Can the Executor Transfer the House to Himself?

Can an executor transfer the house to himself? Only for fair market value.

The house does not belong to the executor – he is just managing it.

What do we call it when a manager steals property he is managing? That’s right, it’s called embezzlement. Or more simply, stealing.

If you would like to consult with an attorney where an executor is transferring a house to himself, you can send us an email at [email protected].

Let’s say an estate contains a house that is worth $1 million and the executor transfer it to himself. This gives him the opportunity to “flip” the house on the market and walk away with $1 million, or live in a $1 million house for free. Even if the executor is one of the beneficiaries, he is responsible to manage the estate for everyone’s benefit, not just his own.

The estate belongs to all the beneficiaries. If an executor uses the estate’s property for his own needs in any way or transfers estate property to himself, he is considered by the law to be taking everyone’s money, not just his own. As an example, if he takes four thousand dollars, he is not taking four thousand dollars of his own money. He is stealing a thousand dollars from each of his siblings. If he takes a penny, most of that penny belongs to the other beneficiaries.

What can happen if an executor neglects good advice and transfers the house to himself without paying the estate its fair market value? Nothing good. The executor can be removed by the judge on the case. The court will force the executor to return the house to the estate or pay restitution to the beneficiaries of the estate. The court might order the executor to pay for his own attorneys’ fees as opposed to using estate funds to pay for his attorney’s fees. The judge may even order the executor to pay the beneficiaries’ attorneys’ fees. What is scarier is that the executor can even be criminally prosecuted for stealing. That’s right, a criminal prosecution even if the executor is one of the beneficiaries of the estate that holds the house. The Surrogate’s Court judge can refer the case to the District Attorney’s office, which has the power to prosecute the case in criminal court.

The executor cannot transfer the house to himself because the house belongs to someone else. Unless he pays full price for it. As explained above, doing so is stealing and can lead to an array of legal woes.

Although we talk about an executor, the same rules apply to an administrator and a trustee, as well as a preliminary executor, administrator d.b.n., administrator c.t.a.d.b.n., administrator c.t.a., ancillary executor, ancillary administrator, and ancillary administrator c.t.a. ^[1]

Above, we’ve referred to the executor as a manager. The legal term for someone managing money, including an executor is “fiduciary.” ^[2] New York’s Estates, Powers and Trusts Law governs the conduct of an estate fiduciary, as well as a trustee and an agent under a Power of Attorney.

New York Consolidated Laws, Estates, Powers and Trusts Law – EPT § 11-1.6 states that “Every fiduciary shall keep property received as fiduciary separate from his individual property.  He shall not invest or deposit such property with any corporation or other person doing business under the banking law, or with any other person or institution, in his own name, but all transactions by him affecting such property shall be in his name as fiduciary.” ^[3]

New York’s Penal Law (the Criminal Law) states that “A person steals property and commits larceny when, with intent to deprive another of property or to appropriate the same to himself or to a third person, he wrongfully takes, obtains or withholds such property from an owner thereof.” ^[4]

The estate is the owner of the house. If an executor transfers the house to himself, even if he’s paying something for it, he commits larceny.

New York Penal Law continues to say that “Larceny includes a wrongful taking, obtaining or withholding of another’s property, with the intent prescribed in subdivision one of this section, committed … by conduct heretofore defined or known as common law larceny by trespassory taking, common-law larceny by trick, embezzlement, or obtaining property by false pretenses.” ^[5]

The most crucial release that an executor can get from the beneficiaries is at the end of the estate. Once the assets are collected or sold and the debts are paid out, and it’s time for the executor or administrator of a New York estate to disburse the funds to the beneficiaries. But before the executor does that, it is important to get the release from the beneficiaries that states that they are satisfied with what they are getting and are never going to sue the executor. The best release comes with an informal accounting, which provides a summary of what property went into the estates, what the expenses were, and what is the share of inheritance for each beneficiary.

To sum up, executors should not transfer the house to themselves, unless it is for fair market value and with either signed consent from each and every beneficiary or an order of the court authorizing the executor to transfer the house to himself.

The executor should place the proceeds of the sale of the house into the estate account.

The executor can only use estate funds to pay the legitimate expenses of the estate, taxes and legal fees.

Whether you are a beneficiary who thinks that the executor is about to transfer the house to himself, or if you are an executor and you feel that you are being falsely accused of transfer the house to yourself for less than fair market value, you can speak with New York estate attorney Albert Goodwin, Esq. He can be reached at (212) 233-1233.

[1] NY EPTL § 11-1.1

[2] NY EPTL § 11-1.1

[3] NY EPTL § 11-1.6

[4] NY PEN § 155.05

[5] NY PEN § 155.05