Many people who agree to serve as executor assume that once they start paying bills for the estate, that money is simply gone, absorbed as a favor to a loved one. It is one of the most common misunderstandings I correct with new clients. New York law does not expect an executor to finance an estate out of personal savings. Reasonable, necessary expenses paid on the estate’s behalf are reimbursable, separate from and in addition to the commission an executor ultimately earns for the job.
The Surrogate’s Court Procedure Act, specifically SCPA 2307, addresses executor compensation, but reimbursement of expenses is treated independently from commissions, which are calculated on top of the reasonable and necessary expenses actually paid out of pocket. In practice, this covers court filing fees, certified copies of the death certificate, postage for notices to beneficiaries and creditors, appraisal fees, the cost of securing or maintaining estate property, and reasonable travel to the Surrogate’s Court or to inspect estate assets. I advise clients to think of it this way: if the expense was necessary to administer the estate and the amount was reasonable under the circumstances, it belongs to the estate, not to you personally.
The word “reasonable” is doing real work in that statute, and the Surrogate’s Court takes it seriously. Expenses that are not reasonable and necessary, such as an extravagant meal with beneficiaries billed to the estate, will probably not be reimbursed. I remind every client that reimbursement is not a blank check. Personal expenses, unnecessary travel, or costs unrelated to actually settling the estate can be challenged by beneficiaries or rejected by the court when the accounting is reviewed.
That is why I advise every executor I represent to keep a running ledger from day one. Save every receipt, note the date and purpose of each expense, and keep it entirely separate from personal spending. This record becomes part of the accounting, whether informal or judicial, as we discussed in a prior article on preparing an informal accounting for beneficiaries. An executor who cannot show what was spent and why risks having reimbursement denied or challenged, even when the underlying expense was perfectly legitimate.
Serving as executor should not cost you money out of your own pocket. If you keep good records and stay within the bounds of what the estate genuinely needed, New York law is on your side.
If your loved one left behind an estate where you’re serving as executor and have incurred expenses which need to be reimbursed, contact us today at (347) 766-2685 for a free phone consultation.
Contributed by Dan Rose, a local business writer specializing in Estate Administration services in New York City.
