Estate, Powers and Trusts, § 11-1.5: Payment of Testamentary Dispositions or Distributive Shares

An executor is the person named in a will by the testator to be responsible for managing the testator's estate after he or she passes away. One of the primary responsibilities of the executor is to distribute the estate’s assets to the testator’s beneficiaries as instructed in the will. However, distributing assets is not always a simple or quick process. New York estate law has rules concerning when and how assets may distributed. For example, generally speaking before assets can be distributed to beneficiaries, all debts of the estate must be paid. New York Estate, Powers and Trusts § 11-1.5, provides several rules regarding when testamentary dispositions can be made. It is important to understand the timeframe for testamentary distributions and other rules related to testamentary dispositions as such rules will effect when your beneficiaries will receive assets that they may sorely need. As you contemplate drafting your will it is important to consult an experienced New York Probate Lawyer who will educate you on the duties and responsibilities of an executor and who will make sure that your will is drafted in a manner that reflects not only your estate planning goals, but that is also compliant with New York probate law.

1. Tax elections by personal representatives: Estates, Powers and Trusts, § 11-1.2
2. Power and duty of executor before probate: Estates, Powers and Trusts, § 11-1.3
3. Validity of execution of power to sell, mortgage or lease real property by less than all qualifying executors: Estates, Powers and Trusts, § 11-1.4
4. Property held as a fiduciary to be kept separate: Estates, Powers and Trusts, § 11-1.6

When a testator passes away often times the family is placed in dire financial straits because the family was financially dependent on the decedent. Even when the decedent provided well for the family by leaving them his or her assets, the family may still suffer financially because it typically takes several months before assets left in a will can be distributed. New York law provides the following rules regarding the timing of testamentary distributions:

1. Estate administration fees, funeral expenses, estate debts and estate taxes must be paid or assets must be set aside to pay them before testamentary distributions may be made
2. There is a waiting period of 7 months before testamentary distributions may be made
3. A notice of the decedent’s passing must be sent to creditors before testamentary distributions may be made

If you want to make sure that there is no significant delay in your beneficiaries receiving distributions from your estate, there are options consider such as creating a living trusts. Unlike wills, living trusts do not have to go through probate. Thus, distribution from a trust is typically a lot quicker than from a will.

1. Subject to his duty to retain sufficient assets to pay administration and reasonable funeral expenses, debts of the decedent and all taxes for which the estate is liable, a personal representative may, but, except as directed by will or court decree or order, shall not be required to, pay any testamentary disposition or distributive share before the completion of the publication of notice to creditors or, if no such notice is published, before the expiration of seven months from the time letters testamentary or of administration are granted.
2. Whenever a disposition is directed by will to be paid in advance of such publication of notice or the expiration of such seven month period, the personal representative may require a bond, conditioned as follows:
   1. That if debts of the decedent appear, and the assets of the estate are insufficient to pay them or to pay other testamentary dispositions entitled, under 13-1.3, to payment equally with or prior to that of the disposition paid in advance, the beneficiary to whom advance payment was made will refund it, or the value thereof, together with interest thereon and any costs incurred by reason of such payment, or such ratable portion thereof, as is necessary to pay such debts or to satisfy the rights, if any, of other beneficiaries under the will.
   2. That if the will, under which the disposition was paid, is denied probate, on appeal or otherwise, such beneficiary will refund the entire advance payment, together with interest and costs as described in subparagraph (1), to the personal representative entitled thereto.
3. If, after the publication of notice to creditors or the expiration of seven months from the time letters are granted, as the case may be, the personal representative refuses upon demand to pay a disposition or distributive share, the person entitled thereto may maintain an appropriate action or proceeding against such representative.  But, for the purpose of computing the time limited for its commencement, the cause of action does not accrue until the personal representative's account is judicially settled.
4. In any action or proceeding to compel payment of a disposition or distributive share, the interest thereon, if any, shall, in the case of a disposition, be at the rate fixed in the will or, if none is so fixed, in any case at the rate of six percent per annum commencing seven months from the time letters, including preliminary or temporary letters, are granted.
5. Upon application by any legatees of the general dispositions on notice to the fiduciary, the court, where the delay in payment was unreasonable, may fix interest in the amount set forth in § five thousand four of the civil practice law and rules.

The process of probating a will is often lengthy- over 7 months. In the meantime your loved ones must wait to receive the assets you left them. This may cause the financial hardship. In addition to having a will, consult an estate planning attorney about the benefits of also having a trust that will allow a speedier distribution of assets. To learn more about writing a will, trust, and other estate planning tools contact Stephen Bilkis and Associates. Call us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan. We will help you develop an overall estate plan that reflects your individual goals.