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What Does an Executor Have to Disclose to Beneficiaries?

One of the main questions a beneficiary always asks is, “what does an executor have to disclose to beneficiaries?” Most beneficiaries might feel they have been left in the dark with no communication from the executor. However, the beneficiary must understand that the executor does not need to give a day-by-day status update regarding the administration. The executor should reasonably inform the beneficiary of certain information that would allow the beneficiary to protect and enforce his beneficiary rights.

At the very least, the executor should inform the beneficiary about the following:

  • The fact that the beneficiary is a beneficiary in the will
  • An inventory of all the assets at the time the decedent died
  • Assets that have entered or left the estate during administration, either via sale, exchange, or any other trade
  • Any change in the value of the assets after decedent’s death
  • Taxes and liabilities paid from the estate

Can the executor sell real property without disclosing the sale to the beneficiaries?

Under Estates, Powers, and Trusts Law (EPTL) § 11-1.1, a fiduciary (which includes an executor) is authorized to sell real property at a public or private sale, and on such terms as in his opinion will be most advantageous to the beneficiaries, except if the letters issued limits such power of the fiduciary.

With this provision, the executor can sell real property of the estate without informing the court or the beneficiaries. However, it would be prudent for the executor to inform the beneficiaries of any sale of real property, especially if such real property is the only valuable asset in the estate, because beneficiaries can hold the executor liable for damages, in case the sale is prejudicial to the beneficiaries’ interests.

What if the executor told you, the beneficiary, that he was planning to sell the real property below market value?

If you have reason to believe (or the executor told you) that he was planning to sell real property below market value and you do not agree with this course of action, you can file an application for temporary restraining order and a petition to modify the executor’s letters to allow him to sell the real property no less than a particular minimum amount. An estate attorney will be able to help you in filing your petition.

Executor’s duty to disclose when asked by beneficiaries

Although the executor does not have a legal duty to always keep the beneficiaries informed of the administration of the estate, the executor has a fiduciary duty to respond to the beneficiaries’ reasonable request to information. For this reason, the beneficiary can be in constant communication with the executor so the beneficiary can take a more active role in administration. This also allows the beneficiary to know whether there is a need to protect and enforce his rights through court.

The beneficiary can:

  • Request the executor for a copy of the will
  • Review the will with an experienced estate attorney
  • Understand what the decedent wanted to convey in his will and what the beneficiary’s inheritance entails, and convey the beneficiary’s wishes about any distribution of the estate (e., if the beneficiary prefers that the real property be sold and proceeds distributed to the beneficiaries, or vice versa, that the real property be held by the beneficiaries)
  • Get a copy of the estate inventory of all assets of the decedent at the time of death
  • Get a copy of the estate accounting and review it with an estate attorney
  • If the executor refuses to cooperate with the beneficiary, hire an estate attorney to communicate and get information from the executor

Executor’s duty to disclose the accounting to beneficiaries

Beneficiaries have a right to an accounting of the estate. If the executor fails to provide an accounting, the beneficiary can petition the court to compel the executor to submit an accounting.

An estate accounting will contain all the principal and income received by the executor, any realized increase or decrease in the value of the assets, any administration expenses and taxes, unpaid administration expenses, trustee commissions (if any), and proposed distribution to beneficiaries. The accounting must be supported by documentation to ensure that numbers reflected in the schedules are accurate. Getting the help of an estate attorney to review this accounting is crucial to see if there are anomalies or irregularities.

Informal vs. formal accounting

An executor can submit to the beneficiary an informal accounting. An informal accounting may or may not be detailed. There is no set format for an informal accounting. If the beneficiaries agree to the informal accounting, they can execute their receipts and releases. If they do not agree to the accounting, they can object to the accounting and not provide the corresponding receipts and releases. Without this receipt and release, the executor can still be held liable for damages resulting from his administration of the estate.

When beneficiaries do not agree to the executor’s informal accounting, they can petition the court to compel the executor to submit a formal account. With the court, the beneficiaries can file their objections. Without a proper judicial settlement of account, the executor will not be discharged from liability.

Going through the legal process of compelling the executor to account may entail legal expenses, which in the end, will be taken from the estate. For this reason, if the executor and beneficiaries can already agree on a course of action, it is always better to settle any dispute out-of-court.

An executor has fiduciary duties to the beneficiaries. If the executor does not observe these fiduciary duties, the beneficiary always has legal remedies which it can enforce through court action. If successful, the beneficiary can ask his attorney’s fees to be taken from the estate funds. Having an experienced estates attorney is important to review the will, review the accounting, and sometimes, even to communicate with the executor when the executor refuses to respond to the beneficiary. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at attorneyalbertgoodwin@gmail.com.