When a person passes away leaving assets in their own name, their heirs generally have to go through probate or an administration proceeding to transfer those assets. Sometimes, however, the value of the assets is so small that it is not cost effective to bring these proceedings. In those cases, New York allows the heirs to bring a “small estate” or “voluntary administration” proceeding, regardless of whether the decedent left a will or not.
Under Article 13 of the SCPA, small estate petitions can only be opened to administer personal property such as bank accounts. Consequently, if the decedent owned real property in his own name, a small estate will not allow his heirs to take control of the property, and a full administration or probate must be brought. It is important to note that jointly owned property, for example a marital home with a spouse, passes by operation of law and does not need to go through administration. Likewise, assets which the decedent owned in joint accounts or with beneficiary designations for others pass outside of the Surrogate Court and do not require court intervention.
How Small is Small?
Estates consisting of no more than $50,000 in personal assets can be administered by a voluntary administrator. This limit does not include the exempt property that EPTL 5-3.1 gives to the decedent’s spouse or children under 21, which we discussed in a previous article about New York’s intestacy laws. For estates larger than $50,000, either the will has to be probated or the estate has to be administered, and the estate will not qualify as a small estate. If during the course of the voluntary administration, the voluntary administrator discovers that the estate is larger than $50,000, he has to notify the court and petition to become the executor or administrator of the estate.
Who Can Petition?
If the decedent left a will, the named executor in the will has priority to serve. If the decedent died intestate (without a will), priority goes to the surviving spouse, then the children, then the parents.
To be appointed a voluntary administrator, the petitioner must file an “Affidavit in Relation to Settlement of Estate Under Article 13, SCPA” along with a death certificate in the Surrogate’s Court of county in which the decedent lived. The affidavit should list the specific assets with corresponding values which need to be administered. If the values are unknown, the court will allow the voluntary administrator permission to obtain that information and submit an amended affidavit at a later date with the accurate information. The petitioner must also bring in stamped envelope(s) addressed to the distributees (heirs) of the decedent which the court will use to send notices to those parties. A payment of $1.00 is also due upon filing the affidavit.
After the court processes and approves the affidavit, they issue a certificate for each asset listed in the affidavit, which the voluntary administrator can use to collect the assets. The court also instructs the voluntary administrator to open an estate account into which the assets can be deposited and used to pay bills and expenses. An EIN number must be obtained from the IRS for the estate account. Funeral and legal bills incurred by the estate are first bills which are paid. After 7 months, and the payment or settlement of all debts of the estate, the remaining assets are distributed to the distributees as per EPTL 4-1.1.
If you lost a loved one and are confused about the next steps in the process, contact our office for a free consultation with a New York estate attorney at 347-766-2685.