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In most cases, the administrator of an estate in New York is also a beneficiary. This is because when a person dies without a will, an administrator is appointed based on a hierarchy of the closest surviving relatives. The order of priority for appointment is typically the spouse, followed by the children, parents, and siblings. As a result, the individual appointed as administrator is frequently an heir-at-law or distributee of the deceased, making them a beneficiary of the estate as well.
Even though an administrator may also be a beneficiary of the estate, the administrator has a fiduciary obligation to consistently put the estate's interests first, ahead of his own personal interests as a beneficiary. Should the administrator breach this fiduciary duty, interested parties have the right to petition the court to remove the administrator and seek to hold him accountable for any losses the estate suffered as a result of the breach.
The appointment of an administrator typically occurs through a proceeding initiated by a petition for administration in the Surrogate's Court of the county where the deceased was domiciled. The petition for letters of administration must be filed by an interested party, usually the spouse or children. If there is no spouse or children, then any other distributes, such as parents or siblings, may petition.
Once appointed, the administrator has the duty and authority to collect and value all the assets of the estate, pay the estate's debts, expenses and taxes from estate funds, and then distribute the remaining assets to the beneficiaries of the estate. The administrator must act prudently in managing the estate assets and must put the interests of the estate and beneficiaries above his own.
Some common situations where an administrator's interests as a beneficiary may conflict with his fiduciary duty include:
To avoid these conflicts, the administrator should keep thorough records and accounting of all estate transactions, promptly distribute assets, and obtain appraisals for significant assets to establish fair market value. The administrator should also communicate regularly with the beneficiaries and seek court approval for any major transactions that could be questioned.
If a conflict does arise, beneficiaries have the right to challenge the administrator's actions in court. The court has the power to remove the administrator, deny or reduce compensation, order a refund of misappropriated assets, and appoint a new administrator. In some cases, the administrator may even be held personally liable for losses caused by a breach of fiduciary duty.
In summary, while the administrator of an estate is often also a beneficiary, the administrator must be careful not to let his personal interests interfere with his duties to properly manage the estate for the benefit of all beneficiaries. Doing so can lead to court intervention and even personal liability. Beneficiaries should remain vigilant and not hesitate to seek court relief if the administrator is abusing his position. Consulting with an experienced estate attorney like us can help both administrators and beneficiaries navigate these issues and ensure an estate is handled properly.
Should you need representation or assistance regarding issues related to conflicts of interest between administrators and beneficiaries, we at the Law Offices of Albert Goodwin are here for you. You can call us at 212-233-1233 or send us an email at [email protected]. Our office is located at Midtown Manhattan.