People in New York who are beneficiaries under a will may be put in a difficult position if the executor does not perform the required duties duties promptly or effectively. Beneficiaries have the right to make executors take care of their obligations. An estate can be damaged and lose value due to an executor’s actions.
In many cases the most valuable asset of an estate is the testator’s principal residence. If the house is not promptly put up for sale, then the estate is diminished through various expenses such as utilities and property tax. Other actions must be taken as well such as transferring auto and home insurance policies into the name of the estate. Insurance coverage can be jeopardized if this is not done promptly. It is also necessary to file the final income tax return for the testator as well as estate income tax returns on time.
Instead of neglect, an executor might take more serious actions that damage the estate. These could include misappropriating assets or not accounting for them, living rent-free in real estate owned by the decedent and failing to distribute assets.
It is important that an executor administer an estate efficiently. Whether or not the damage to the estate is intentional, the effect may be the same. Executors are not expected to be legal or financial experts, but as fiduciaries, they are supposed to meet a certain standard in administering the estate. In many cases, the advice and counsel of an attorney who has experience in probate and estate administration can be valuable.
The thought of having an estate go through probate could be worrisome for some New York residents, especially if there is a significant possibility of some potential heirs disputing the distribution of assets as outlined in a will. Avoiding probate can save both time and money, and some of the potential stresses and contentions might be minimized as well. Further, avoiding probate can protect the privacy of those involved. However, it is important to understand the steps needed to limit the risk of a drawn-out probate process.
One of the most common strategies for limiting probate activity is to use a revocable trust to manage assets. This allows heirs to be designated and assets to be distributed promptly upon the death of the grantor. A trust is not handled publicly, which serves one’s interests in keeping such personal matters private.
If there is an interest in handling certain assets outside of a trust or will, joint ownership might be helpful. For example, a home would be transferred to the other party rather than being subject to probate . This can be handled through options such as joint tenancy, tenancy by the entirety or through community property laws. However, joint ownership must be established prior to one’s death. A retirement account or other personal account can be transferred on death to a designated beneficiary, which can keep such an asset out of probate.
The legal costs of probate can be high when there are valuable assets involved. An individual might want to consider giving away some assets to avoid this issue. Estate planning can be complex for those who have unusual assets or family situations. However, an experienced lawyer can often provide helpful strategies for addressing special needs, serious areas of conflict, or other unique issues that might impact the handling of one’s assets.
A New York resident who has been appointed as the executor under a will has a number of legal responsibilities when the testator dies. Along with those responsibilities, executors also face problems involving liability issues. .
Whenever people die and leave assets, those assets, whether intangible or tangible, become part of the decedent’s estate. Prior to allocating the assets according to the testator’s wishes, the executor is responsible to make sure the assets are securely kept. During this time, if any valuable assets are lost or stolen, the executor can be held liable. To avoid a lawsuit, it is a good idea for the executor to take inventory of all the decedent’s assets and then get them appraised and safety stored away until they are distributed to the designated heirs.
Sometime family members may pressure the executor into distributing the assets right away. However, the executor must first make sure there are enough assets to compensate any creditors. On the other hand, paying debts too quickly can cause problems, too. Lower-class creditor claims are not as important as other classes and paying them off can result in a breach of fiduciary duty, exposing the executor to become personally liable for unpaid debts. For example, if the executor satisfies small debts, there may not be enough funds to pay an unexpected tax bill. To avoid this pitfall, the executor should make sure all the proper tax forms are filed and all the taxes are fully paid before satisfying both large and small debts.
Executors who wish to avoid common mistakes and liability issues while managing a decedent’s estate may want to have the assistance of an estate administration attorney. In an effort to protect the client’s interest, the attorney could offer valuable advice to help avoid or settle any disputes between executors and heirs .
Source: Market Watch, “The biggest mistakes executors make” , Feb. 5, 2016
New York residents who have been chosen as executors under someone’s will have a number of important duties as well as challenges ahead. One of the difficulties of being an executor is that the person may face pressure from heirs to distribute assets as soon as possible. However, the executor should be wary of doing so before all debts are paid. Otherwise, the executor may end up without enough to cover those debts and have to pay out of pocket.
This is only one of the potential pitfalls that may befall an executor. An executor has a number of duties including finding all the assets and determining their value, seeing a will through probate and filing tax returns. Other responsibilities may be dealing with the testator’s online accounts, taking care of the cellphone bill and turning off utilities. There may also be ongoing business ventures that have to be handled correctly, such as managing rental property that the testator owned.
An executor may have to deal with grieving family members or people trying to take advantage of the decedent’s estate . Executors may also take on a significant amount of liability themselves. Because being an executor can be so stressful and complex, it is important that a person should only agree to be an executor when they fully understand and are willing to undertake the duties.
An attorney who has experience in probate law and other estate administration matters can often provide assistance to an executor with many of these duties. Just because people have been chosen as executors does not mean that they are financial or legal experts, and the advice of legal counsel is often necessary and appropriate.