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Generally, there is executor misconduct when the executor does one or more of the following things:
- wastes or improperly applies assets of the estate;
- is unfit for office due to dishonesty, drunkenness, improvidence, want of understanding and the like;
- willfully or neglectfully refuses to obey a court order
- misrepresents a material fact in his application for letters testamentary
- removes estate property from the state without prior court approval
- fails to account as directed by the court
- fails to appear despite service of process
- absconds or conceals himself from the court
- fails to supply information regarding estate assets and affairs despite court order
- has been convicted of a felony
- commingles estate funds with personal funds or other funds of a third person
- other analogous circumstances
Definitions of executor misconduct in New York can be found in SCPA §§ 711. And SCPA 719 provides the basis for the court to suspend, modify or revoke the letters testamentary of an executor. The most common examples of executor misconduct that we have seen usually relate to the following issues:
Self-dealing
The most common complaint we receive regarding executor misconduct is self-dealing. Self-dealing occurs when the executor uses his position to benefit himself, acting for his self-interest rather than and in conflict with the interest of the estate and its beneficiaries.
Examples of executor self-dealing are: selling estate property to himself (even if it’s within market value), selling estate property to another (below market value), selling estate property to his family member or an entity in which he has an interest in (even if it’s within market value), and using estate funds to pay for his personal expenses.
If the estate property hasn’t been sold but the beneficiary is aware that the executor plans to sell the estate property to himself or to another below market value, a temporary restraining order or preliminary injunction may be secured to restrain the executor from selling the estate property below a particular value.
When the property has already been sold, objections are usually made during accounting. If the beneficiaries’ objections are meritorious, the executor is surcharged for the difference, which is the damage done to the estate due to the sale.
Failure to distribute assets
Another common complaint we receive regarding executor misconduct is failing to distribute assets. We have witnessed surviving spouses who were appointed as executors, and thereafter, failed to discharge the duties of their office. These surviving spouses would remarry, move out of the state, collect rent from the estate property, and fail to distribute the proceeds or the estate property to the beneficiaries. This especially happens when the beneficiaries are still minors.
Generally, assets should be immediately distributed after the seven-month window for creditors to file claims has lapsed. In this case, we would have to petition the court to revoke the letters testamentary of the executor and to appoint a successor executor.
Failing to file taxes or pay debts
Paying taxes and debts is one of the executor’s primary duties. Failure to do so can cause the revocation of his letters. This is rarely a complaint we receive from beneficiaries. Most executors are aware that they immediately need to pay taxes and debts. Otherwise, any penalties arising from the late payment may be surcharged to them.
Refusing to communicate with beneficiaries
Although communicating with beneficiaries is an important executor obligation, there mere failure to communicate will usually not be cause for revocation of letters testamentary, in the absence of clear executor misconduct that has caused damage and injury to the estate and its beneficiaries.
When executor misconduct is alleged, there is a need to support your allegations with evidence. For example, if you are claiming that the executor sold the property for below market value, you need to provide an appraisal of the property to show that it was indeed sold for below market value.
Even if the property was sold below market value, the executor can still have a valid excuse for the below market value sale, such as when the property is run-down, the property needed repairs, and there was only one offer despite the being in the market for a long time, just to name a few.
If you are requesting the court to surcharge the executor to make the executor liable for injuries to the estate, you must show with evidence how much the estate was damaged and a correlation between the executor misconduct and the damage.
Executor misconduct is common, especially when there are no restrictions in the letters testamentary. If you suspect executor misconduct, contact an estates lawyer immediately to know your possible options and courses of action. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].
About the Author
Albert Goodwin Esq. is a licenced New York attorney with over 17 years of courtroom experience. His extensive knowledge and expertise make him well-qualified to write authoritative articles on a wide range of legal topics. He can be reached at 212-233-1233 or [email protected].
