Can an executor pay their attorney with estate funds?

It is common for an executor to hire a New York estate attorney to assist in probating an estate.  Usually, handling an estate takes work, plus an executor may not know how to deal with every issue that could arise during probate.  Many beneficiaries may wonder how attorney’s fees that are paid for the purpose of probating the estate are handled and who has to pay those fees.  It is important for a beneficiary to know how attorney’s fees are paid out when probating an estate, especially if the beneficiary is contesting a will.

Who has to pay attorney fees related to probating an estate?

In general, executor’s legal fees are paid for out of the estate funds.  Additionally, in New York, there is no set amount of attorney’s fees, but rather those fees need to be reasonable.  The payment of attorney fees has to take place before gifts are given out to the beneficiaries as with other creditors such as funeral homes or credit cards.  Legal fees are considered to be one of the most important debts to be paid out of estate assets.

Does the executor or the estate pay attorneys’ fees to defend a will contest?

If a beneficiary contests the will, the default is that the attorney who defends the estate’s status quo is being paid by estate funds. The executor can apply to the court to have attorney’s fees for work that is done on the executor’s behalf to be paid for by the estate out of the funds that are meant to go to that beneficiary (this is because of the famous New York court ruling in the Matter of Hyde).  This is so that beneficiaries who did not contest the will still receive their entire amount and not have their share diminished when they did not contest the will.  This is not the case, however, if all beneficiaries benefit from the will contest.  In such a case, the legal fees would be paid out of the inheritance of all beneficiaries who are positively affected by the will contest.  In general, the Surrogate’s Court expects each party, besides the executor, to pay his or her own bills, rather than having those bills paid for by the estate.

Does the executor of the estate pay attorney’s fees to defend a contested accounting?

If the executor is submitting an estate accounting, his lawyer’s fees will be paid by the estate because the accounting is assumed to benefit the estate. Defending that accounting is also assumed to be for the benefit of the estate. If there are irregularities found in the accounting or if the executor is taking funds from the estate for his own benefit, then the beneficiary may apply to the court to have the executor be surcharged for the attorney’s fees of the accounting.

The only time that an executor’s legal fees would not be paid out of the estate is if the executor had acted in an egregious way, such as engaging in fraud or self-dealing, rather on behalf of the estate.  Again, this is something that is not the default way, and will need to be ordered by the court in order to be effective. Outside this situation, the court expects legal fees to be paid for from estate funds in a reasonable amount as there is strong public policy to have attorney’s fees be paid and for executor’s not to have to risk being individually liable for their legal fees as part of the job.  Legal fees are instead considered a cost of administering the estate, not a personal expense that will be expected of the executor to pay.

It is important when hiring an attorney that an executor hires a New York estate attorney who is familiar with what is considered a fair legal fee in New York and who can also handle everything from the administrative costs of probate, along with any potential litigation.

Call the Law Offices of Albert Goodwin at (212) 233-1233, New York estate, guardianship, wills, trust, Medicaid and probate lawyer, and make an appointment to discuss.