Estate Accounting in New York

Estate Accounting in New York

If you are named executor in the will of a deceased relative or friend in New York, you will be responsible for carrying out a series of important duties regarding the decedent’s property and the financial assets they held in their name at the time of their death. When the decedent leaves no last will and testament, the court will appoint an administrator – an administrator’s duties are virtually the same as those of an executor.

As either an executor or as an administrator, you have a fiduciary duty to act in the best interest of the estate and its beneficiaries. The tasks that need to be performed include all the following:

  • Identify and gather all the estate principal (the property and assets owned by decedent at their death);
  • Open an estate bank account into which all the decedent’s financial assets will be held;
  • Pay the decedent’s just debts, funeral expenses, and any taxes due;
  • Take steps to maintain the value of the decedent’s property; and
  • Distribute some of the estate assets as directed in the decedent’s last will and testament.

Seven months after your letters testamentary are issued, you could possibly be winding down the estate. As the time to finalize the estate approaches, you will plan to distribute the remaining assets to the persons either named in the will or designated by New York’s laws of intestate succession, accept a commission for your work, and bring the estate to a close. But before those last steps are completed, you sometimes need to account to the Surrogate’s court for all the actions you took in your capacity as the estate fiduciary. That is if  an informal accounting to beneficiaries does not suffice.

Three Types of Estate Accounting

Informal Estate Accounting - New York State
Informal accounting requires that all beneficiaries consent to the executor’s actions and approve the accounting without objection. If one or more beneficiaries object to the executor’s proposed disposition of assets or challenge the accounting, then a judicial estate accounting will be necessary.

New York Surrogate’s Court procedure provides for three types of estate accounting processes:

  • Judicial Estate Accounting
  • Decree for an Estate Accounting
  • Informal Estate Accounting

Informal estate accounting is by far the simplest and least expensive type of accounting procedure. Informal accounting involves no contentious litigation expenses like hiring expert witnesses to testify to the value of particular assets. By avoiding unnecessary expenses, more of the estate’s assets are available to be distributed to the estate’s beneficiaries.

However, informal accounting requires that all beneficiaries consent to the executor’s actions and approve the accounting without objection. If one or more beneficiaries object to the executor’s proposed disposition of assets or challenge the accounting, then a judicial estate accounting will be necessary.

Judicial Estate Accounting —A Judicial estate accounting is the most formal means of accounting and is performed in circumstances in which an executor’s (or administrator’s) actions are challenged by the estate’s beneficiaries. The Surrogate’s court can demand the accounting, or the beneficiaries may request that the executor’s actions be judicially examined. The executor can also petition the court for a judicial accounting if they expect that the beneficiaries will not agree to approve the way they handled the management or distribution of estate assets. This process allows the court to hear beneficiaries’ objections, and the executor’s (or administrator’s) responses, and decide whether to approve the accounting.

Decree for an Estate Accounting (some New York counties) — When all the beneficiaries do approve the executor’s accounting, the estate can be closed by a court decree. In this process, the executor files documents, including the inventory, all receipts, and records of payments, along with the proposed final disposition of the assets remaining in the estate. All beneficiaries must sign the documents to indicate their approval of the accounting. Finally, the proposed decree is submitted with these other documents. If all the foregoing documents are in order, the Surrogate’s court judge will issue a decree approving the final actions, closing the estate, and releasing the executor from any future responsibility.

Many counties, including Westchester and the five New York City boroughs, among others, do not require such a decree to close an estate.

Informal Estate Accounting — An informal estate accounting procedure is just as it sounds. The executor (or administrator) does not need to use a particular form or comply with overly technical criteria. They may record the necessary data on a spreadsheet if they wish to. The executor supplies each beneficiary with a receipt for the distribution they received, a release waiving any additional claims, and a copy of the accounting. The accounting details everything originally contained in the estate, what distributions were made and to whom, and includes the proposal for the final closure of the estate.

While it is important to detail all of the executor’s actions and obtain the beneficiaries’ signed releases and consent to the accounting, an informal accounting does not need to be presented to the court.

What Must Be Included in the Accounting

Regardless of which accounting procedure an executor follows, it must include the same essential components:

  • a breakdown of the estate’s original assets,
  • a listing of gains or losses realized on the estate’s assets,
  • income earned from estate assets,
  • any funeral expenses paid,
  • any debts paid,
  • distributions already made,
  • all administration expenses, including outstanding claims,
  • assets remaining in  the estate,
  • proposed distribution of remaining assets,
  • proposed commission for the executor’s service,
  • legal fees, and
  • statement of any assets reserved for future accounting or other professional fees.

Getting Experienced Legal Guidance for A New York Estate Accounting

The duties of an estate executor or administrator can be challenging for someone unfamiliar with the financial record-keeping and legal processes involved. While the beneficiaries of an estate are typically family members, close friends, or charitable organizations, the goodwill between parties can become strained when claims to substantial sums of money or other valuable property are at issue.

To protect yourself from liability for possible errors in handling estate transactions, anyone named as executor or appointed as administrator of an estate should consult with a New York trust and estate attorney with extensive experience in the Surrogate’s court. At Ely J. Rosenzveig & Associates, we concentrate our practice on helping individuals and families to plan, prepare for, and administer estates of all kinds.

Family members are often named executors in their loved ones’ wills and other testamentary documents. Additionally, those whose family members died without a will are usually the people who seek to be appointed as estate administrators. But few such family members have experience managing the complicated process needed to gather the decedent’s assets into an estate account, determine which debts to pay, what taxes may be due, and what information is required to be shared with beneficiaries.

Knowing that you are receiving experienced legal guidance executing your fiduciary duties is a great comfort during a period of great stress and grief.

Ely J. Rosenzveig & Associates is ready to assist you in managing these burdens in the best interest of all concerned.

Contact Ely J. Rosenzveig & Associates:
Call 1.914.816.2900 or email us at: [email protected]

Ely J Rosenzveig
Ely Rosenzveig

Ely J. Rosenzveig practices principally in the fields of elder law, trusts & estates, tax planning, employment law, and mediation. He has extensive experience in federal and New York State tax law, and has successfully represented a wide range of clients on FBAR & FATCA compliance issues. Ely also practices employment law, with a particular emphasis on age and disability discrimination, negotiating compensation agreements, and severance issues. With his extensive background in the law, his experience as a congregational rabbi, and his specialized training in Mediation at Harvard Law School, Ely is also available as a professional mediator to help facilitate optimal solutions in matters ranging from family and estate disputes to multi-party commercial issues.

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