How Long Do You Have To Transfer Property After Death?

In New York, an executor or administrator generally could transfer property and make distributions to heirs and beneficiaries seven months after their appointment, the issuance of letters testamentary or letters of administration, without incurring any liability.

Seven-month creditor claim period

What is this period of seven months after an executor or administrator’s appointment? Under SCPA § 1802, a creditor has seven months from the date of issuance of the executor or administrator’s letters to make a claim with the estate. This seven month period begins on the date letters are first issued to a fiduciary, including a temporary or preliminary fiduciary.

During this seven-month period, the executor or administrator must also pay for the debts and other expenses of the estate in the order provided under SCPA § 1811. These expenses, in accordance with order of priority, are:

• Reasonable funeral expenses and administration expenses
• Debts under US and New York laws
• Property taxes
• Judgments against deceased
• All recognizances, bonds, sealed instruments, notes, bills, and unliquidated demands and accounts

Distributing the estate assets without paying any of the above shall make the personal representative (executor or administrator) personally liable for such debt. Any amount not recovered from the personal representative shall be taken from the heirs and beneficiaries who received the distributions.

Distributions prior to the seven-month creditor claim period

When a personal representative, such as an executor or administrator, distributes properties to an heir or beneficiary prior to the lapse of the seven-month notice period, the personal representative can be liable in case a creditor appears within the said period to file a claim.

Distributions after the seven-month creditor claim period

If the executor distributes estate assets after the seven-month creditor claim period, he will generally not be liable if a creditor suddenly appears beyond the seven months to make a claim.

The good faith requirement

However, in Matter of Bailey, 147 Misc.2d 46 (1990), the court held the executor liable for creditor claims made after the seven-month period because the executor did not exercise good faith in the investigation of the existence of possible claims. The alleged good faith distributions to the beneficiaries were debunked when it was shown that the executor was advised of a possibility of a claim less than five months after the issuance of his letters.

In addition, the executor knew that the decedent, his mother, was hospitalized and had home attendants prior to her death. Yet, the executor never investigated whether these hospitalization and home care expenses were paid for. For this reason, the executor was held liable for these hospitalization and home care claims filed after the seven-month period because he was adequately advised or should have known, with due diligence, about the possibility of these claims within the seven-month period.

If the executor acted in good faith and with due diligence in investigating and resolving creditor claims yet was not aware of the existence of any such claim, he may avoid personal liability for the distribution of estate assets after the seven-month period.

If there is any doubt, the executor should seek guidance from an estates attorney to minimize any risk of being personally liable for estate debts. 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].