loans, stock margin accounts, home equity or other lines of credit.  These types of items may be easy to discover and to determine the extent of a claim since there are typically periodic account statements sent showing the outstanding balance.

In many cases the decedent’s obligations may be more difficult to discern and quantify.  There may be business debts or obligations to third parties involved in business transactions which are reflected in various agreements which are not apparent without a careful review of the decedent’s records.  Obligations may also exist as a result of a past divorce or matrimonial pre-nuptial or settlement agreement.  Such obligations may be binding upon a decedent’s estate as to future payouts or result in claims due to the decedent’s failure to make past due payments.

The Surrogate’s Court Procedure Act (SCPA) Section 103 entitled “Definitions” provides a definition for “Fiduciary” at paragraph 21.  The term includes an expansive list of titles including administrator, executor, guardian, and testamentary trustee.  Someone acting in a fiduciary capacity to another generally means that such person owes certain legal responsibilities to the party for whom they are acting or based upon the parties’ relationship.  Someone who is a Guardian for an incapacitated person in an Article 81 Guardianship, as well as an agent appointed under a Durable Power of Attorney stands in a fiduciary relationship to the person for whom they have accepted responsibility to perform certain tasks or acts.

Responsibilities flow from the authority given to a fiduciary either from the document which defines the manner or scope of the powers and also from the various statutes and rules and guidelines a fiduciary must follow.  For example, an Article 81 Guardian typically derives the extent of authority from the Order and Judgment appointing the Guardian.  Also, Article 81 of the Mental Hygiene Law (MHL) sets out certain powers that a Guardian may possess.  MHL Section 81.20 lists “Duties of Guardian” while section 81.21 sets forth “Powers of guardian; property management” and section 81.22 provides for “Powers of guardian; personal needs.”  Similarly, with respect to the estate laws, Estates, Powers and Trusts Law Section 11-1.1 provides an expansive list of “Fiduciaries’ powers.”

Thus, an executor or administrator in settling an estate needs to be aware of their responsibilities.  Another area which is always a topic of discussion is the fees that can be paid to a fiduciary for acting in such capacity.  These fees, called commissions, are meant to compensate someone for accepting and performing the job as trustee, guardian, administrator or executor.  The SCPA contains a number of sections which set out the manner by which commissions are allowed and computed.  For instance, SCPA Section 2307 sets forth the commissions to be paid to fiduciaries which are not trustees, while SCPA 2309 gives commissions for trustees for trusts created after August 31, 1956.  MHL Section 81.28 gives information as to “compensation of guardian.”