Contesting a transfer on death in New York will likely require that the person who made the transfer did not have the capacity to make the transfer and that someone tricked them into making the transfer.

Contesting a transfer at death happens when your loved one transferred their property to someone before they died and you suspect that the transfer was problematic.

Transfers made before death can be subject to some of the most contentious litigation when it comes to estates. This can especially be the case in matters where there are indications that property was transferred at death due to factors such as fraud or duress or where it looks like someone who held a power of attorney may have abused that power. It is unfortunately common that not all gifts are transferred all so innocently.

When it comes to estate planning, a lifetime transfer is a tool in any New York estate attorney’s arsenal. Usually, with these transfers, a person planning what will happen to their estate can make sure that property goes to his or her beneficiaries without going through the Surrogate’s Court, hope to avoid creditors or possibly plan for future nursing home stays using Medicaid. This can be very useful for someone planning their estate and their beneficiaries. However, lifetime transfers are not always done willingly or by someone with the required mental capacity to make the transfer. Sometimes undue influence is involved with lifetime transfers, and even duress.

If you are dealing with a contested transfer on death, we at the Law Offices of Albert Goodwin are here for you. You can send us an email at [email protected] or call us at 212-233-1233.

What You Need to Know When it Comes to Contesting a Transfer at Death

When we contest a transfer at death, we may start with a demand for an accounting by the executor of the estate that includes both the property that existed in the estate before death and also the property that was transferred to others in the weeks, months and years before death.

In addition to asking for an accounting, you must understand the issues that arise around the statute of limitations when it comes to contesting transfers at death. While it is possible to contest the transfer at death, there is a limited time to do so, usually just a few years from the transfer, or, in the case of the wrongful use of a power of attorney, six years from the end of that power of attorney. While this does put limitations on the types of gifts that you can contest, the statute of limitations still does allow for a rather long period of time to contest a wrongful transfer at death. Failure to sue during this time could result in you missing out on your rights to even file suit if you feel your loved one’s property was improperly transferred.

A person dies, and it emerges that their house or bank account is not a part of their estate, because it was already transferred to someone before their death. Or, someone was named as a beneficiary on a bank account or a life insurance policy. The one it was transferred to claims that the decedent gave them the asset. The other relatives don’t buy the story, say that the decedent was tricked into transferring the property and wish to contest the transfer at death. To determine who’s right, we need to look into the three possible reasons someone transfers property at death – as a gift, as a “straw-man” to shield from liabilities, and because of being tricked.

Gift? – people do transfer their assets to a favorite relative to exclude all others.

“Straw-Man?” – People can transfer property to others in an attempt to avoid creditors or divorcing spouses, to avoid taxes, or to qualify for Medicaid. When a property is transferred for various avoidance reasons, the person who transfers the property orally tells the one getting the property that they are just a “straw-man,” keeping the property in title but really owning it for the benefit of the person who transferred it. In such cases, the person receiving the property promises the person giving the property to be a proper “straw-man,” to let the person who owned the property benefit from it during their lifetime and to distribute it to the owner’s heirs after the owner’s death.

Or, Fraud, Duress, Undue Influence or Lack of Capacity – People also transfer property without wanting to do so. Some people are so sick that they can be easily convinced to do anything. Some are so dependent on others that they are easily persuaded. Some are just slipped papers and told to sign them without knowing what they are signing. Some are misinformed about family or financial circumstances, made believe certain things that makes them transfer the property to someone they trust.

When a pre-death property transfer is discovered, the person whom the property is transferred to claims that it was a gift, and the people who are left out claim that the recipient is merely a “straw-man”, or that fraud or duress took place.

It is up to the one wishing to undo the transfer to prove why the transfer should be undone. However, if it can be proved that the recipient of the asset was in a position of trust with the one who transferred the asset, the burden of proof can shift towards the recipient.

You must keep in mind that contesting transfers at death is not something that should be taken care of without representation. Proving either incapacity, abuse of a power of attorney or fraud or duress when it comes to transfers of property can be incredibly difficult. Hiring a New York estate attorney to assist you every step of the way in such a matter is necessary to be sure that you have a chance to reverse such a transfer, recapture the property for the estate, and get access to the property that you believe you deserve. An attorney can file a proceeding for discovery of property and a proceeding for turnover of property of the estate. Your case can be even further complicated if you need to contest the will as well, as there is a much stricter time period involved when it comes to contesting a Will than there is for contesting a transfer at death.

If you are involved in contesting or defending a transfer at death of real estate, bank accounts or insurance policies, and wish to speak with an attorney, we at the Law Offices of Albert Goodwin are here for you. You can send us an email at [email protected] or call us at 212-233-1233.

When a will has multiple executors, they are called co-executors. The question is, do they have to work together or can each co-executor act independently?

It is essential to understand the rights and responsibilities you possess when you are named a co-executor on a will in New York City. This article will cover common co-executor questions asked of New York City estate attorneys.

Do Co-Executors Need to Work Together

Co-executors must work as a team when making decisions for the estate. They all hold the same authority over the estate. The court and the beneficiaries will hold each co-executor equally responsible for estate duties.

Decision Making as a Co-Executor

The will should contain an outline of the responsibilities that the co-executors hold. These duties are:

• Paying taxes
• Dealing with the deceased individual’s debts
• Closing out administrative expenses
• And more

Making decisions regarding these duties is the responsibility of all co-executors. Some of the decisions may already be addressed in the will.

Can One Co-Executor Make a Decision Independently?

Can joint executors act independently? One co-executor can make decisions on the estate. The law sees each co-executor as one entity, so if one co-executor acts on duty or makes a decision, it reflects as if all did the action. This does not always end up so well. It is crucial to retain a check and balance between all co-executors, as acting without the consent of other co-executors can end up in a conflict, which can end up with the court reversing the co-executor’s decision.

How to Handle Disputes Between Co-Executors

It is always favorable that co-executors work together to achieve a positive result in executing the duties of the estate. When this does not work out, disputes can arise. If the co-executor cannot agree on a decision, then a third-party intermediary may be necessary to draw out a final compromised conclusion. The co-executors will eventually have to agree to disagree and come up with a solution to the conflict.

Recourse For Co-Executor Who Acted Independently in a Disagreeable Way

If one co-executor has decided that the others did not authorize, a lawsuit may be the next step to reverse that particular action. A judge will hold a hearing for the co-executors to present their respective cases, and then the judge will make a decision that will favor one over the other. All co-executors will have to abide by the judge’s decision.

Conflicts Among Multiple Co-Executors

Having more than two co-executors can cause increased conflicts, as there must be a unanimous decision made among all executors regarding the estate. One act done by one individual co-executor independently is seen by law as all executors acting upon the decision, so it’s best to have all co-executors communicate and always be in agreement.

If you are an executor or a beneficiary who needs representation in a New York City estate matter, you can send us an email at [email protected] or call us at 212-233-1233.

One of your other siblings or your sister’s caretaker was supposed to notify you of your sister’s death, but they did not. They should have notified you, but they did not. It’s possible that the person who did not inform you had more access to your sister. They may have lived closer to her and had more interaction with her. They may or may not have informed you of the date of death, of the wake, funeral or showing. Your emotion at this point may be, you feel left out and cheated out of the important process of saying good-bye to your sister and robbed of a chance to grieve their death at a proper time. You may be experiencing shock and anger at the conduct of those who did not notify or inform you of your sister’s death.

You may also be concerned with the issue of their estate or inheritance. Concerned that the same people that did not inform you about her death also kept you in the dark about her assets and what happened to her estate. You may be concerned that they had your sister leave a will cutting you out or giving you a diminished share, and you may suspect that they might have gotten a hold of your sister’s assets while he was alive. You think that they may be hiding assets from you.

In addition to not informing you of your sister’s death, they are probably also refusing to communicate with you regarding her last will and testament, pension plan, insurance, house and other assets. They are probably refusing to give you information and notices about the estate.

The person who did not notify you may be your sister’s agent under a Power of attorney. They may also be an agent under your sister’s Health Care Proxy (New York name for a Health Care Power of Attorney).

You suspect that since they did not notify you of your sister’s death, there may be other things that they did not notify you about, like your sister making a will that diminishes your interest in her inheritance.

In New York, there is no lawsuit that you can bring to ger reimbursed for the mental anguish that this betrayal has cost you. But you do have important rights in regards to your sister’s remains and the estate that they left behind.

It is unfortunate when family dysfunction shows itself after an sister’s death. The people who did not notify you may be angry and confused and they may be trying to take that anger out on you. You in turn may be angry at them for not notifying you. It’s important to address the feelings of grief and anger and not let them cloud everyone’s judgment.

You have the right to be present at the funeral, even if your cousins or her caretaker don’t want you there. You may have the right to determine how your sister’s remains are laid to rest. You have the right to receive a copy of her will. If you suspect that the will is invalid, you have the right to contest the will. The grounds for contesting a will are incorrect will execution, lack of mental capacity, undue influence, fraud and duress. Your sister may have suffered from a stroke and may have been diagnosed with Alzheimer’s or dementia, which may have diminished her mental capacity to make a valid will.

If you were not notified of your sister’s death and have questions about what happens next, you can call the Law Offices of Albert Goodwin at (212) 233-1233 or (718) 509-9774.

If you are an executor or administrator of an estate, the last thing you want to deal with is a contested accounting in New York. But the beneficiaries are making edging towards one, so it is up to you to de-escalate the situation quickly.

A contested accounting in New York has many downsides, not only for the executor but for the beneficiaries as well:

• It requires a lot of work from the executor. The executor has to spend time on the contested accounting in New York, the time he could have spent on his professional and personal pursuits. The executor will not be paid extra for the work of providing an accounting.
• Expensive. The fees for attorneys, accountants, and appraisers being involved can add up to tens of thousands of dollars.
• Gives Beneficiaries Another Reason to Complain. To add insult to injury, the beneficiaries will complain that the executor is spending too much on lawyers and accountants, for the contested accounting in New York, even though it is the beneficiaries themselves who created the accounting situation in the first place.
• Exposes the Executor to Potential Liability. Once the executor files the contested accounting in New York, the beneficiaries’ attorney will try to find inconsistencies in order to extract a settlement from the executor.
• Can Force Unjust Settlement. The prospect of a drawn-out contested accounting in New York can squeeze the executor into giving up a share of their rightfully owned estate just to avoid the torture.
• Leaves Less Money in the Estate to be Shared. Money can be better spent by you and beneficiaries then paying lawyers and accountants.

Try to Settle for an Informal Accounting. Since a contested accounting is about to start anyway, you will have no choice but to file some sort of an accounting. An informal accounting is a good way for the executor and the beneficiaries to try to find common ground and resolve a case without the expenses and the time commitment of a formal accounting.

An informal accounting has many benefits over a contested accounting:

• It requires less work. Because you don’t have to use court-mandated forms, there is less work to do. For example, you would not have to list every single item of expense and income, you can just give a summary of income and expenses.
• Cheaper. Less attorney and accountant fees.
• Easier to work things out. The atmosphere of a contested accounting is less contentious so it’s easier to work things out.
• More money left over for a settlement. As opposed to giving estate money to lawyers and accountants, keep the money for yourselves and the beneficiaries

Make Sure to Include All Expenses. Just like filing a tax return for a business, you will pay dearly if you neglect to list all of the expenses. Make sure the beneficiaries will not charge you for money that is not due to them but was spent on the expenses of the estate. Look over the estate accounts and even the decedent’s personal bank accounts and possibly your personal bank accounts (ask your estate attorney). Even small expenses can add up to large sums fairly quickly. No expense should be left unaccounted for.

Be Involved in the Accounting Process. It’s easy to just let the attorney and the accountant handle the contested accounting in New York. After all, they’re getting paid to do it. You can’t do everything yourself, and you have to delegate. However, this does not mean that you should not be involved in the process. After all is said and done, it’s you who is in the crosshairs, not the attorney or the accountant. So make sure you check their work.

Do Not Procrastinate. Start compiling the contested accounting as soon as the Citation for Compulsory Accounting is served, if not before. This is because it takes months to put together an accounting, but the court is only going to give you from thirty to sixty days. Courts know that executors have the option to start putting the accounting together before the court issues the Contested accounting Order; this is why courts give so little time to file an accounting. Don’t procrastinate – call your New York estate lawyer and tell them to start working on the accounting right away.

The sooner you start, the more time you have to fix any issues that may come up, so that you’re one hundred percent protected from any allegations that may come up from the beneficiaries. Even if the beneficiaries will ultimately agree to work things out based on an informal accounting, you will still need to file some kind of accounting, so get to work.

Hire a Good Estate Attorney. If you are looking for an estate attorney who is experienced in submitting and defending complex judicial estate accountings in New York, call the Law Offices of Albert Goodwin at (212) 233-1233 or (718) 509-9774. We can compile and submit your estate accounting, defend against objections and make sure that your rights are protected.

Who gets to decide the disposition of a deceased person’s remains? Who decides whether a person’s remains get buried or cremated and the final resting place of the body or the ashes?

We sometimes deal with situations where a person dies and there is a disagreement between members of his family regarding whether they should be buried or cremated or what should happen to the remains.
For example. In some typical scenarios, you can have the decedent’s second wife directing the funeral home to cremate the remains, and the children directing the funeral home to bury the remains next to his first wife, their mother.

In a situation like that, children typically say that the second marriage was not valid, especially if the decedent and the second wife were in a divorce proceeding at the time of the decedent’s death. There are also scenarios where one child says that their mother or father should be buried and the other child says that their mother or father should be cremated.

There are also situations where the executor of the decent’s will having a disagreement with the children or other relatives of the decedent regarding the interment of his or her remains. People say, “I want my father, mother, husband, wife, brother, sister, aunt, or uncle cremated or buried and someone else is directing the funeral home to do the opposite.

New York Public Health Law 4201(2)(a) states that the following persons in descending priority shall have the right to control the disposition of the remains of such decedent:

(i) the person designated in a written instrument executed pursuant to the provisions of this section;

(ii) the decedent’s surviving spouse;

(ii-a) the decedent’s surviving domestic partner;

(iii) any of the decedent’s surviving children eighteen years of age or older;

(iv) either of the decedent’s surviving parents;

(v) any of the decedent’s surviving siblings eighteen years of age or older;

(vi) a guardian appointed pursuant to article seventeen or seventeen-A of the surrogate’s court procedure act or article eighty-one of the mental hygiene law;

(vii) any person eighteen years of age or older who would be entitled to share in the estate of the decedent as specified in section 4-1.1 of the estates, powers and trusts law, with the person closest in relationship having the highest priority;

(viii) a duly appointed fiduciary of the estate of the decedent;

(ix) a close friend or relative who is reasonably familiar with the decedent’s wishes, including the decedent’s religious or moral beliefs, when no one higher on this list is reasonably available, willing, or competent to act, provided that such person has executed a written statement pursuant to subdivision seven of this section; or

(x) a chief fiscal officer of a county or a public administrator appointed pursuant to article twelve or thirteen of the surrogate’s court procedure act, or any other person acting on behalf of the decedent, provided that such person has executed a written statement pursuant to subdivision seven of this section.

Disagreements over the disposition of the decedent’s remains are often a precursor of further disagreements in the family, especially about the validity of the decedent’s will and the disposition of his estate.

If you have a disagreement regarding the disposition of your loved one’s remains, you can call the Law Offices of Albert Goodwin at (212) 233-1233 or (718) 509-9774.

When a will has a relative or a beneficiary as a witness, is the will valid? Kind of. The will is valid for everyone else, but the beneficiary-witness does not benefit from any increase in his or her share over what the beneficiary-witness would have gotten if not for the will. In other words, the will is valid but the bequest to the beneficiary witness is ignored. Instead, the beneficiary-witness gets what they would have gotten if the will was not made (this is called the “instestate,” or no-will, share). Except if the will leaves the beneficiary-witness less than they would have gotten without the will. So the beneficiary-witness gets the worst of both worlds.

New York Consolidated Laws, Estates, Powers and Trusts Law – EPT § 3-3.2 Competence of attesting witness who is beneficiary;  application to nuncupative will is the section of New York law dealing with this issue. It states that

(a) An attesting witness to a will to whom a beneficial disposition or appointment of property is made is a competent witness and compellable to testify respecting the execution of such will as if no such disposition or appointment had been made, subject to the following:

(1) Any such disposition or appointment made to an attesting witness is void unless there are, at the time of execution and attestation, at least two other attesting witnesses to the will who receive no beneficial disposition or appointment thereunder.

(2) Subject to subparagraph (1), any such disposition or appointment to an attesting witness is effective unless the will cannot be proved without the testimony of such witness, in which case the disposition or appointment is void.

(3) Any attesting witness whose disposition is void hereunder, who would be a distributee if the will were not established, is entitled to receive so much of his intestate share as does not exceed the value of the disposition made to him in the will, such share to be recovered as follows:

(A) In case the void disposition becomes part of the residuary disposition, from the residuary disposition only.

(B) In case the void disposition passes in intestacy, ratibly   1 from the distributees who succeed to such interest.  For this purpose, the void disposition shall be distributed under 4-1.1 as though the attesting witness were not a distributee.

A person serving as a witness to a New York should not be someone who benefits from that will in any way, even indirectly. The law requires that a will must be signed by two or more competent witnesses over the age of 18.

There are some people that should not be used as witnesses. When a beneficiary is used as a witness, it creates a conflict of interest situation and voids the bequest. For this reason, it is the worst idea to use a beneficiary as a witness to a will because that heir’s inheritance would be invalid, and the heir would then inherit nothing.

At the will execution ceremony, the witness must attest that the testator has declared the document to be the testator’s last will. There are other specific qualification requirements to be a witness under New York Probate laws other than being over 18 years of age and competent. The testator must sign in the presence of the witnesses. It is also recommended that the witnesses sign in the presence of each other as well, although New York law does not require that they do. However, the second witness must sign within 30 days after the first witness has signed in order for the will to be valid. Should a witness be called to testify in a will contest matter after a decedent’s death, the Will witness must be able to attest that the testator was mentally competent at the time of the execution of the will.

Please do not use this post if you are preparing your will yourself, as there are subtle issues involved that could make a difference between the will being valid and invalid. In order to make sure your will is valid, it is recommended that an experienced New York estate planning attorney prepare the will for you, and conduct and attend the signing ceremony to make sure that the will is properly signed and attested to under New York law. The attorney can explain the various provisions of the will to you and go over the New York probate process with you in case you have any concerns or questions. Having a valid will assures that your wishes will be carried out after your death and that your heirs will inherit your assets in the manner you have chosen.

If you wish to make a will with the assistance of a New York estate attorney, or you are dealing with a will where a relative or beneficiary is a witness and it may be invalid, call the Law Offices of Albert Goodwin at (212) 233-1233.

Can the executor buy property from the estate? Only for fair market value. Estate property does not belong to the executor – he is just managing it. What do we call it when a manager steals money he is managing? That’s right, it’s called embezzlement. Or more simply, stealing.

Let’s say an estate contains a house that is worth $1 million and the executor buys it for $200,000. This gives him the opportunity to “flip” the house on the market and walk away with $800,000 or live in a $1 million house having only paid $200,000. 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 money for his own needs in any way or transfers estate money 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 buys the house from the estate for less than 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 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 buy property from the estate 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.

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 property. If an executor buys property from the estate at less than the full market price, 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]

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 buying the decedent’s business, house, or other property, 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. An executor buying assets from the estate can trigger 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.

To sum up, executors should not buy property from the estate, 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 buy the property.

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 buying property of the estate for less than full market value, or if you are an executor and you feel that you are being falsely accused that, 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

Informal accounting is easier, cheaper and faster than a formal accounting. A Compulsory Formal Accounting is a Drag. If you are an executor or administrator of an estate, the last thing you want to do is to have to provide a formal accounting, unless the beneficiaries are making you do it.

Try to settle for an informal accounting. If the beneficiaries are asking questions, you will have no choice but to file some sort of an accounting. An informal accounting is a good way for the executor and the beneficiaries to try to find common ground and resolve a case without the expenses and the time commitment of a formal accounting.

An informal accounting has many benefits over a formal accounting:

• It requires less work. Because you don’t have to use court-mandated forms, there is less work to do. For example, you would not have to list every single item of expense and income, you can just give a summary of income and expenses.
• Cheaper. Less attorney and accountant fees.
• Easier to work things out. The atmosphere of an uncontested informal accounting is less contentious so it’s easier to work things out.
• More money left over for a settlement. As opposed to giving estate money to lawyers and accountants, keep the money for yourselves and the beneficiaries

Make sure to include all expenses. Just like filing a tax return for a business, you will pay dearly if you neglect to list all of the expenses in your informal accounting. Make sure the beneficiaries will not charge you for money that is not due to them but was spent on the expenses of the estate. Look over the estate accounts and even the decedent’s personal bank accounts and possibly your personal bank accounts (ask your estate attorney). Even small expenses can add up to large sums fairly quickly. No expense should be left unaccounted for.

Be involved in the informal accounting process

It’s easy to just let the attorney and the accountant handle the accounting. After all, they’re getting paid to do it. You can’t do everything yourself, and you have to delegate. However, this does not mean that you should not be involved in the process. After all is said and done, it’s you who is in the crosshairs, not the attorney or the accountant. So make sure you check their work.

Do not procrastinate. Start compiling the accounting as soon as the Citation for Compulsory Accounting is served, if not before. This is because it takes months to put together an accounting, but the court is only going to give you from thirty to sixty days. Courts know that executors have the option to start putting the accounting together before the court issues the Accounting Order; this is why courts give so little time to file an accounting. Don’t procrastinate – call your New York estate lawyer and tell them to start working on the accounting right away.

The sooner you start, the more time you have to fix any issues that may come up, so that you’re one hundred percent protected from any allegations that may come up from the beneficiaries. Even if the beneficiaries will ultimately agree to work things out based on an informal accounting, you will still need to file some kind of accounting, so get to work.

A formal accounting has many downsides, not only for the executor but for the beneficiaries as well:

• It requires a lot of work from the executor. The executor has to spend time on the accounting, time he could have spent on his professional and personal pursuits. The executor will not be paid extra for the work of providing an accounting.
• Expensive. The fees for attorneys, accountants, and appraisers being involved can add up to tens of thousands of dollars.
• Gives beneficiaries another reason to complain. To add insult to injury, the beneficiaries will complain that the executor is spending too much on lawyers and accountants, even though it is the beneficiaries themselves who created the accounting situation in the first place.
• Exposes the executor to potential liability. Once the executor files the accounting, the beneficiaries’ attorney will try to find inconsistencies in order to extract a settlement from the executor.
• Can force unjust settlement. The prospect of a drawn-out compulsory accounting proceeding can squeeze the executor into giving up a share of their rightfully owned estate just to avoid the torture.
• Leaves less money in the estate to be shared. Money can be better spent by you and beneficiaries then paying lawyers and accountants.

Hire an experienced estate attorney. If you are looking for an estate attorney who is experienced in preparing an informal accounting, we at the Law Offices of Albert Goodwin are here for you. You can call us at 718-509-9774 or send us an email at [email protected]. We can compile and submit your informal accounting and make sure that your rights are protected.

Executor buying a house from the estate – is that allowed? Only if he pays fair market value for it, or if the transfer is being done as part of distributing the estate, with equal distribution among all the beneficiaries and in accordance with all the applicable rules. Estate property does not belong to the executor – he is just managing it. What do we call it when a manager steals money he is managing? That’s right; it’s called embezzlement. Or more simply, stealing.

Let’s say an estate contains a house that is worth $1 million, and the executor buys a house from the estate for $200,000. This gives him the opportunity to “flip” the house on the market and walk away with $800,000 or live in a $1 million house having only paid $200,000. 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 money for his own needs in any way or buys a house from the estate at a lower than market price, 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 buys a house from the estate for less than fair market value? Nothing good. 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 for the executor buying a house from the estate, 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 buy a house from the estate for less than fair market value because the house belongs to someone else. 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 buys the house from the estate for less than full market value, 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]

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 buying a share of the decedent’s business, house, or other property, 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. Buying a house of the estate 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.

To sum up, executors should not buy a house from the estate, 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 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 buying a house from the estate for less than fair market value, or if you are an executor and you feel that you are falsely accused of doing so, 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