Bronx Estate Administration
Estate administration is very similar to probate. It the legal process that your estate must go through before your assets can be distributed to your heirs. If you made a will before you passed away, then the process is referred to as probate. If you did not leave a will, then the process is called estate administration. In New York the Surrogate's Court oversees the settlement of estates. Estate administration proceedings begin when someone approaches the Surrogate's Court and files a petition seeking the appointment of an administrator. Depending on the size and complexity of your estate, estate administration will likely take at least 9 months, and in some cases, significantly longer. There are sometimes problems along the way such as disputes with creditors and heirs. However, there are steps that can be taken to ensure that the estate administration process is smooth. There are also ways to avoid the estate administration process all together. If you are concerned about your estate having to go through the process of estate administration, contact an experienced Bronx Estate Administration Lawyer who can explain to your estate planning options.
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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.
The Surrogate's Court judge will oversee the estate administration process, including the distribution of assets to your heirs. If there are any disputes during the process that lead to estate litigation, the Surrogate Court judge will preside over the proceedings.The Process of Administering an Estate
In order for a will to go through probate, there are a few preliminary steps that must occur. These steps are sometimes referred to as "opening the probate estate." First your will must be found. After you execute your will it is a good idea to put it in a safe place and let your executor know where it is. Then your executor will take your will to the New York Surrogate's Court in the county in which you lived at the time of your death and file a Petition for Probate. The petition must include a copy of your will and any amendments, a certified copy of your death certificate, and the filing fee. On the petition you will have to include the names and addresses of the beneficiaries as well as the approximate value of the estate.
A New York Surrogate's Court judge will review the will to determine if it valid. If the court finds that the will is valid, then the judge will issue the person you named as executor in your will Letters Testamentary. In doing so, the executor is given the legal authority to begin managing your estate and ultimately distributing your assets to your beneficiaries.
Managing the estate involves a number of tasks:
Notifying statutory heirs. One of the first jobs of the estate administrator is to notify your statutory heirs. A statutory heir is someone who is entitled to inherit from your estate based on New York's laws of intestate succession. Your heirs are entitled to formal notice that your estate is in the process of being settled.
Collecting you assets. The estate administrator must collect all of your assets. Your estate administrator must secure both your personal and real property and ensure that it is safe. Such property may include your house, furniture, personal items, vehicle, bank accounts including checkbooks, safe deposit box, retirement accounts, and your small business.
Not all of your assets are subject to the estate administration process. Examples of such assets include: proceeds of life insurance policies, retirement plans such as pension plans, 401(k) plans and IRAs, property that you own jointly with others, and property that you placed in a trust while you were still living. However, the estate administrator must still make sure such assets are property distributed.
Part of safeguarding your assets means that the estate administrator must make sure that your property is maintained. For real estate this may involve making sure that utility bills are paid and that the property is secured.
Appraising Assets. Essential to administering your estate and distributing you assets to your heirs is figuring out the exact value of the estate. The values of a vehicle, bank account or investment account are fairly straightforward to determine. However, other items such as jewelry and collectibles or a small business may require that the administrator obtain professional appraisals.
Open a checking account. Using funds from the estate, another task that the administrator will do early in the estate administration process is to open an estate checking account.
Paying Creditors and Final Bills. The estate administrator must determine if there are creditors of the estate or other claimants and determine if the claims are valid. This involves giving notice to known creditors and closing accounts such as credit card accounts as well as other lines of credit. Valid debts must be paid. Other bills that must be paid out of estate assets include your funeral expenses and expenses related to managing your estate. For example, if the executor needed to hire an appraiser, attorney, or accountant, their fees would be paid by the executor from estate assets. Creditors only have a limited amount of time to submit their claims for payment. Claims must be filed within 7 months of when notice was given.
The estate administrator is responsible for filing your final federal, state, and local income tax returns and paying income taxes owed. He or she must also file estate income tax returns, if required.
If there is not enough cash in your estate to pay estate debts, then your estate administrator may ask the court for permission to sell assets. If there still is not enough money in your estate to pay all of your estate's debts, then your creditors may only get paid a portion the debt or all or some may not get paid at all. Unfortunately, this would also mean that there would not be money to distribute to heirs. However, your heirs will not inherit your debts.
Closing the Estate. Before assets can be distributed your estate must be closed. After the deadline for submission of claims against your estate has expired and taxes have been paid, your estate administrator will submit to the Surrogate's Court a proposed final distribution of your estate's assets.
Distributing Assets. After all estate debts are paid the balance of the estate will be distributed to your heirs according the intestate succession rules. If the property is tangible personal property such as jewelry, clothing or household furnishings then it can be simply given to the appropriate heir. If the property is real estate, the executor must make sure that the title to the property is properly transferred to the appropriate heir. To fulfill a bequest that is a specific dollar amount, the executor will simply write a check from the estate's account to the appropriate heir.
In some cases the executor may have difficulty finding an heir. The estate administrator must make a good faith effort to find any missing heirs, including possibly employing the services of an heir finder. If the estate administrator cannot find an heir and the property remains unclaimed, the property will eventually be distributed to the missing heir's statutory heirs according to New York's intestacy laws. EPTL § 4-1.1. If your heir has no statutory heirs then the property may become the property of New York State according escheat rules. N.Y. ABP. Law § 1215Intestacy heirs
Under New York laws of intestate succession, your primary heirs are your surviving spouse and your children. However, if you pass away without a spouse or children, then your property will go to blood relatives in a specific order. NY EPTL § 4-1.1
If you are survived by a just a spouse and no, your spouse will inherit 100% of your property. If you are survived by both a spouse and children, then all will share in your estate. Your spouse will inherit the first $50,000 of your estate, plus 50% of the balance. Your children will inherit the remaining 50% of your estate, divided equally. If you are survived by children but no spouse, then they will all share in your estate equally. If you are survived by one or both of your parents, but not by a spouse or children, then your parents will share equally in 100% of your property. If you are survived by siblings but not by a spouse, children, or parents, then your siblings will share in 100% of your property. After that New York rules on intestate succession provide that your estate will go to your grandparents and your aunts and uncles.Problems with an Estate Administrator
On occasion problems may arise with the administration of an estate. An heir may be unhappy with how the administrator has managed the estate's assets. Someone who has a claim against the estate may be angry if the estate administrator refused to pay a claim. Another party may have had a dispute with you during your lifetime that was never resolved and take it out on the estate administrator. Any dispute involving the administration of an estate may rise to the level of estate litigation which will undoubtedly lead to a delay in the assets of the estate being distributed to your heirs.
Personal Liability for the Administrator. An estate administrator is a fiduciary with respect to your estate. This means that the estate administrator is obligated to manage your estate with the utmost care. An estate administrator meets these responsibilities by taking possession of the estate’s assets, taking care of estate assets, keeping accurate records, administering the estate for the sole benefit of your heirs, and by showing the care and skill an ordinary person would have in managing your assets. If the administrator fails to do these things, your heirs may sue the administrator for breach of fiduciary duty or negligence.
For example, in the case of In the Matter of Mahler, 2009-1485/B, (Surrogate’s Court, Kings County, April 14, 2014), Mahler was the executor of the estate of Margaret Van Cortlandt Billmyer and was sued for breach of fiduciary duty. Mahler sold real estate that was part of the estate to an acquaintance for $670,000 which was well below market value. The acquaintance then sold the property three days later for $1.3 million. The Surrogate's Court found that Mahler had breached his fiduciary duty by selling the property at such a low price. The court held Mahler personally responsible, requiring him to pay the estate $630,000 in damages.
Removing an Administrator. Another option for addressing problems with an estate administrator is to seek to have him or her removed. There are specific reasons listed in the Surrogate's Court Procedure that a Surrogate's Court judge may remove an administrator:
- Ineligible or Disqualified. The administrator is ineligible or disqualified to act as a fiduciary under New York law. N.Y. SCP. LAW § 711(1)
- Wasted Assets. The administrator wasted assets, misapplied assets, or made unauthorized investments. N.Y. SCP. LAW § 711(2).
- Unfit for Office. The administrator is unfit for the job because of dishonesty, drunkenness, carelessness or want of understanding. N.Y. SCP. LAW § 711(2)
- Disobedience. The administrator refused to follow orders of the court. N.Y. SCP. LAW § 711(3)
- Deceit. The administrator was deceitful. N.Y. SCP. LAW § 711(2)
- Change of Address. The administrator failed to notify the court of a change of address within 30 days of such change. N.Y. SCP. LAW § 711(6)
- Removal of Property from State. The administrator removed estate property outside of the State of New York without prior court approval. N.Y. SCP. LAW § 711(7)
- Irresponsible. The administrator showed that he or she does not have the degree of responsibility required because of substance abuse, dishonesty, carelessness, or lack of understanding. N.Y. SCP. LAW § 711(8)
- Failure to Account. The administrator failed to file an accounting as directed by the court. N.Y. SCP. LAW § 711(12)
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 or missing heirs. However, there are ways to avoid estate administration and ensure that your property is distributed to the beneficiaries of your choosing as quickly as possible after your death. The staff at Stephen Bilkis and Associates has extensive estate planning experience and frequently represents clients before the New York Surrogate's Court during the probate or estate administration process. Contact us at 1-800-NY-NY-LAW (1-800-696-9529) to schedule a free, no obligation consultation regarding your estate plan.