What Power Does an Executor of a Will Have – Examples and Duties

An executor of a will has many powers. Among them are the following:

• Manage the estate assets including bank accounts, stock, bonds, retirement accounts, pensions
• Take inventory of assets, including personal and real property
• Invest assets
• Sell personal and real property
• Pay creditors and other claims including funeral expenses and any estate taxes that may be due out of estate assets
• Contact an employer to find out about the testator’s employee benefits
• Manage the testator’s business
• Make accountings to the beneficiaries and the court
• Communicate with the beneficiaries on a regular basis to keep them informed of important financial matters
• Resolve disputes that may arise between beneficiaries
• Wind up and settle the estate
• Distribute assets
• Close out the estate

An executor is named by the testator (the person who made the will) at the time a will is made and executed. The executor is has the power to carry out the wishes and intent of the testator and must do so by acting in good faith and by representing the best interests of the beneficiaries at all times during the probate administration of the estate and winding up and closing of an estate.

When choosing an executor, the testator should keep in mind qualities such as experience, ability to handle and manage business matters, competency and availability. The testator may appoint a spouse, another family member, friend, attorney or any other person over the age of 18 years of age to act as the executor. It is also common for a testator to appoint a co-executor or successor as well.

Examples of Power of an Executor

An executor has the power to initiate the filing of a probate proceeding with the Surrogate’s Court by filing the original will and death certificate with the court. He has the power to obtain and file any other necessary documentation that the court may require.

An executor has the power to enter into contractual and legal relationships, to an extent. For example, if the testator owned commercial property and had tenants, the executor has the power to may have to collect rent, work with a property management company or hire one depending on the size of the building and the number of tenants.

The executor has the power to work with attorneys and accountants in to make sure assets are properly valued and contractual obligations are completed.

An executor is entitled to receive compensation for his or her services in accordance with the law. The executor also has the power to NOT take compensation for their services, in order to not pay income tax on the compensation. When a spouse or a family member acts as executor, many times they do not take compensation for their services, especially when they are also a beneficiary receiving a distribution of assets under the will.

Fiduciary Duty of an Executor as a Limit on Their Power

Because an executor has so much power and discretion over the affairs of the estate, an executor is held a higher standard of behavior and is expected to act in an honest, fair and ethical manner. If an executor breaches their fiduciary duty, the executor could be held legally liable for any losses suffered by the estate or beneficiaries. An executor can be removed by the beneficiaries for breach of fiduciary duty and could be subject to restitution of any financial losses to the estate and beneficiaries, and even face criminal charges if the executor committed any crimes such as embezzlement of estate assets.

Acting an executor comes with power but is also a responsibility, especially if an estate is large and has substantial assets. That is why some spouses or family members decide they do not want to take on the job and end up resigning and hiring an attorney or another personal representative to replace them and administer the estate.

If you wish for a New York estate attorney to assist you with your powers as executor, you can send us an email at [email protected] or call us at 212-233-1233.

The Statutory Source of Executor Powers

An executor's powers come from multiple sources:

• The will itself. Express grants of power, often in a broad "fiduciary powers" article.
• EPTL Article 11. Statutory powers granted to all fiduciaries unless restricted by the will.
• SCPA Article 21. Procedural powers and obligations.
• Court orders. Specific authorizations for particular actions.
• Common law. Background fiduciary law principles.

The will's specific grants typically supplement statutory powers. Where the will is silent, statutory defaults apply.

EPTL 11-1.1 Fiduciary Powers

EPTL § 11-1.1 grants extensive default powers to fiduciaries:

• Power to retain estate property.
• Power to invest in various asset categories.
• Power to sell real and personal property at public or private sale.
• Power to lease property for terms not exceeding the estate's likely duration.
• Power to borrow against estate assets in appropriate circumstances.
• Power to compromise claims.
• Power to make distributions in cash or in kind.
• Power to engage agents and professionals.
• Power to vote shares of stock.
• Power to insure assets.
• Power to allocate items between income and principal.

These default powers allow effective administration without requiring the will to spell out every power needed.

The Duty of Loyalty

The executor's most fundamental duty is loyalty to the estate. The duty requires:

• Acting solely in the interests of the estate and beneficiaries.
• Avoiding conflicts of interest where possible.
• Disclosing unavoidable conflicts.
• Not using estate property for personal benefit.
• Not competing with the estate.
• Treating multiple beneficiaries impartially.

Self-dealing transactions violate the duty of loyalty even when the transaction terms appear fair. The no-further-inquiry rule voids self-dealing transactions without examining their actual fairness.

The Duty of Prudence

The executor must manage estate assets with reasonable care and skill. The Prudent Investor Act in EPTL § 11-2.3 governs investment decisions:

• Diversification of investments where appropriate.
• Consideration of the estate's particular circumstances.
• Risk-return analysis tailored to the estate's objectives.
• Reasonable costs.
• Consideration of tax consequences.
• Loyalty to the estate.
• Periodic review and adjustment of investments.

Departures from prudent investment practices can result in surcharges against the executor for resulting losses.

The Duty to Account

The executor must provide accountings to beneficiaries. The duty includes:

• Maintaining detailed records of all estate transactions.
• Providing periodic informal accountings to beneficiaries during administration.
• Filing inventory within six months of appointment.
• Providing a final accounting before distribution.
• Producing supporting documentation when reasonably requested.
• Filing formal accountings if compelled by beneficiaries.

Statutory Commissions

Executors are entitled to commissions under SCPA § 2307. The schedule:

• 5% on the first $100,000 of principal received and distributed.
• 4% on the next $200,000.
• 3% on the next $700,000.
• 2.5% on the next $4 million.
• 2% on amounts above $5 million.

Plus a separate income commission on income received. Multiple co-executors generally share the commission or each receive a portion based on the work performed.

Commission Considerations

Executors who are also beneficiaries face a choice about commissions:

• Commissions are taxable as ordinary income.
• Inheritance is generally not taxable (with step-up in basis).
• Taking commissions may produce higher tax liability than just taking the inheritance.
• The executor can waive commissions for tax efficiency.
• Non-beneficiary executors may have different considerations.

The decision about whether to take commissions involves tax planning and family dynamics. Counsel can advise on the optimal approach.

Resignation and Removal

An executor may resign or be removed:

• Voluntary resignation. The executor can resign, typically following procedures in the will or with court approval.
• Removal for cause. The court can remove an executor for misconduct, conflict of interest, or other grounds.
• Disqualification. An executor who becomes disqualified (felony conviction, etc.) loses authority.
• Successor appointment. When the original executor cannot serve, the will's alternate executor or a court-appointed successor takes over.

Court Involvement

The Surrogate's Court provides oversight throughout the administration:

• The court issues letters testamentary appointing the executor.
• The court may require bonding.
• The court addresses petitions for instruction or direction.
• The court resolves disputes between parties.
• The court reviews and approves accountings.
• The court can remove fiduciaries for misconduct.
• The court can impose surcharges for breach of duty.

The court's involvement is most active when disputes arise. In uncontested estates, the executor handles most matters with attorney guidance and only limited court involvement.