NEW YORK EXECUTOR GUIDE
The New York Law Firm of Mitchell Wilensky has represented executors, administrators, and trustees for over 30 years. Executors, administrators, and trustees, who are frequently family members of the deceased and untrained in probate, estate, and trust law, need support and guidance in proper estate and trust administration. Without an understanding of their legal responsibilities, it is easy to make mistakes and take missteps that can lead to claims by the beneficiaries of breach of fiduciary duty. Whether it is a simple or complex estate, our law firm prides itself on its supportive representation of executors, administrators, and trustees. If you are an executor, administrator or trustee seeking legal representation, the below guide presented in a Q&A format will provide you with a fundamental background.
The Executor is the man, woman (a woman is sometimes referred to as an Executrix) or bank or trust company named in a decedent's Will to carry out the provisions of the Will and administer the decedent's estate. A Will can appoint more than one Executor. If a person dies without a Will (or if there is a Will but no Executor is named or is willing to act), the individual appointed by the Surrogate’s Court to wind up the decedent's affairs is called an Administrator. The law provides that Executors are entitled to commissions for their services, which are paid from the estate unless waived by the Executor. It is not unusual for individual family members or friends who serve as Executors to waive commissions.
Simply stated, the Executor is required by law to wind up the decedent's affairs, and to carry out the terms of the decedent's Will. Specifically, the Executor is responsible for having the Will probated, collecting those assets of the decedent that pass under the Will (i.e., not joint property, insurance and pension benefits payable to named beneficiaries, and the like), paying the decedent's debts (including funeral expenses), paying administration expenses, and paying any taxes that are due from the estate. Such taxes can include the decedent's final income taxes, gift taxes, Federal and NYS estate taxes due, if any, and income taxes on income earned by the estate during the period of administration.
During the administration of the estate, which can take anywhere from a few months to several years depending on the size and complexity of the estate, the Executor is generally responsible for investing and managing the estate's assets and providing for the management of any real estate or cooperative apartment. Once all of the bills and taxes have been paid, the Executor is responsible for distributing the remaining assets in accordance with the terms of the decedent's Will. Finally, the Executor will be required to account to the beneficiaries (and sometimes to the Surrogate’s Court) for every asset collected, all gains and losses, all income and other receipts during administration, and all of the property paid out or distributed to the decedent's creditors and beneficiaries.
Probating a Will is the first step in any estate administration. Once the Will has been located, the Executor must make sure that the probate is handled quickly and efficiently, and the best way to do this is to hire counsel such as the Law Firm of Mitchell Wilensky who is well versed with probate and Surrogate's Court procedures. Although an Executor is not legally required to obtain the assistance of an attorney to probate the Will, he or she would be well advised to do so. New York requires that all beneficiaries and fiduciaries named in a Will as well as all of the decedent's distributees (those who would benefit if there were no Will) be notified that the Will is being submitted to probate. Any person who would be adversely affected by the probate of the Will is given an opportunity to appear in Court and object. Such a person may sign a waiver and consent form indicating he or she consents to probate. In most cases, no one has any objection to the Will, and as long as the Surrogate believes that the testator's last Will was properly executed in accordance with New York law, it will be admitted to probate and the person or persons named therein appointed Executors. In some instances the witnesses to the Will may be required to testify that the Will is valid.
The Executor must undertake a thorough search for all of the decedent's assets. It is the Executor's sole responsibility to locate all of these assets, pay the taxes on them, if any, and distribute them to the people named as beneficiaries in the Will. These assets can include social security payments, medical insurance reimbursements, CDs, bank accounts, furniture, jewelry, artwork, pension plans, IRAs, stock certificates, brokerage accounts, real property, partnership interests, automobiles and life insurance. The Executor must locate all assets, even those which are not "probate assets" such as jointly held property or accounts or life insurance policies payable directly to beneficiaries, since the Executor is responsible for including information about such property on the estate tax returns and the Surrogate‘s Court Inventory which is required to be filed within six (6) months after the appointment of the Executor. Thereafter, the Executor must transfer all of the probate assets into the name of the estate and open an estate bank account. By law, the Executor cannot commingle estate funds with the Executor‘s personal funds.
The Executor must pay all of the decedent's debts, including unpaid bills, medical expenses, funeral costs, loans and income taxes. Before paying any debts, the Executor must determine what the total debts are, in order to insure that the estate has sufficient money to pay them all. The Executor must make sure that all claims are genuine before agreeing to pay. Generally, in New York, the Executor is required to consider all claims received from creditors within the first seven months of his or her appointment, although there is a special obligation to insure that all of the decedent's taxes have been paid.
During the period of estate administration, the Executor decides which of the estate's assets to hold and which to sell in order to meet cash needs and to help the estate earn income. The estate's assets must be managed prudently and conservatively, and the Executor may be held accountable to the beneficiaries and the Court for any gross negligence, waste or mismanagement. The Executor must abide by New York’s Prudent Investor Act.)
The Executor is responsible for paying all of the decedent's outstanding income taxes and arranging for the preparation of his or her final income tax and gift tax return(s). The Executor is also responsible for paying income tax and filing fiduciary income tax returns for any income earned by the estate during the course of administration. The Executor is also responsible for paying any and all federal and state estate taxes due on the estate and filing any estate tax returns required even if no tax is due. Estate tax returns are usually prepared by the estate's attorney. Since in sizeable estates there are often complex tax elections to be made on an estate's tax returns, it is very important that the Executor hire competent professional help such as the New York Law Firm of Mitchell Wilensky.
After all of the assets have been collected and the debts and taxes have been paid, the Executor is responsible for distributing the balance of the estate assets in accordance with the terms of the Will. After the estate is distributed, the Executor is responsible for preparing an accounting which lists all of the estate assets and indicates every dollar that has been earned and every dollar that has been spent or distributed to beneficiaries during the course of the estate administration. The accounting can be informal if all of the interested parties are competent adults who agree that an accounting before the Surrogate’s Court is unnecessary. The accounting is the final duty of the Executor and is usually prepared by the estate's attorney.
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