Responsibilities of an Administrator Over an Estate in New York

When a New York resident dies without a valid will, the Surrogate's Court appoints an administrator to oversee a court-supervised process called administration. This is similar to the probate process.

An administrator is charged with doing everything necessary to manage the estate, including gathering the decedent's estate assets, determining heirs, paying the debts and taxes, and distributing the remaining estate assets to next of kin.

Probate is a court-supervised process that wraps up the affairs of the person who died, called the deceased or the decedent. Probate procedures are not uniform across the country. Rather, they are creatures of state law, and each state enacts and enforces its own probate laws and requirements.

In New York, probate refers to the court-supervised process of administering the estate of a decedent who left a valid will. The similar process for a decedent who did not leave a valid will is termed an administration.

Probate/administration in New York involves a variety of disparate issues that include:

• Determining if the deceased had a will.
• Finding the will.
• Finding the will witnesses.
• Adjudicating any will challenges.
• Ruling on the validity of a will.
• Determining intestate succession if no valid will.
• Appointing someone to serve as the executor or administrator for the estate.
• Locating the estate probate assets.
• Transferring probate assets to the executor or administrator.
• Calculating the value of the probate property to see if any shortcut procedures apply.
• Gathering a list of probate debts.
• Determining whether claimed debts are valid.
• Locating beneficiaries of a will or determining and locating heirs of the deceased.
• Converting the decedent's assets to cash, if necessary, to pay estate debts.
• Managing any ongoing businesses of the estate during probate.
• Filing estate taxes.
• Distributing property to beneficiaries or heirs.

In New York, both testate estates and intestate estates must pass through a probate-like procedure in Surrogate's Court. An estate is termed "testate" if the deceased left a valid will. When a deceased in New York dies without leaving a valid will, the estate is termed "intestate."

In an intestate estate, there is no will giving instructions on who is to inherit, so the property passes to the deceased's next of kin. The order in which close family members of the deceased will inherit assets is set out in the New York state laws on intestate succession, with surviving spouse and surviving descendants being first in line.

An intestate estate must pass through a probate-like procedure in Surrogate's Court called an administration. Rather than appointing an executor to manage the administration procedure, the court appoints an administrator. That person performs many of the same functions as an executor, but is charged also with determining legal next of kin.

When a person dies without a will in New York, some of their property is administration property that must pass through a court-supervised procedure before being distributed to next of kin. However, not all property will be administration property. Administration property includes assets that the deceased owned as an individual, rather than held jointly with someone else.

Assets that a decedent owned jointly with someone else with right of survivorship pass directly to the other owner or owners. In the same way, bank accounts and insurance policies that have a named beneficiary, like life insurance policies and payable-on-death (POD) retirement accounts, transfer to the named beneficiary automatically. This happens outside of court probate or administration.

New York allows an individual to add a "transfer-on-death" (TOD) designation to stocks and bonds, and other financial accounts. Many residents hold their investment accounts this way.

While the state will not permit a transfer-on-death designation to be attached to real property, it does recognize survivorship rights attached to joint property ownership like joint tenancies. These types of assets are called non-probate assets.

When a deceased leaves a will, that will can be viewed as written instructions as to who should inherit their property. If there is no will, there are no instructions. To fill that gap, every state has an intestacy law that sets out as a matter of law what family members will inherit an intestate estate.

If a New York resident fails to make a will, their assets are distributed to the deceased's close family members according to the state's intestacy laws. The order of distribution is set out in the New York Consolidated Laws, Estates, Powers and Trusts Law - EPT Section 4-1.1.

As in most states, New York law puts surviving spouses and surviving children as the first "next of kin" in line to take a deceased's probate assets if there is no valid will. When there is a surviving spouse, but no surviving children, the spouse takes everything. If there are surviving children, but no surviving spouse, the entire estate is divided evenly among the children.

If a deceased leaves both a surviving spouse and children, the spouse inherits the first $50,000 and half of the remaining property. The children divide the rest. If the deceased does not leave a surviving spouse or descendants, the parents of the deceased are next to inherit, followed by siblings of the deceased.

Although administration is a court-supervised process, the hands-on work of winding down the estate is not handled by the court. Instead, it is handled by the person appointed as the estate administrator. The person named as administrator is usually one of the persons to inherit as next of kin under the intestacy law.

That person must file a petition for the administration of the estate with the Surrogate's Court in the county in which the deceased person died. They have no authority to act on behalf of the estate until they are actually appointed by the Surrogate's Court. All potential heirs under New York's intestacy laws must receive notice of the petition to the court.

The order issued by the court that appoints the administrator is called Letters of Administration. These Letters of Administration give the heir legal authority to serve as administrator of the estate to gather and distribute the deceased's property according to New York laws.

An initial responsibility of the administrator of an estate in New York is to find and take control of the assets of the deceased individual. They must keep records of the assets they collect and keep them safe until the estate is fully distributed to the heirs.

Precision about the valuation of the assets is important since the estate could be liable for taxes on income earned from them. Even if the administrator lives in another state, they do not have the right to remove any estate assets from New York before distribution.

Once assets have been collected, the administrator must file an inventory of the estate assets with the Surrogate's Court. The inventory lists all estate property, real and personal, including the fair market value of each piece of property as of the date of decedent's death.

Determining fair market value may require hiring a professional appraiser, for example, to value a parcel of real estate. This inventory must be completed and filed within six months from the date the Letters of Administration were issued.

The administrator will usually open an estate bank account, often a checking account, and deposit in the account all funds they locate or receive that belong to the estate.

It is against New York law for the administrator to mix or commingle estate assets with non-estate assets. Instead, the administrator must use the estate account to store liquid assets as well as to pay expenses of the estate, taxes and distributions to the heirs.

The administrator must also calculate the estate debts. This may require poring through the decedent's financial records, credit card statements, and other documents to determine what is owed and to whom. Creditors will have seven months after the issuance of the Letters of Administration to the administrator to present debts.

All valid debts must be paid. However, if there is not much money in the estate, New York law requires that the first debts to be paid are the funeral expenses. After that, taxes must be paid, then other debts. No distribution of assets can occur until these three categories of debts are taken care of.

If an administrator in New York makes an improper early distribution, and the estate ends up without adequate funds to pay estate debts, the administrator may be personally liable for the remaining obligations of the estate.

Filing tax returns is also part of the administrator's duties, although they need not prepare the returns themselves; it is appropriate to pay a professional to do the tax returns. Returns for both the estate and the decedent must be filed, and any amounts owed must be paid. This includes state and federal income tax returns if the decedent had taxable income during the year they died.

Sometimes New York or federal estate taxes will be due on the value of the estate. If so, the administrator must file them and pay the taxes from the estate assets.

Many persons, particularly heirs, regard distributing assets the primary duty of an administrator. However, this can only be done after all valid debts have been paid, tax returns have been filed and taxes paid, and funeral expenses are also paid. At that point, the administrator can distribute the remaining assets to heirs.

The administrator must determine what relatives qualify as heirs under New York's intestacy law. The New York statute sets out the priority and order in which relatives of the decedent will share in the estate. The administrator must make sure that every person to whom estate assets are distributed signs a release, then they file all releases with the Surrogate's Court.

Note that the law anticipates that estate assets will be distributed relatively quickly. That is, a final accounting is expected to be filed and assets distributed within within two years from the date the Letters of Administration were issued.

If this two-year mark passes, the administrator must file a form with the Surrogate's Court to explain the delay. They must also tell the court the amount of estate funds remaining in their possession. Once the form has been filed, the court acts to expedite the closing of the estate.

The document that closes the estate is the final accounting. This shows the total value of the estate and all payments made for debts, funeral expenses and taxes. Once the administrator files that document with the Surrogate's Court, the estate is closed. However, if a minor child is one of the heirs of the estate, the Surrogate's Court must issue a court order approving the accounting before the estate is closed.