EPTL 11-1.6: A Fiduciary Duty Not to Commingle Estate Property

Section 11-1.6 of the New York Estates, Powers and Trusts Law (EPTL) sets out one of the most basic rules governing executors, administrators, and trustees. Its core command is short: "Every fiduciary shall keep property received as fiduciary separate from his individual property." The rule applies whether the fiduciary is a family member serving as executor, a court-appointed administrator, or a professional trustee.

This page explains what the duty requires in practice, what happens when a fiduciary breaks it, and how interested parties raise the issue in Surrogate's Court.

What EPTL 11-1.6 Requires in Plain Terms

Once a fiduciary receives letters testamentary, letters of administration, or takes office as trustee, the assets they control belong to the estate or trust. They are not the fiduciary's own money, even if the fiduciary is also a beneficiary. EPTL 11-1.6 requires the fiduciary to hold those assets in a way that keeps them identifiable and apart from personal funds.

In day-to-day terms, the duty means:

• Separate accounts: Estate cash goes into an account titled in the name of the estate or trust, with the fiduciary signing in a representative capacity (for example, "Jane Doe, as Executor of the Estate of John Doe"). The account should use the estate's own taxpayer identification number, not the fiduciary's Social Security number.
• No personal deposits: Checks payable to the decedent or the estate, such as refunds, final paychecks, rents, and sale proceeds, are deposited only into the estate account.
• No personal payments: The fiduciary does not pay personal bills from estate funds, and does not pay estate expenses from a personal account and then informally "settle up" later without documentation.
• Proper title to other assets: Securities, vehicles, and other property should be held or re-registered so the estate's ownership is clear.

The duty works alongside the powers granted by statute. A fiduciary may have broad authority to sell, invest, and manage assets under EPTL 11-1.1, but those powers are exercised on the estate's behalf and through the estate's own accounts.

Why the Rule Exists

Commingling creates two problems. The first is tracing: once estate money is mixed with personal money, it becomes difficult to show which dollars belong to whom. The second is exposure: personal funds can be reached by the fiduciary's own creditors, so estate money sitting in a personal account is at risk of being lost to someone else's debts.

New York courts treat commingling as a breach of fiduciary duty even when no money is actually lost. Where records are confused because the fiduciary mixed funds, courts generally resolve doubts against the fiduciary, who bears the burden of proving that estate property was properly handled.

Worked Examples

Example 1: Sale proceeds deposited into a personal account

An executor sells the decedent's house and receives net proceeds of $480,000. Rather than opening an estate account, the executor deposits the check into a personal savings account that already holds $60,000 of the executor's own money. Over the next year, the executor withdraws $40,000 for a personal car purchase, intending to repay it.

Even if the executor later replaces the $40,000, the deposit itself violated EPTL 11-1.6. On an accounting, the court can surcharge the executor for any shortfall and add interest. Surrogate's Courts often apply the statutory rate of 9 percent per year under CPLR 5004 in surcharge cases, although the court has discretion to use a different rate. At 9 percent, interest on $40,000 runs to $3,600 for one year. The court can also reduce or deny the executor's commissions.

For questions about whether and how the sale itself was proper, see whether an administrator can sell estate property.

Example 2: The cost to commissions

Executor commissions are set by SCPA 2307: 5 percent on the first $100,000, 4 percent on the next $200,000, 3 percent on the next $700,000, 2.5 percent on the next $4,000,000, and 2 percent above $5,000,000. On a $600,000 estate, statutory commissions would be $5,000 + $8,000 + $9,000 = $22,000. Where commingling is accompanied by misconduct or a failure to keep proper records, the court may deny all or part of that amount.

Example 3: Rent from estate real property

An administrator collects $2,500 a month in rent from a two-family house owned by the estate and deposits it into a joint account shared with a spouse. After 18 months, $45,000 in rent has passed through that account along with household income and expenses. The administrator cannot show which payments were estate expenses. On an accounting, the administrator may be charged with the full $45,000 unless they can document legitimate estate disbursements.

Procedure in Surrogate's Court

Beneficiaries, distributees, and other interested persons have several tools when they suspect commingling.

1. Request information informally. Ask the fiduciary in writing for bank statements, the estate account's title, and a summary of receipts and disbursements. Many disputes end here.
2. Petition for information or turnover. SCPA 2102 allows a petition to compel a fiduciary to provide information about the estate and to pay over money or property. SCPA 2103 provides a discovery and turnover proceeding to locate and recover estate property.
3. Compel an accounting. Under SCPA 2205, an interested person may petition to compel the fiduciary to account. Such petitions are commonly brought after the seven-month creditor claim period under SCPA 1802, though the court can order an accounting earlier for cause.
4. File objections. Once the fiduciary files an account, interested parties may file objections to specific entries, such as unexplained transfers or missing income, and pursue discovery before trial or settlement.
5. Seek removal or suspension. SCPA 711 permits an interested person to petition to suspend, modify, or revoke letters where the fiduciary has wasted or improperly applied assets or otherwise mismanaged the estate. SCPA 719 lets the court act in certain cases without a petition. The court can suspend a fiduciary's powers while the matter is heard.

Deadlines and Timing

Claims against a fiduciary for breach of duty generally do not begin to run while the fiduciary is still acting, until the fiduciary openly repudiates the obligation or the account is judicially settled. That rule protects beneficiaries, but delay still carries a cost: records disappear, money is spent, and a fiduciary with no assets may be unable to pay a surcharge. Once a decree judicially settling an account is entered, interested parties who were properly served are generally bound by it, so objections must be raised in that proceeding.

Common Pitfalls for Fiduciaries

• Using a personal account "temporarily": Short delays in opening an estate account are common, but depositing estate checks into a personal account, even briefly, is a violation.
• Advancing personal funds without records: Paying funeral or carrying costs personally is allowed, but the fiduciary must document each payment and reimburse through the estate account.
• Confusing joint accounts with estate assets: An account the decedent held jointly with right of survivorship may pass to the surviving owner outside the estate. Estate funds should never be routed through such an account.
• Serving as both fiduciary and beneficiary: A fiduciary who will eventually inherit still may not treat estate money as their own before distribution. The same applies to trustees considering distributions of principal under EPTL 7-1.6.
• Poor recordkeeping: Every receipt and disbursement should be traceable to a bank statement and a supporting document. The fiduciary will need these to prepare the account.

Consequences of a Violation

Depending on the facts, a Surrogate's Court may:

• Surcharge the fiduciary for any loss, plus interest
• Reduce or deny commissions
• Suspend or revoke letters and appoint a successor fiduciary
• Order turnover of funds and property
• Charge legal fees incurred because of the misconduct against the fiduciary personally

Intentional taking of estate funds may also be referred for criminal prosecution. For a broader discussion of these claims, see our page on breach of fiduciary duty in New York.

Albert Goodwin represents beneficiaries, executors, administrators, and trustees in Surrogate's Court proceedings involving EPTL 11-1.6 and related fiduciary obligations.

You can contact the Law Offices of Albert Goodwin by phone at 212-233-1233 or by email at [email protected].