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Manhattan 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. An estate administrator is appointed by the New York Surrogate's Court and is responsible for managing your estate and ultimately distributing your assets. Because there is no will your assets will not be distributed to beneficiaries of your choice. Instead, they will be distributed to your heirs as defined by New York's laws related to intestate succession. Estate administration can be lengthy and costly to an estate. However, with careful planning your estate will not have to go through estate administration, but will be distributed to the beneficiaries of your choice in an expeditious manner. If you are concerned about your estate having to go through the process of estate administration, contact an experienced Manhattan Estate Administration Lawyer who can explain to your estate planning options.

Becoming an estate administrator

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 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:

  • Locate Your Assets. One of the first jobs of the estate administrator is to locate all of your assets. This may be as simple as going to your home and inventorying its contents. It may also mean finding bank and investment accounts. The administrator lets banks know that you have passed away. The administrator may have to retrieve assets that have been loaned to family and friends. A type of asset that may not immediately come to mind are digital assets. For example, funds that are held in an online payment processing account such as Paypal.
    However, 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.
  • 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. Valid debts must be paid. Such creditors may include utility companies, mortgage companies and credit card companies. 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 must file claims against an estate within 7 months of when the estate administrator is appointed or from the deadline in the published notice.
    If there is not enough money in your estate to pay all of your estate's debts, then your creditors will not get paid. Unfortunately, this would also mean that there would not be money to distribute to heirs.
  • Keep Records. The administrator must keep careful and detailed records of all income coming into the estate and payments going out of the estate.
  • Paying Taxes. 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.
  • Closing the Estate. Before assets can be distributed your estate must be closed. The estate administrator will complete a formal accounting of all estate transactions and file it with the Surrogate's Court. Once the court approves the accounting the estate will be closed and the administrator will be given permission to distribute assets to your heirs.
  • Distributing Assets. After all estate debts are paid the balance of the estate will be distributed to your beneficiaries. If the property is tangible personal property such as jewelry, clothing or household furnishings then it can be simply given to the appropriate beneficiary. If the property is real estate, the executor must make sure that the title to the property is properly transferred to the appropriate beneficiary. 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 beneficiary.

In some cases the executor may have difficulty locating an heir. The estate administrator must make a reasonably diligent effort to locate a missing heir, including possibly employing an heir finder. If the 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 § 1215

Intestacy heirs

Under New York laws of intestate succession, your primary heirs are your spouse and your children. However, if you pass away without a spouse or children, then the law states that your property will go to other blood relatives in a specific order. NY EPTL § 4-1.1

If you are survived by a spouse and you do not also have surviving children, your surviving spouse will inherit 100% of your estate. 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. 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. 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 estate. If you are survived by siblings but not by a spouse, children, or parents, then your siblings will share in 100% of your estate. 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. A claimant may be upset that the administrator refused to pay a claim. Another party may have had a dispute with you, the decedent, 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.

Claims against the estate. It is not unusual for someone to bring a claim against an estate based on damages that you caused before you died. For example, if you negligently caused a car accident that resulted in injuries to another person and that also resulted in your death, the injured person may sue your estate to recover damages. If you have outstanding debts which the estate administrator failed to pay, the creditors may sue your estate to recover the money owed. A lawsuit against an estate is generally the same as a lawsuit against a live defendant except that the timeframe for filing a claim is generally a lot shorter. Claimants have 7 months from date that the estate was opened or the deadline stated in the published notice to file a claim. N.Y. SCP. LAW § 1802

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 act in the best interest of your estate and to exercise due care in carrying out his or her responsibilities. An estate administrator meets these responsibilities by taking possession of the estate’s assets, maintaining 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.

To prove a breach of fiduciary duty, the person bringing the claim must show that a fiduciary relationship existed and that the executor breached that relationship. If he or she is able to prove that the estate administrator breach his or her fiduciary duty, the estate administrator may be held personally liable for any damages or personal gain that resulted from the breach. For example, in In the Matter of Mahler, 2009-1485/B, (Surrogate’s Court, Kings County, April 14, 2014), Mahler, the executor of the estate of Margaret Van Cortlandt Billmyer, was sued for breach of fiduciary duty. Mahler sold real estate that was part of the estate to an acquaintance for $670,000, who sold it three days later for $1.3 million. The Surrogate's Court found that Mahler had breached his fiduciary duty by selling the property at a price that was well below fair market value. 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. Oftentimes an interested party and the estate administrator simply do not get along. However, hostility with an heir is not a reason that the Surrogate's Court will remove an estate administrator. In re Brody, 872 N.Y.S.2d 689 (Sur. Ct. Nassau County 2008), the court stated that unless the hostility interferes with the proper administration of the estate, it cannot in itself serve as a basis to remove an estate administrator.

There are specific reasons listed in the Surrogate's Court Procedure that an administrator may be removed:

  • Ineligible or Disqualified. Information becomes available showing that the estate administrator is ineligible or disqualified to act as a fiduciary under New York law. N.Y. SCP. LAW § 711(1)
  • Wasted Assets. The estate 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 received the appointment as estate administrator by lying. N.Y. SCP. LAW § 711(2)
  • Change of Address. The administrator failed to notify the court of his or her 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 shows 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 fails 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. However, there are ways to avoid estate administration. The staff at Stephen Bilkis & Associates, PLLC 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 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan. We serve individuals throughout the following locations:

New York Probate and State Administration Blog - Manhattan Estate Administration
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