Quick Start Guide for NY Estate Executors and Administrators

QUICK START GUIDE FOR NEW YORK ESTATE EXECUTORS

AND ADMINISTRATORS

The Job of Executor or Administrator Comes with a

Great Deal of Responsibility

The Executor or Administrator is the person tasked with managing a decedent's estate. The Executor need not be a relative of the deceased. The designated person may be a relative, friend or trusted advisor. In fact, the Executor may not be a person at all - financial institutions and some corporations are qualified to serve. On the other hand, Administrators are usually the closest next-of-kin as determined by state law. The title "fiduciary" refers to an executor, administrator, trustee or guardian. When a decedent leaves a will (testate), the proceeding to appoint a fiduciary is called a probate proceeding. An executor is the person or institution designated in a will to administer an estate. If the decedent died without a will (intestate), the proceeding is called an administration proceeding and the Surrogate’s Court appoints an administrator who performs duties similar to those of an executor. The Executor or Administrator has a fiduciary duty to the estate as well as its beneficiaries and creditors. Which means that he or she is held to a very high degree of care. A fiduciary must be extremely faithful towards the estate, its beneficiaries and creditors and must not put his or her own interests ahead of that duty.

How Do I Become an Administrator or Executor?

In New York, the Executor / Administrator is appointed by the Surrogate’s Court located in the county where the decedent resided. Once the Will is admitted to probate, the Executor is appointed and may proceed to administer the estate. Note that before the Will is probated, the person named as Executor has no authority to act. If there is no Will, an Intestate Administration proceeding is filed. The court will then appoint an Administrator and he or she will have all of the powers of an Executor.

What are the Differences Between an Estate Executor

and Administrator?

The Executor must ensure that the decedent's objectives and goals, as stated in the Will, are faithfully carried out. The job of the Administrator differs in that he or she must make certain that the estate is settled according to New York's laws of intestacy. However, both the Executor and Administrator must protect the decedent's property until all debts and taxes are paid. Then make certain that the balance is transferred to those people entitled to it.

I’ve Been Appointed Executor or Administrator, Now

What?

If you are represented by an attorney, look to your attorney for guidance on how to proceed. If you are acting on your own, you should do as must research on the topic as possible. There are many books available on the subject (e.g., The Executor’s Guide published by Nolo). If you prefer not to purchase a guide, try doing some research at your local public library. A basic checklist of estate settlement tasks is provided below. • Make a list of the decedent's assets and protect them by notifying the financial institutions of the death and your appointment. • Obtain professional appraisals of real property and personal property (e.g. art, jewelry, furniture), if needed. • Within in six (6) months of your appointment as fiduciary, you are required to file an inventory listing all the decedent's personal and real property with the court. • Apply for a tax identification number for the estate from the IRS. • Once you have collected some funds, open an estate checking account. You are required to keep estate funds separately. You must not commingle estate funds with any other funds. • Determine if there are creditors of the estate and whether their claims are valid. • Pay estate debts and expenses (e.g., funeral expenses, court fees, attorney fees, appraisal costs, etc.). • Keep careful and detailed records of financial transactions (i.e., make a ledger and record all income and expenses). • Have the decedent’s final income tax return and estate income tax returns prepared and filed, if needed. • Federal and State estate tax returns should be prepared and filed on time, if required. • Pay the balance of estate funds to the beneficiaries of the will or to the intestate distributees. It is a good idea not to make any distributions without first obtaining a release from each beneficiary.

Is an Executor or Administrator Entitled to be Paid?

Generally, yes. Most states make allowances for compensation (commissions) to the Executor or Administrator for services rendered to the estate. The amount of compensation is normally set by law and differs from state to state. Compensation received by Executor or Administrator is taxable income and must be reported on a personal income tax return. However, funds received as a beneficiary are not considered taxable income. Before accepting compensation, the tax implications should be discussed with a qualified tax advisor or attorney. Also, the terms of the Will may dictate whether or not the Executor is entitled to compensation. For more information about Executor’s fees and to use our New York commission calculator.

Estate Taxes - An Important Note

If the estate is subject to federal and/or state estate taxes, a return must be filed and the taxes paid within 9 months of the date of death. If it is filed late or incorrectly, there may be penalties assessed. The unwary Executor or Administrator may be personally liable for such penalties. Note that the Estate Tax and Fiduciary Income Tax are separate and distinct taxes and many estates are subject to both.

How do I close the estate?

There are a few options available to close an estate. If you have obtained releases from all beneficiaries of the estate, you may file them with the court. Releases discharge you from your duty as fiduciary. The filing of a final judicial accounting may be required if a beneficiary is a minor, or a person under a mental disability. It may also be necessary if there is a residuary charitable beneficiary or if the estate is insolvent. It is best to consult with an experienced estate attorney to determine the best course of action.