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Too Slow: Getting an Executor to Distribute the Estate

Jimmy found out that his favorite aunt, Linda, bequeathed inheritance to him, prior to her passing. Jimmy waited patiently for the will to enter probate and receive court approval. Reasoning that Linda would have wanted him to do so, Jimmy decided to splurge on an expensive vacation. Yet, the estate’s executor is not distributing Linda’s inheritance. With his credit card bills piling up, Jimmy started to reach the executor for periodic updates. The executor replied “hopefully soon” to the first email, but stopped responding to the subsequent ones. Is there anything that Jimmy can do to speed things up?

A situation as described above is not uncommon. The beneficiaries obviously desire to receive their inheritance as soon as possible. But in New York, possible is not always soon. There are certain key items, even after receiving a letter testamentary from the court, that slow the process down. For starters, after publicizing notice of the probate, an executor is ill-advised to distribute most property before seven months.[1] This is because in a case of a disbursement prior to the end of seven months, New York law holds the executor personally liable to reimburse the estate to pay out any valid claims.[2] Yet, even at this juncture, there may be a good reason for non-payment.

An executor must file federal and state tax returns for the estate within nine-months after the decedent’s death.[3] Depending on the estate and the amount of assets, it may be proper for the executor to file for a tax extension or to withhold distributions until receiving a tax closing letter from the IRS. The earliest this form can be filed is six months after filing the return and the requestor should allow up to thirty days to receive this letter.[4] Adding it up, two years may indeed be a reasonable wait.

On the other hand, a diligent beneficiary should not sit by idly for this entire temporal period, especially if he believes that an executor is failing the nonwaivable duty to “exercise reasonable care, diligence and prudence.”[5] For example, a court may disqualify an executor on grounds such as comingling funds, mismanagement, dishonesty, and substance abuse.[6] Although, New York courts will generally give a long leash, and will only step in if the executor “endanger[ed] the estate” or “seriously impede[d] its administration.”[7] If the executor is non-responsive, however, a beneficiary should send a written demand for an accounting. This request serves two purposes. First, it is a requirement to commence any proceeding in court against the executor.[8] And second, it gives the executor notice that you are serious—which may give way to a faster distribution. If the executor does not respond to this written demand, the beneficiary may then commence a motion to compel accounting with the court.[9] Although even here, the New York courts generally compel such an accounting only for good cause.[10]

It is a fine line between giving the executor deference and desiring to receive the inheritance promptly. When a beneficiary knows that an executor is mishandling the estate, a court should immediately get involved. In many cases, however, a quarrel with the executor is not in the best interests for either the beneficiary or the estate. Therefore, it is best for a beneficiary, like Jimmy, to discuss such matter with a competent New York estate attorney.

[1] N.Y. Est. Powers & Trusts Law § 11-1.5 (McKinney 2018). This excludes the statutory exclusion of up to $25,000 from the estate for a surviving spouse or children under twenty-one. Id§ 5-3.1.

[2] N.Y. Surr. Ct. Proc. Act Law § 1802 (McKinney 2018); N.Y. Est. Powers & Trusts Law § 11-1.5(c).

[3] 26 U.S.C. § 2204 (2012); N.Y. Tax Law § 972 (McKinney 2018).

[4] Frequently Asked Questions on Estate Taxes: When can I expect an Estate Tax Closing Letter?,IRS, https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-estate-taxes#1 (last updated May 11, 2018).

[5] N.Y. Est. Powers & Trusts Law § 11-1.7(a)(1).

[6] N.Y. Surr. Ct. Proc. Act Law § 711.

[7] In re Braloff, 162 N.Y.S.2d 620, 623 (2d Dep’t 1957), affirmed, 173 N.Y.S.2d 817 (1958).

[8] N.Y. Surr. Ct. Proc. Act Law § 2102(1).

[9] See id.§ 2205, 2206.

[10] See, e.g., In re Sherburne, 464 N.Y.S.2d 531, 531 (1983) (holding that in a proceeding in which it was determined that executors did not have authority to sell decedent’s home, ordering executors to render and file a final account was appropriate exercise of discretion).