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The executor can only distribute estate assets to the beneficiaries after debts and expenses have been paid. Usually, distribution may occur seven months after the executor’s appointment, but may take longer in complex estates.
Order of Payment for Estate Debts
In New York, an executor must follow an order of priority for the payment of estate debts. Failure to observe this priority can make the executor personally liable for damages caused by such deviation. This order of priority is provided in SCPA § 1811:
- Reasonable funeral expenses and expenses of administration;
- Federal and state debts;
- Taxes assessed before death;
- Judgments (docketed before death); and
- Court bonds, acknowledged financial and contractual obligations, and all other debts.
Only after payment of all estate debts state above can the executor distribute estate assets to the beneficiaries.
Seven-Month Notice Period for Creditors
Under SCPA § 1802, estate creditors in New York have seven (7) months from the time an executor is appointed to present their claim with the estate. This seven-month period is counted from the time letters testamentary were issued, including letters for a temporary or preliminary executor.
After the lapse of this seven-month period, the executor can distribute estate assets to the beneficiaries in good faith, without incurring personal liability. In case a creditor makes a claim after seven months, the executor is not personally liable to pay such claim when estate assets have already been distributed to the beneficiaries in good faith.
Distribution When There is a Will Contest
When there is a will contest, distribution can even take longer. Although a preliminary executor may be appointed by the court in cases of will contests, such preliminary executor usually only has the power to pay estate debts and expenses. Although the 7-month period for creditors to make their claims begin upon issuance of preliminary letters testamentary, the executor cannot be said to have distributed estate assets to beneficiaries in good faith, especially when there is a pending issue regarding the validity of the will, and as a consequence, a pending question regarding the identity of the rightful heirs and/or beneficiaries.
Estate matters can be complicated and should be handled with care. Otherwise, personal liability can attach and executors may be personally charged for damages caused by deviations from the regular practice and law. Should you need assistance in handling estate matters, 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].
