Estate administration is the legal process during which the estate of a decedent is settled and the property in the estate is distributed to the decedent's heirs. An estate administrator manages the process. Estate administration is similar to probate. However, probate is the legal process that occurs when the person who passed away left a last will and testament, while estate administration occurs when there is no will. Furthermore, the executor named in the will manages probate. If you are appointed to serve as the estate administrator over a loved one's estate it is important that you work with an experienced Nassau County Estate Administration Lawyer who can ensure that you understand the details of estate administration and that the process proceeds as quickly and efficiently as possible under the circumstances.
Unlike an executor who is named in a will, an estate administrator is appointed by the New York Surrogate's Court. An estate administrator is appointed in response to the filing of a Petition for Letters of Administration. Notice of the petition will be given to your heirs and other interested parties. If no one objects, then the judge will determine who is the appropriate person for the job. The judge will then issue that person the letters of administration. The letters of administration officially appoint the estate administrator giving him or her the legal authority to begin the process of managing the decedent's estate.
Responsibilities of the estate administratorTake Control of Assets. One of the first jobs of the estate administrator is to take control over the decedent's assets. Estates assets may include real estate, vehicles, artwork, collectibles, stocks, bonds, bank accounts, furniture, and other personal property. He or she will inventory your assets and have them appraised. This is a necessary step as the estate administrator must know the value of the estate before he or she will be able to ultimately distribute assets to the decedent's heirs.
At times there may be disagreements within the family as to what property is indeed part of the decedent's estate. It is up to the administrator to work with the family to resolve such disputes. Once the assets are collected the administrator can then figure out the total value of the estate.
Managing the Estate. Before the estate assets are distributed and the estate is closed, as a fiduciary the administrator must take care of assets in a prudent manner. This may be as simple as making sure that the testator's home is secured, or making sure that rental property is properly leased. It may also mean making sure that cash is invested properly, and that such investments are not unnecessarily risky.
Pay Estate Debts. The next major step in the estate administration process is for the estate debts to be paid. The administrator will advise known creditors of the debts in order to allow them to file claims against the estate. It is up to the administrator to pay only legitimate claims. On occasion disputes develop over the payment of a claim, resulting in the creditor initiating estate litigation in an effort to secure payment of the debt.
Estate debts may also include your funeral expenses as well as outstanding bills such as utility bills. Taxes will be paid from estate assets and the administration must file tax returns. The estate administrator must file both federal and state income and estate tax returns and must pay "death taxes" including estate and inheritance taxes. Fees associated with the administration of the estate must be paid out of estate assets such as court costs and estate administrator fees. Estate administrators are paid. The amount of the fee is based on the size of the estate. The administrator may need to hire professionals such as an attorney and accountant. These fees are also paid from estate assets.
If there is not enough cash in the estate assets to pay debts, then the administrator may have to sell property in order to satisfy debts. Assets such as real estate, jewelry, and vehicles are typically sold at public auction.
Distributing Estate Assets. The last step in the administration process before the estate is closed is distributing the estate assets. Prior to the final distribution of assets, small allowances can be given to the testator's spouse, minor children and others who relied on the testator for support. In general, however, no assets are distributed until debts paid and all other estate issues are resolved.
Since there is no will, New York law dictates who will receive the decedent's property. The only potential heirs are a surviving spouse and certain blood relatives, including children, parents, grandparents and siblings. The rules of intestate succession give a specific order in which statutory heirs may inherit. NY EPTL § 4-1.1. If the decedent has only a surviving spouse, then he or she will receive the entire estate. If the decedent has both a spouse and surviving children, then the spouse will receive the first $50,000 of the estate with the remaining assets being split between the children and the spouse. If there are no children or spouse, then the decedent's parents will get the entire estate. After that, the decedent's siblings and then other blood relatives will be entitled to share in the estate.
Even though the law states clearly who may inherit, family members may be dissatisfied with the result and resort to estate litigation. Another problem that occasionally develops is where heirs are difficult to locate. When this happens the estate administrator must make a diligent effort to locating the missing heirs. If there are difficulties in locating heirs, there may be a delay in the distribution of assets and closing the estate. The services of an heir finder may help you locate hard-to-find relatives.
Closing the EstateOnce the estate has been distributed the estate administrator's job is done. Before the estate can be closed the estate administrator must receive releases from all beneficiaries. The releases are filed with the court and discharge the administrator from his or her duties as a fiduciary.
Problems with an Estate AdministratorAn estate administrator is a fiduciary. He or she must fulfill his or her duty in prudent manner and avoid dealing with estate assets and issues in a self-interested manner. If the administrator performs his or her responsibilities in an imprudent manner, then that administrator can be removed by the court. Furthermore, poor management of an estate could lead an interested party such as a heir to commence estate litigation based on breach of fiduciary duties. If the court finds that an estate administrator breached his or her fiduciary duties, the administrator may be personally liable for any losses that resulted from such errors or omissions, or from failing to act fairly, prudently, or timely.
Guardianship.If you do not leave a will that names a guardian, then the court will appoint one. While this person may ultimately be a relative, however, the court may also appoint someone who you would not have chosen. While the court would not likely chose a complete stranger, in cases where there is not a relative or close friend who is able, willing or qualified to serve, the court may appoint a stranger to serve as guardian. The better strategy is to name a guardian in advance who you know will care for your children in a manner that is consistent with your beliefs.
Estate administration is sometimes routine, but can also become quite complicated depending on the size of the estate and any unexpected events that develop in the process such as estate litigation. An experienced Nassau County Estate Administration Lawyer will help you complete the process as quickly as possible under the circumstances. The staff at Stephen Bilkis and Associates has extensive estate planning experience and frequently represents clients before the New York Surrogate's Court. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan.