New York Estate Accountings: An OverviewBy: Roman Aminov, Esq.
Being an executor or administrator of an estate come with many responsibilities. Collecting and insuring the estate’s assets, paying valid debts and expenses, filing income taxes, and list goes on. That’s why most clients look forward to the final step in the estate process with great anticipation. That final step, known as the accounting, is where the executor or administrator (also called the fiduciary) “accounts” to the beneficiaries for their actions and proposes a distribution of the remaining assets as per the will or as per intestacy (if there was no will). The purpose of the accounting is to wrap up the estate and distribute the assets of the estate to the appropriate parties.
Duties of Fiduciary:
The fiduciary must fully and completely disclose all the assets he or she collected, all interest earned, as well as any costs, expenses or losses incurred. The fiduciary must also make sure that he collected and pursued all assets of the estate. Receipts, account statements, transaction logs, cancelled checks, and all other relevant documentation should be kept by the fiduciary or his attorney.
Rights of Beneficiaries:
The beneficiaries have a right to examine the accounting and ask questions about any transaction until they are satisfied that their proposed distribution is correct and that the fiduciary acted appropriately in collecting the assets and paying the debts. They also have the right to hire their own attorney to oversee the accounting and to make sure their rights are being protected. Generally, only those beneficiaries who are entitled to a percentage or remainder of the estate review the accounting. Any beneficiary who is entitled to a dollar amount or specific assets (like a necklace) is fully satisfied when they get their check or item, and have no need to review all the other transactions.
If all the beneficiaries are satisfied with the accounting of the fiduciary, and assuming none of them are minors or disabled or missing, the beneficiaries can sign a receipt, release, and refunding agreement (RRR). The RRR is an agreement between the parties in which the beneficiaries agree that the fiduciary acted appropriately and that they release the fiduciary from liability once he makes the distributions outlined in the agreement. This is that way most estates are settled since it is much cheaper, faster, and easier than the alternative.
Judicial accountings, while rare, are initiated in a few main ways:
- By a beneficiary if there is a disagreement with the fiduciary which can not be resolved amongst themselves. For example, that the decedent’s home was worth $500,000 but was only sold for $300,000, or that the fiduciary paid improper debts of the decedent which he was not obligated to pay.
- By a court order. For example, if there is a minor in an estate, the court may order that there be a mandatory judicial accounting.
- If the fiduciary initiates it, typically because they anticipate a disagreement with a beneficiary and want a court ruling on their actions as fiduciary.
Once the fiduciary files his judicial accounting with the Surrogate’s Court, the beneficiaries and possible creditors have a chance to review the accounting and raise objections. If any of them file objections to the accounting, we enter the world of contested accountings and estate litigation. Once all objections are resolved, ruled upon, or settled, the Surrogate issues an order regarding the accounting and the fiduciary’s actions.
Estate accountings in New York can either be very straightforward or complicated affairs. If you are an executor or administrator of an estate, it is important that you hire the right estate attorney to represent you. When done properly, an accounting releases the fiduciary from liability while making sure the beneficiaries and creditors of the estate get what they are entitled to. Beneficiaries of estates can also benefit from the services of an estate accounting lawyer who can help them review the proposed accounting and determine whether they are receiving everything they are entitled to.
Roman Aminov, Esq. is an New York estate planning lawyer concentrating in estate planning, elder law, Medicaid planning and probate. For a consultation, contact him at (347)766-2685 or www.AminovLaw.com