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Penalty for Stealing from an Estate

Penalty for Stealing from an Estate

What is the penalty for stealing from an estate? 

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.” [1]

The estate is the owner of the property. When an executor is stealing from the estate, 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.” [2]

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]

As a civil penalty, the judge on the case can remove the executor. The court will force the executor to return the property 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 contains the property. 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 estate property to himself because the property 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.

New York Penal Law 155 describes the sentencing guidelines for someone stealing from an estate. The sentence depends on the amount that the executor steals. An executor convicted of larceny can incur a sentence of up to fifteen years.

  • Grand Larceny in the Fourth Degree: PL 155.30(1) applies to an executor who stole from an estate in amount in excess of $1,000 but not more than $3,000.
  • Grand Larceny in the Third Degree: PL 155.35 capplies to an executor who stole from an estate in amount in excess ofnorth of $3,000 but not greater than $50,000.
  • Grand Larceny in the Second Degree: PL 155.40(1) is a felony whereby applies to an executor who stole from an estate in amount in excess of $50,000 but is not more than $1 million in value.
  • Grand Larceny in the First Degree: PL 155.42, the most severe offense, occurs when applies to an executor who stole from an estate in amount in excess of more than $1 million worth of property in any form.

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. [4]

Having your New York estate lawyer get a release form beneficiaries is especially crucial when the transaction in question involves the executor personally, such as when the transaction is between the estate and the executor or the executor derives some sort of benefit from the transaction. For example, if the executor is transferring a share of the decedent’s business, house, or other property to themselves, the executor should obtain a written release from the beneficiaries, or at least get them to approve it in writing, in order to avoid the possibility of being sued. Transferring assets to yourself often triggers feelings of inequity in beneficiaries, so it is important to communicate with them, explain that they are still getting a fair share of the estate and that they are actually getting more money than they would have if not for you buying them out because of cost savings on transaction costs such as paying a broker. It is important that there is a feeling that the executor fulfilled his responsibilities to the beneficiaries.

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.

The executor should place all estate funds into an 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 stealing from the estate or if you are an executor and you feel that you are wrongly accused of stealing from the estate, 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