Five Questions and Answers to Consider as a Executor
1.Letters Testamentary have been issued to me, and I am now the Executor of an estate. What do I do now?
Executors have a number of responsibilities in administering estates. First, you should post a bond if you are obligated to do so and have not yet done so. Where the bond requirement is not waived in the decedent’s Will, the Court will usually order the Executor to post bond. The bond insures the Executor and protects beneficiaries from any possible negligence or wrongdoing by the Executor.
The Executor should then collect all of the assets of the estate and make an inventory of all of the assets. The Executor may need to hire appraisers to appraise some of the estate assets, such as any real estate that was owned by the decedent.
It is recommended that the Executor open an estate account in which to transfer all of the funds of the estate. The Executor should not transfer any of his own personal funds into the estate account and should not use the estate account to pay for his own personal expenses.
The Executor must also file an Inventory of Assets within six months of his appointment. The Surrogate’s Court mails the Letters Testamentary to the Executor (or his attorney), as well as the Inventory of Assets form. The Executor is required to complete and file this form he receives and attach either a document that breaks down all of the estate assets and their values or a copy of the Estate Tax Return filed for the estate, if any was required.
The Executor should then pay all estate taxes and debts, if any. The Executor will also pay administration expenses, such as legal fees in connection with the estate administration; the decedent’s cable bills, rent, and energy costs until such services are cancelled; and any storage expenses paid in connection with storing the estate assets.
The Executor can then distribute the remaining assets of the estate in accordance with the decedent’s Will.
Once the Executor finishes distributing all estate assets to the beneficiaries, he should render an accounting. Some Executors choose to prepare informal accountings that are provided to the interested parties without court intervention. The interested parties will review the accounting and sign releases stating that they approve of the accounting and release the Executor from further liability. Other Executors choose to bring formal accounting proceedings in Court. In these proceedings, the interested parties have the right to contest the accounting in Court. If the accounting proceeding is successful, the Court will settle the account.
2. May I, as the Executor of the estate, sell a cooperative apartment that was specifically gifted to someone in the decedent’s will?
The Executor may not sell any property that is specifically disposed of in a will unless he obtains court approval first. An example of how this rule applies is a situation in which a cooperative apartment is specifically disposed of to a beneficiary and the cooperative board does not grant approval to the beneficiary. In this scenario, since there was no board approval, the beneficiary of the cooperative apartment cannot own or sell the cooperative shares and unit. The Executor cannot sell the apartment either without further action. How can the Executor solve this problem? He can obtain court approval to sell the cooperative apartment and then sell the co-op and distribute the sales proceeds to the beneficiary.
3.May I, as the Executor of the estate, purchase real property from the estate of which I am the executor?
The Executor must first look to the will to see if the will authorizes the Executor to purchase real property from the estate or if it prohibits him from doing so.
If the will is silent on the matter, there generally is a way for an executor to obtain permission to purchase real property from the estate. Normally, this would be considered self-dealing, but the Executor may be allowed to purchase real property from the estate if he obtains a court order authorizing him to do so.
Before the Court grants the Executor permission to purchase real property from the estate, the Court generally requires that the Executor obtain two or more appraisals for the property that is the subject of the purchase. This will help the Court determine whether the Executor is acting in the best interests of the estate. If the Executor plans to purchase the property at a price substantially below the appraisal price, the Court may find that the Executor would not be acting in the best interests of the estate and may not grant permission to the Executor to purchase the property. The Executor should also give notice to all interested persons of the proposed purchase.
4.I know that Executors may distribute estate assets, but I have only received Preliminary Letters Testamentary. May I distribute estate assets to the beneficiaries of the decedent’s will?
No. Preliminary Executors have most of the same rights as Executors. These include the right to collect all of the estate assets, pay estate and income taxes, pay all of the debts of the estate, and sell property not specifically disposed of in the decedent’s will. The Preliminary Executor, however, may not distribute the estate assets.
5. I no longer feel competent to act as Executor. May I resign?
Yes. An Executor who can no longer act as Executor may resign. The Executor should file a petition with the Court in which he requests permission to resign as Executor, revocation of his Letters Testamentary, and judicial settlement of his account. In addition, the Executor should give reasons for his resignation and provide any information about the estate that will be helpful for the Successor Executor who takes over the estate. Some reasons that the Court may approve of the resignation are that the Executor is elderly, is severely ill, or is suffering from declining mental capacity.
Similarly, if the estate has multiple Executors and one of the co-Executors is violating his fiduciary duties, the other co-Executors or any other interested party can commence a proceeding to remove that co-Executor. Reasons that the Court may remove the malfeasant co-Executor are if he removed estate property to a location outside of New York state without court approval, if he changed his address without informing the Court, or if he has acted dishonestly in carrying out his duties.
Please feel free to contact me for all of your tax planning, estate planning, and estate administration needs.
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