An executor is a person nominated by the testator and appointed by the Surrogate Court as the personal representative of the testator who has died, tasked with the duty and responsibility of managing the deceased testator’s estate, pay its debts, and distribute the remaining net proceeds to the beneficiaries. When managing the deceased person’s estate, the executor often asks, “what expenses are an executor allowed to charge to the estate?”
An executor is allowed to charge reasonable expenses related to the administration of the estate. What is reasonable depends on the circumstances of the case. An executor is not allowed to charge expenses to the estate that were incurred before the testator died.
Why is it important to know what expenses are allowed and not allowed? Because the beneficiaries can question the expense in the accounting submitted by the executor and the executor may be held personally liable for such expense.
Accounting to be discharged from liability
At the end of the administration of the estate, for the executor to be released from personal liability, the executor has to submit an accounting to the beneficiaries. The beneficiaries, after being apprised of the accounting, have to sign receipts and releases. These receipts and releases confirm that the beneficiaries have received their share of the estate, and they release the executor from personal liability.
What are reimbursable expenses?
The usual reimbursable expenses of the executor are as follows:
- Funeral expenses
- Administrative expenses related to the management of the estate
- Maintenance costs for the house (i.e., utilities expenses, real property taxes, etc.)
- Costs associated with marketing and selling the house
- Sale costs for the house (i.e., closing costs, broker’s commission, etc.)
- Postage costs
- Documentary costs
- Costs to get certified copies of the death certificate
- Professional fees
- Accountant fees
- For settling taxes
- Legal expenses
- Attorney fees for filing the petition for probate, court costs and other legal expenses
- Costs for asset valuations
- Reasonable travel costs
- For as long as it is related to the administration of the estate
- Reasonable miscellaneous expenses
- Accountant fees
What costs are not reimbursable?
Sometimes, when the executor is also a beneficiary, the executor would attempt to charge beneficiary costs to the estate. For example, when the executor-beneficiary receives specific items from the deceased testator’s estate, such as jewelry and furniture, the executor-beneficiary might attempt to charge his travel costs to pick up the jewelry and moving and/or storage costs to transport the furniture. This is considered a beneficiary expense and not an executor expense. Although the executor has the ability to charge this expense to the estate since the executor has control over the bank accounts, other beneficiaries may question this expense when the executor submits his accounting.
When legal fees are reimbursable
When the executor’s actions are questioned by the beneficiaries (i.e., the expense was not reasonable or related to the administration of estate, the executor acted with conflict of interest), the executor usually uses estate funds to pay the legal fees to defend himself. If the executor is successful and the court agrees with the executor’s actions, the estate is liable to pay for the executor’s legal fees. If the executor is unsuccessful and the court finds that the executor’s actions were not reasonable or in conflict with his duties, the executor’s legal fees cannot be charged to the estate. If the executor has already paid these legal fees using estate funds, the executor can be liable for a surcharge.
A surcharge action can be filed by the beneficiary to make the executor liable for certain costs. Usually, surcharge actions arise from:
- Executor’s embezzlement or fraudulent use of estate funds
- Executor’s fraudulent transfer of assets from the estate to himself or a member of his family, without the consent of the beneficiaries and for a price below market value
- Intentional or negligent administration or investment of estate assets
- Failure to make timely distributions to the beneficiaries
- Failure to carry out the instructions of the deceased testator in the will
An executor will only be surcharged after proper hearing and evidence is presented to the court. The court must be satisfied that the executor, indeed, committed the wrongful action and should be surcharged.
An estates litigation attorney will be able to help a beneficiary surcharge an executor who has been using estate funds for his own personal purposes. At the same time, an experienced estates litigation attorney will also be able to defend an executor for the expenses he has charged to the estate. Should you need assistance in these matters, 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 firstname.lastname@example.org.