Can The Executor Sell Property Without All Beneficiaries Approving
For those wondering “can the executor sell property of an estate without all beneficiaries approving,” and “can the executor sell the house,” the short answer is this: An executor appointed by a New York court does not have to seek approval of the beneficiaries.
Once the court appoints the executor, the executor may
- marshal the assets of the estate
- pay debts and expenses
- and disburse the remainder of the estate to the rightful beneficiaries
That can include
- a house
- bank account
- stock portfolio
- automobiles
- and any other assets of an estate
However, even though the executor does not legally have to have the beneficiaries’ approval, it may still be a good idea for the executor to communicate with the beneficiaries in a way that can be later proven in court (such as email) to confirm in writing that they agree with the executor’s decision.
For example, if the executor is selling a property of an estate, such as a house or a business, the executor will do well to
- advise beneficiaries of the price for which the asset is being sold
- and confirm in writing that the beneficiaries are comfortable with that price, so as to avoid being sued in the future for “selling it under market value”
So does the executor have the final say? Yes. But is it a good idea for the executor to sell the property without all beneficiaries approving? Not really. Putting himself in such a risky position is what an executor should not do.
As an executor, 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 benefit from the transaction.
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 the executor needs to communicate with them. The executor can explain to the beneficiaries that they are still getting a fair share of the estate. The executor can explain to the beneficiaries that they are getting more money than they would have if not for the executor buying them out, because of cost savings on transaction costs such as paying a broker. It is important that beneficiaries feel that that the executor has fulfilled his responsibilities to them.
The most crucial release that the 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 disburses the funds, he should 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 is a fiduciary, meaning that he has a duty to exercise the utmost good faith and undivided loyalty toward the beneficiaries throughout the relationship.[1] Does the duty to exercise “good faith and undivided loyalty” include a duty to seek approval from the beneficiaries before selling a house? The executor “must act in accordance with the highest principles of morality, fidelity, loyalty and fair dealing.” [2] Does the executor’s failure to seek the beneficiaries’ approval violate those principles? Probably not. Unless of course, the executor is self-dealing, which is a violation of fiduciary duty.
Selling the house for less than market value for entities controlled by the executor, or getting money “under the table” is embezzlement, or more simply, stealing.
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 owns the house. If the executor uses the house to benefit himself at the expense of the beneficiaries, he would be committing embezzlement, which is 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]
Someone who has been nominated as the executor by the will but is not yet appointed by the court does not have the power to sell a house. The law states that “an executor named in a will has no power to dispose of any part of the estate of the testator before letters testamentary or preliminary letters testamentary are granted, except to pay reasonable funeral expenses, nor to interfere with such estate in any manner other than to take such action as is necessary to preserve it. [6]
Can the executor sell property without all the beneficiaries approving? Can the executor sell the house? Does the executor have the final say? – The executor does not have to seek the beneficiaries’ approval, but in many cases, it is better to do so before the transaction rather than to be sued by the beneficiaries later.
Albert Goodwin, Esq. is a New York estate lawyer with over a decade of experience. You can make an appointment to discuss your rights. You can call him at (212) 233-1233.
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[2] In re Estate of Naumoff, 301 A.D.2d 802, 803, 754 N.Y.S.2d 70 (3d Dep’t 2003)
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