Small Estate Probate In NYC – When There Is Less Than $30,000 in the Bank?

Bill died in NYC with a Last Will and Testament in which he left all of his assets to his daughter, Susan.  Bill had $25,000 in his checking account when he died. Bill could not place a beneficiary designation on his checking account. The bank would not allow Susan to withdraw the funds from Bill’s individually owned checking account.  What should Susan do?

How Can Susan Withdraw Funds from The Bank?

The majority of Bill’s assets are owned jointly in his and Susan’s names.  These assets are non-probate assets, and therefore, can be collected by the co-owner without court intervention.  For example, in New York, where a person dies owning a joint bank account, the bank that holds the account will typically turn over the funds from that account to the co-owner, as long as the co-owner of the account provides the bank with a copy of the decedent’s death certificate.

Small Estate Proceeding

In order to collect the assets from the individually-owned bank account, however, Susan needs permission from the court to obtain the funds.  Susan should commence a voluntary administration proceeding, otherwise known as a small estate proceeding.  SCPA §1301 and §1303 provide that where an individual dies with probate assets (assets that are owned in the name of that individual alone) consisting only of personal property totaling $30,000.00 or less, a voluntary administration proceeding must be commenced in order for those probate assets to be collected and distributed.  This is true regardless of whether the individual died with or without a will.  According to §1303, since Susan was named as Executor under Bill’s will, she may file for voluntary administration requesting that she be appointed voluntary administrator by the court.  For those who die with a will, the law provides a hierarchy of individuals who may commence a voluntary administration proceeding.  For those who die without a will, the law also provides a list of individuals who may be appointed as voluntary administrator.

A voluntary administration proceeding is much like a full administration or probate proceeding, in that it grants permission to a fiduciary to collect and distribute the probate assets of a deceased individual, but the process is generally a much cheaper and faster process.

In order to commence a voluntary administration proceeding, Susan should file an Affidavit in Relation to Settlement of Estate Under Article 13, the certified death certificate of the decedent, the decedent’s original will, a Report and Account in Settlement of Estate, and a filing fee of $1.00 in the Surrogate’s Court of the county in which the decedent lived at the time of his death.  In the Affidavit, Susan will provide her contact information, Bill’s date and place of death, the names of Bill’s next of kin, and a list of personal property that Bill owned at the time of his death.  Click here to access the Small Estate Forms.

What happens after the voluntary administration proceeding is commenced?

After Susan files the voluntary administration documents, the Court will issue a certificate for Bill’s individually-owned bank account.  (After a voluntary administration proceeding is commenced, the Surrogate’s Court usually issues a certificate for each probate asset of the estate.) Susan can then present the certificate to the bank, and the bank is then obligated to honor the certificate and pay the funds to Susan.

How could Bill have avoided this outcome?

Bill could have kept less than $5,000 in his check account. He could also have retained a trusts and estates attorney to prepare a revocable trust.  Trusts are often used as a method to avoid the probate.  After preparing and executing a revocable trust, the creator of the trust must remember to transfer all of his assets into the trust in order to ensure that no probate or administration proceeding is required.  If even the smallest amount of probate assets remains in the name of the decedent alone, some sort of court intervention will be necessary in order for the fiduciary of the decedent’s estate to be able to collect and distribute those assets.

When attorneys draft revocable trusts, they also draft pour over wills, which are used to catch any property that was not transferred into the trust and pour that property over into the trust.  If any of the creator’s probate property is not transferred into the trust before his death, his fiduciary will need to commence a probate proceeding in order to be able to collect and distribute that property.  However, if the creator did transfer all of his assets into his revocable trust, no probate proceeding will need to be commenced, even though a pour over will had been executed.

Please feel free to contact me for all of your tax planning, estate planning, and estate administration needs.

Additional resources provided by the author

For more information, please contact probate and estate planning attorney Regina Kiperman:
Phone: 917-261-4514
Email: rkiperman@rklawny.com
Or visit her at her new location:
80 Maiden Lane
Suite 304
New York, NY 10038

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