If you have been nominated as executor or your loved one has died and left a will, nominating a person you are not on good terms with as executor, you are probably wondering, can an executor decide who gets what?
No, an executor cannot decide who gets what. It is the testator, the one who wrote the will, who decides who gets what. The executor’s job is to execute the will. When the will’s provisions and the testator’s intentions are clear, the executor has no discretion on how to distribute the estate of the testator.
For example, your father died, leaving a studio apartment in Manhattan worth $200,000, a house in Queens worth $500,000, a bank account with $100,000, an IRA account worth $500,000, a 401(k) account worth $400,000, and credit card debt of $10,000. He named your brother, whom you have not spoken to in a decade, as executor. The beneficiary named in the 401(k) and IRA accounts are your surviving mother who has dementia and is living in a nursing home. In his will, your father left the studio apartment in Manhattan to you and left his residual estate to you, your brother, and your mother in equal shares.
Can the executor, your brother who you have not spoken to in years, decide to sell the studio apartment in Manhattan, depriving you of the gift your father gave you in the will, and use the proceeds to pay for the funeral expenses, taxes, and other debts? Can the executor decide who gets what? No, in this case, the executor cannot decide to sell the studio apartment that your father gave you. The executor should administer the will in accordance with the law and your father’s intentions.
Under EPTL § 12-1.2, the order of liability are distributees, residuary beneficiaries, general beneficiaries, specific beneficiaries, and surviving spouse, in that order. Since your father specifically gave you the studio apartment, the executor should, to the best of his ability, preserve this gift because residuary beneficiaries should first be liable for estate debts before specific beneficiaries. Thus, the executor should first use the residual property, the money in the bank account, and if insufficient, to sell the house in Queens, to pay for the debts, taxes, and expenses of the estate. It is only when these residual properties are insufficient to pay for the debts can the executor sell your gift, the Manhattan apartment, to pay for the debts. Thereafter, the executor must give you the excess amount remaining, if any, in order to comply with the testator’s wishes to give you the Manhattan apartment or its remaining value after payment of expenses.
What can an executor decide on
When the will does not make a specific gift of a property, that property, if considered part of the estate, is residual property. The executor has more discretion in deciding how to distribute the residual property to the beneficiaries if the will is silent or open to interpretation.
In the example above, the IRA and 401(k) accounts are not considered part of the estate because they have designated beneficiaries, the surviving mother. They automatically pass to the mother when the father dies. However, the $100,000 bank account and the Queens house are not specifically given to anyone. Therefore, they form part of the residual estate. The will is silent as to how it is going to be distributed, except for the fact that it should be distributed into three equal shares between the mother, you, and your brother. Thus, the executor can decide to distribute the residual estate in cash or in property, for as long as the residual estate is distributed in three equal shares. Whatever the executor decides, such decision must be aligned with what the executor feels is for the best interests of the estate since the executor has a fiduciary duty to the estate and its beneficiaries.
In the case above, the executor must pay first the debts of the estate in accordance with the priority provided under SCPA § 1811. The net estate can then be distributed in accordance with the will of the testator. In the example, if all the debts of the estate (including administrative expenses, taxes, and other claims) are $55,000, the executor should still have $45,000 left in the bank account and the house in Queens.
The executor can distribute the $45,000 in the bank account in three equal shares: $15,000 each to you, your mother, and your brother, and thereafter deed the house in Queens to you, your brother, and your mother as co-owners or tenants-in-common. In the alternative, the executor can sell the Queens house and distribute the net proceeds to the three of you in three equal shares. This discretion can be exercised by the executor since the will is silent and open for interpretation. However, any decision made by the executor should always be in accordance with the estate’s best interests, free from the executor’s conflict of interest.
The executor’s duties can be complex and should always follow the law. Otherwise, the executor could be subject to lawsuits initiated by the beneficiaries and subjected to payment of surcharge and damages. This is why it is always important for the executor to be guided by an experienced estates lawyer to ensure that his actions are always in accordance with law and make him free from liability. We have helped both executors and beneficiaries with their issues regarding estate settlement. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at firstname.lastname@example.org.