Estate, Powers and Trusts, § 11-1.7: Limitations on Powers and Immunities of Executors and Testamentary Trustees

A will is an important estate planning document that controls how your property will be managed and distributed upon your death. When you write your will you as the testator will name an executor who will be charged with carrying out your wishes as stated in your will during the process of probate administration. As a fiduciary with respect to your estate’s assets, an executor has an extraordinary amount of power over the management of your estate after your pass away. However, New York estate law does place some limits on this power. New York Estate, Powers and Trusts, § 11-1.7, describes the power and authority that cannot be granted to executors or testamentary trustees. Because the role of an executor or trustee is pivotal to how your estate will be managed once you pass away, it is critical that you take great care and determine who will serve in these roles. As you contemplate drafting your will and appointing fiduciaries it is would be wise to consult an experienced New York Estate Administration 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 your estate planning goals.

1. Tax elections by personal representatives: Estates, Powers and Trusts, § 11-1.2
2. 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
3. Payment of testamentary dispositions or distributive shares: Estates, Powers and Trusts, § 11-1.5
4. Property held as a fiduciary to be kept separate: Estates, Powers and Trusts, § 11-1.6

In your will you will name the person who will be the executor of your estate. If your will creates a trust, the trustee is referred to as a testamentary trustee. Executors and trustees have broad power and responsibility with respect to estate or trust assets. Such responsibilities may include:

• Gathering and inventorying estate or trust property. This may include the contents of your home, other real estate, financial accounts, and other types of property.
• Managing estate or trust property until it is distributed to your beneficiaries. This may include taking care of your the bills related to your house such as paying the mortgage and utilities, as well as managing your investments.
• Hiring professions such as an attorney or accountant. This may be required if your estate is substantial or complicated.
• Paying estate debts and taxes. This would include filing your final tax return and paying any taxed owed as well as paying your outstanding creditors.
• Distributing your assets to your beneficiaries. This is the final step. It can only be done after all other business of your estate has been taken care of such as paying your creditors.

Under EPTL 11-1.7, the following rules apply to an executor or testamentary trustee:

• A fiduciary cannot be exonerated from liability for breaching fiduciary duties.
• A fiduciary cannot be granted the power to make a binding valuation of an estate or trust asset.

1. (a) The attempted grant to an executor or testamentary trustee, or the successor of either, of any of the following enumerated powers or immunities is contrary to public policy:
   1. (1) The exoneration of such fiduciary from liability for failure to exercise reasonable care, diligence and prudence.
   2. (2) The power to make a binding and conclusive fixation of the value of any asset for purposes of distribution, allocation or otherwise.
2. (b) The attempted grant in any will of any power or immunity in contravention of the terms of this § shall be void but shall not be deemed to render such will invalid as a whole, and the remaining terms of the will shall, so far as possible, remain effective.
3. (c) Any person interested in an estate or testamentary trust may contest the validity of any purported grant of any power of immunity within the purview of this § without diminishing or affecting adversely his interest in the estate or trust, any provision in any will to the contrary notwithstanding.

Making a will and appointing an executor is an important process that will affect how your estate is managed once you pass away. It will also impact the financial future of your family members. It is important to make sure that it is done correctly and that you understand the authority that your executor or other fiduciary will have. The staff at Stephen Bilkis and Associates has years of experience working closely with New York clients to draft wills and other estate planning documents such as trusts, powers of attorney and living wills. To learn more about estate planning, contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan.