New York Estates May Involve The Payment Of A Decedent’s Debts

An Estate fiduciary such as an Executor or Administrator is responsible for settling a decedent’s estate.    A New York City estate lawyer often refers to Estates Powers and Trusts Law (EPTL) Section 11-1.1 which is entitled “Fiduciaries’ powers”.  Among the authority provided by the statute is the power to settle claims against a decedent’s estate.  The payment of estate creditors is a primary obligation of the fiduciary which must be completed before any distributions can be made to beneficiaries.   If a fiduciary distributes estate assets to beneficiaries before satisfying creditor’s claims, the administrator or executor may be held personally liable to satisfy those debts if the estate does not have sufficient assets remaining on hand to do so.

It is very common for a person to die with unpaid debts or creditor claims. The most common types of unpaid items include credit card balances and mortgages. In a recent article posted at by Christine DiGangi dated May 29, 2017 entitled “What happens to your debt when your die?”, it was reported that 73% of decedents had some type of debt at death.The New York Probate Lawyer Blog has posted many articles covering the estate settlement process. A fiduciary collects the decedent’s assets and is responsible for determining and satisfying the decedent’s debts. Depending upon the asset make-up of the estate, there may or may not be sufficient liquid assets such as bank accounts or securities available to pay all of the decedent’s outstanding obligations. If the estate has real estate as an asset, the property may need to be sold to satisfy the outstanding obligations. This is especially the case when the property has a mortgage or a reverse mortgage. Since this type of debt tends to be large, it may be that the only way to pay this item is to sell the mortgaged property and use the proceeds to satisfy the loan.

While an estate fiduciary is not personally liable for a decedent’s debts, such liability may occur if the executor or administrator mishandles estate assets and does not give priority to the payment of the decedent’s obligations. In many cases the estate may dispute the liability or amount of a creditor’s claim. This can occur when the claim is based upon some alleged claim that may need to be litigated or opposed by the estate such as a lawsuit that was pending against the decedent before he died.

There are a number of Surrogate’s Court procedures that can be utilized to determine the validity and amount of creditor’s claims. For example, when the estate fiduciary files an Estate Accounting with the Court, one of the issues that can be presented is the determination of a claim. Also Surrogate’s Court Procedure Act Section 1809 entitled “Proceeding to determine validity and enforceability of claim” provides a means to settle these issues.

I have represented many administrators and executors in settling an estate and satisfying outstanding obligations of a decedent. Very often estate litigation in the Surrogate’s Court is needed to resolve these matters. If you have a question or issue regarding the administration of an estate or a debt of a decedent, call me now for a free review.

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


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