Estate Administration 101
After a loved one dies, many people wonder if they need to set up an estate or are unsure about how to handle certain assets.
The estate administration process can take longer than many people expect. If you are seeking to be appointed as the Executor (in a situation where the deceased individual had a Will) or Administrator (in situations where no Will exists), you will have many duties as the fiduciary of the estate.
The first task prior to becoming appointed is to submit a petition and related documentation to the Surrogate’s court in the county where the decedent was domiciled. This information can be found on the death certificate.
After submitting your petition to court, the Surrogate Court Judge will review your application. In some occasions, the court can issue your Letters of Administration or Letter Testamentary with submission of paperwork, but there are often numerous situations where you or your attorney will be required to attend a court hearing. Typically, this happens when there are family members who cannot be located, or where there are minor children or disabled adults who are involved.
Once your Letters have been issued, you can begin to marshal the Decedent’s estate assets. First, you will need to open an estate bank account. The assets of which you will have control over will only include those that were in the name of the Decedent individually and will not include joint assets or those accounts which include a designated beneficiary. An example of jointly owned personal property is a joint checking account. The fiduciary of the estate has the legal authority to sell real property, liquidate or transfer stock interests, liquidate bank accounts, and sell vehicles. Any assets that are liquidated or closed out should be deposited into the estate bank account.
Another duty of the fiduciary of the estate is to pay off any debt of the estate. Creditors have 7 months to file claims within the estate, but the fiduciary has a duty to pay off any claims of which they are aware. This can include, as an example, credit card debt, IRS debt, or Medicaid debt. It is important to consult with an attorney to learn the priority of debt that needs to be paid, or what to do if the estate is insolvent (i.e. the debt outweighs the estate assets). If payment of debt is not handled properly, the fiduciary can potentially expose themselves to individual liability.
Another important duty of the fiduciary of the estate is to distribute the assets of the estate either according to the deceased individual’s Will or, where there is no will, according to the intestacy laws of New York. You will want to consult with an attorney to make sure that all distributions are properly made. Fiduciaries are also entitled to a commission for their work as serving as the executor or administrator. This counts as “income” for purposes of that fiduciary’s own income taxes, although a distribution from the estate does not. The commission is calculated pursuant to New York State law.
Closing out the estate requires the fiduciary to account to everyone who is entitled to take a distribution from the estate. Those individuals will need to sign court paperwork stating that they agree with the amount they received and have accepted it. The person receiving the distribution also relieves the fiduciary from future claims or contests regarding the estate. There are certain situations which require judicial accounting, which is a complicated court process. Examples of Estates that require this for estate closure are when there are minor children involved, when the estate is insolvent, or when there are charities involved as beneficiaries.
An experienced Trusts and Estates attorney can help make this process much easier and ensure all requirements are met.
This is not intended to be legal advice. You should contact an attorney for advice regarding your specific situation.
Christine Fiorile Harrington is an associate with the firm and practices estate planning and estate administration. Christine can be reached by phone at 845-764-9656 and by email.