COVID-19 UPDATE: Firm Operations Continue Uninterrupted - Learn More About How We Are Helping Our Clients

Did You Know Estate Settlement May Require A Beneficiary to Reimburse Estate Funds

The administration of a New York estate typically is comprised of three stages.  The first stage involves the appointment of an estate fiduciary such as an Administrator when the decedent dies intestate or an Executor when there is a Last Will and Testament.  In most cases this stage is uneventful and after a complete petition and supporting papers are filed with the Court the fiduciary is appointed.  Sometimes, there is estate litigation concerning a contested Will or the appropriate person to be appointed as Administrator.   Kinships may also be an issue.

Stage two of an estate involves the collection of assets and the payment or settlement of claims and estate obligations.   Surrogate’s Court litigation may also be needed here if there are disputed issues regarding estate liabilities and the ownership of assets.  An estate executor or administrator has a fiduciary obligation to collect and protect the estate assets.  Creditor’s claims and tax issues can complicate the finalization of the decedent’s affairs.

In the third and final stage, the estate fiduciary is ready to distribute the net assets to the beneficiaries.  The fiduciary usually prepares an Accounting.  This document contains detailed information as to all of the estate assets and income collected as well as all of the expenses and other items paid from the estate.    The accounting will set forth various unpaid items to be paid such as fiduciary commissions and attorneys or accountant fees.  It may also contain proposals for the manner in which the net estate is to be distributed by providing a final calculation of each beneficiary’s interest.

Accountings can be informal or formal.  An informal accounting allows all the parties to finalize estate affairs without further Court proceedings.  When a formal accounting is needed, papers are filed with the Surrogate’s Court to settle all accounting issues.

The Administrator or Executor must be careful not to distribute estate funds before all parties agree to the accounting and before all possible claims are satisfied.  In the event there are insufficient funds in the estate to satisfy claims and other expenses, the fiduciary will be personally responsible for such items if he already distributed assets to beneficiaries.

In fact, the beneficiaries may need to repay monies received from the estate to satisfy these unpaid claims.  This was the situation in a recent Manhattan estate case entitled Estate of Antin, decided by Manhattan Surrogate Nora Anderson on April 19, 2019.  In Antin, the Executor distributed assets to himself and his sister, the sole estate beneficiaries.  However, the estate still had an obligation to pay attorney’s fees.  The Court provided in the accounting decree that the estate beneficiaries would be individually liable for any estate obligations to the extent the estate did not have sufficient funds to pay them.

As seen from Antin, the settlement of an estate can be very complex and the fiduciaries need to be very careful about the payments and distributions they make before finalizing the decedent’s affairs.  I have worked with Fiduciaries in all types of Probate and Administration cases to administer an estate and finalize an accounting.

Call me now for a free review regarding your estate settlement issues.  We offer flexible and reasonable fee arrangements.

New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 30 years resolve issues relating to probate and estate settlement throughout New York City including Queens County and the Bronx.   If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial consultation.

Contact Information