Foundations of Estate Administration Estate Planning Joan S. Arbiter Attorneys Melville New York

The administration of a decedent's estate is under the jurisdiction of the Surrogate's Court, which is established in every county in New York State. The proper venue for the proceeding is the county of the decedent's domicile. The Surrogate's court handles all matters relating to the affairs of decedents. It also handles matters relating to the guardianship of minors, mentally retarded and developmentally disabled persons. This material will focus only on the procedures involved in the administration of decedents' estates. The two statutes primarily involved in this area are the Estates, Powers and Trusts Law (EPTL) and Surrogate's Court Procedure Act (SCPA). The Uniform Rules for N.Y.S. Trial Courts Part 207 Uniform Rules for the Surrogate Court must also be complied with as well as the procedures in each county. (22 NYCRR 207) SCPA Article 3 applies if there is no other applicable section regarding a particular proceeding. The Civil Procedure Law and Rules (CPLR) may also be applicable. Note that a different terminology is used in Surrogate's Court than Supreme Court. There are no actions, only special proceedings resulting in decrees or orders, not judgments.

Surrogate Court forms can be found online at www.courts.state.ny.us/forms/surrogates or by calling the court and requesting a package of forms. The forms attached here are the official forms from the website. The court rules can also be found online at the same website.

Probate assets are assets for which title is held individually in the name of the decedent and cannot pass to another after the death of the owner without court administration. Non-probate assets are assets held in the name of the decedent but title can pass without court administration. Examples are Totten trust accounts, "in trust for" accounts, pay on death accounts, accounts held as joint tenants with rights of survivorship, registered securities in joint ownership or with a beneficiary designation of "transfer on death" or "pay on death", and life insurance or annuities and retirement accounts, or other accounts where beneficiaries have been designated. Other examples include certain trusts and real property. This may not be as simple as it appears. The death of a beneficiary or naming a trust as a beneficiary, as well as a spouse's right of election and exempt property all may effect passing of non-probate assets.

A Totten trust is a bank account in the name of one person with a designation that it is held "in trust" for another. It is owned by the named title holder and is paid on death to the person for whom it is held in trust. The owner can revoke this designation at any time. The beneficiary has no rights to the account until the death of the owner.

A typical revocable trust may be considered a non-probate asset if the trust is not revoked and the trust provides for the disposition of the trust property upon the death of the grantor. After the death of the grantor and pursuant to the terms of the trust, the trustee may transfer the property to the named beneficiary without having to go to court for authorization. An irrevocable trust may also be a non-probate asset in the same manner. Note that a deed by a trustee transferring title pursuant to the terms of a trust may result in exceptions to a title policy in the instant or a subsequent transaction. The issue of estate taxes is also often raised as an exception in a title report but can often be resolved by affidavits. Surrogate's Ct also has jurisdiction over trust matters.

Real property can also be a non-probate asset even if title is held solely in the name of the decedent, either as the sole owner or as a tenant in common. The reason is that title passes to the heirs at law upon the death of the owner, subject to a devise in the owner's will. The heirs at law are the intestate takers found in EPTL 4-1.1. The heirs can then transfer good title to the property if all sign the deed; however, a title company will always request an affidavit of heirship in order to insure a subsequent deed. Quitclaim deeds may also be required of anyone who may have an interest in the property. A quitclaim deed is similar to a general release in the real estate world. It is generally a good idea to do affidavit of heirship and it can even be recorded it for safe keeping.

All probate assets must be listed on the petition for probate or administration when filed with the court. Non-probate assets are not listed on the petition but are listed on the inventory. It is important to note that the fact that all of a decedent's assets may be non-probate assets eliminating the need to do an estate administration procedure has no bearing on whether or not an estate is taxable either for New York or Federal estate taxes.

Another thing to keep in mind regarding non-probate assets is a spouse's right of election. The right of election may impact the passing of title to any non-probate asset. See EPTL 5-1.1-A(a)(2). A spouse's right to elect against a decedent's will is a personal one and he or she is entitled to the greater of $50,000 or 1/3 of the value of the decedent's net estate valued as of the date of death. To determine the net estate, debts of the estate, funeral expenses and reasonable administration expenses are deducted but not estate taxes. What are included in determining the value of the estate are intestate distributions and bequests in the will to the spouse, as well as property renounced by the spouse and property listed in EPTL 5-3.1 as set off property to the spouse and children under age 21.

This exempt property listed in EPTL 5-3.1 may include another $56,000 worth of property as follows: $10,000 worth of household items; $1,000 worth of books and family photographs; $15,000 worth of domestic animals with food for 60 days, a lawn tractor, a farm tractor, and farm machinery; a motor vehicle worth up to $15,000 and $15,000 in money or other personal property.

In determining the value of the estate for right of election purposes, the value of any testamentary substitutes defined in EPTL 5-1.1-A(b)(1) are included in the calculation. These include gifts causa mortis, taxable gifts and one half of taxable split gifts made within one year of death, Totten trusts, joint bank accounts and other jointly owned property, trust property if the decedent had the right to invade the principal or revoke the transfer of property to the trust, fifty percent of any retirement or deferred compensation plan, any general power of appointment held by the decedent or exercised in favor of anther within one year of death, and registered securities that are either jointly owned or have a named beneficiary to whom the security will be transferred or paid to on death. Note that it does not include life insurance policies.

Note further that leaving property in trust for the spouse does not satisfy the right of election and if the decedent does this, the spouse would still be able to take the property outright. The right of election should also be compared and contrasted with the intestate distribution set forth in EPTL 4-1.1(a). In intestacy, a spouse is entitled to the entire estate if there are no issue. If there are any issue, the first $50,000 and one-half of the balance of the estate would go the spouse, and the remainder passes to the issue by representation. EPTL 4-1.1(a) sets forth to whom the estate is distributed if property is not disposed of by a will. These persons are called distributees.

While the term probate is often used to refer to the process of administering an estate through the court, it is more precisely the process of offering a will to the court to determine its validity. It is the process of obtaining judicial determination that the offered will is valid. Probate administration is the administration of the estate pursuant to the terms set forth in a valid will. Intestate administration is the term for the procedure involved where the decedent died without a valid will. SCPA Article 14 covers probate proceedings and Article 10 covers administration proceedings.

All proceedings begin with a petition to the Surrogate's Court in the county where the decedent maintained his domicile. A death certificate with a raised seal is always required. All petitions will require a statement as to the value of the estate as the filing fee is based upon the value of the estate. A chart of the filing fees can be obtained from the court or it is available on line at the website mentioned above. If it is determined that an incorrect fee is paid, it will be corrected later by an additional amount to be paid or a refund will be issued.

The proposed executor nominated in the will usually submits the probate petition. If there are co-executors both would sign the petition. Generally, any interested party can file a petition for probate or administration. However, SCPA 1001 sets forth the order of priority for granting letters of administration.

The required contents of the petition are found in SCPA 304, 1402 and 1002. Generally, it must state the nature of the proceeding, identify the testator and any testamentary documents, wills and codicils, identify the interested parties, state whether any of those parties are minors or under a legal disability, and state the size of the estate. If any extraordinary issues such as a question of the construction of a will or a distributee's right to inherit are involved, this should also be brought to the attention of the court. In identifying a person's relationship to the decedent, the courts want specificity. If a person's interest in the estate is derived through another's death, provide a copy of the death certificate

In a probate proceeding, the original will and all original codicils, if any, must be submitted to the court with affidavits of the attesting witness. A copy of the will must also be submitted to the court with an affidavit of comparison. Notice must be given to all persons named in the will as beneficiaries, trustees, executors and guardians, all distributees, and certain other interested parties, notably any person named in a prior will whose interest is adversely affected by the proposed will. If the proceeding is for a non-New York State domiciliary the Department of Taxation and Finance must also be notified of the proceeding. (SCPA 1403) See also the Uniform Rules for additional requirements for specific circumstances.

Notice of probate is filed with the court and is given to the interested parties by either a citation issued by the court or notice of probate or administration. The attorney general's office must be served if there are certain charitable bequests. (SCPA 1409) A person can also waive service of process and consent to the probate or administration procedure and the appointment of the executor of administrator. Affidavits of service of all documents must be filed with the court. The citation is equivalent to a summons in other courts, but it is issued by the court in estate proceedings, not the attorney. Generally, distributees are cited unless they waive citation in writing. Others interested parties receive notice of probate. (SCPA 1403 & 1409) Affidavits of service must also be filed with the court.

In a probate proceeding, the petitioner has the burden of proving due execution of the will and testamentary capacity of the testator. This is usually accomplished by affidavits of the attesting witnesses signed either at the execution ceremony or sometime thereafter. If the affidavits are signed after death the witnesses must review the original will or a court certified copy and state that they did so in the affidavit. (SCPA 1406) The better practice is to have the witnesses sign the affidavits at the time of execution of the will and attach them to the will itself.

Note that there are certain circumstances where the court will not accept an affidavit, notably when the will was executed within 90 days of death or when not executed under the supervision of an attorney. Affidavits are also not accepted if the attorney-drafter or a member of his family is a beneficiary under the will or where the decedent and an unrelated beneficiary had a confidential relationship such as doctor-patient or attorney client. In these situations it is necessary for the witnesses to appear in court to testify as to the circumstances surrounding the execution of the will and the testator's capacity.

If a testator designates the attorney-drafter or an associate as executor, SCPA 2307-a mandates full disclosure that, subject to certain limited exceptions, any person, including an attorney, may serve as executor and, absent any agreement to the contrary, any person, including an attorney, who serves as executor is entitled to statutory commissions, and if such attorney renders legal services as well as serves as executor, such attorney is entitled to reasonable compensation for such services as well as statutory executor's commissions. The testator must sign a written acknowledgment of this disclosure which must be a separate document from the will, prior to, currently with or subsequently to the execution of the will. There must be at least one witness to the written disclosure and it must be filed in the probate proceeding. A model acknowledgment of disclosure is provided in the statute. Failure to comply with this disclosure requirement will result a fifty percent reduction in the statutory executor's commissions to the attorney-executor.

After service of process, any party to the proceeding can ask to examine the attesting witness as to all relevant matters which may be the basis of objections to the probate of the will. (SCPA 1404) This includes due execution, testamentary capacity and undue influence. Any person whose interest in property or the estate would be adversely affected by the admission of the will to probate may file objections to probate, except for, with certain exceptions, a fiduciary named in a prior will whose only interest is the commissions to which he is no longer entitled. (SCPA 1410) The intention is that only a person who would have an adverse monetary interest has standing to object to the will. For example, a distributee who would receive less in intestacy than he would receive under the will has no standing to object. Note that there are additional considerations as to objecting to a will when there is an in terrorem clause in the will and certain objections will not trigger the in terrorem clause. The subject of the objections would also be handled at the 1404 examinations.

Assuming there are no objections to the proceeding and all documents are in order, the court will issue a Decree of Probate and issue Letters Testamentary to the executor in a probate proceeding or Letters of Administration to the administrator in an administration proceeding. Original certificates of the Letters can then be used as proof of the executor or administrator's authority as the personal representative of the estate. Usually a number of certificates of letters are requested (and paid for) at the time the petition is submitted. But one can always request addition certificates of letters if more are needed.

Letters of Administration, C.T.A. - SCPA 1418 - Procedure for application for Letters of Administration cum testatmento annexo (with the will annexed). Proper procedure when there is a will but either it fails to name an executor or the executor has died or ceased to serve or is unable to serve.

Letters of Administration, D.B.N. - SCPA 1007 - Procedure for application for Letters of Administration de bonis nom). Proper procedure when an appointed administrator has died or ceased to serve or is unable to serve.

Lost or Destroyed Wills - SCPA 1407 - Can only be admitted to probate if shown not to have been revoked, due execution is established and all of the terms of the will are established by two witnesses or a true and complete copy or draft of the will. In proving the will was not revoked, if the testator had possession of the will and it cannot be located at his death there is a very strong presumption that it was destroyed with the indention to revoke it.

Nunupative or Holographic Wills - EPTL 3-2.2 - A nuncupative will is an oral or unwritten will and its making and terms must be clearly established by two witnesses. A holographic will is written entirely by hand by the testator and is not executed in accordance with the provisions of EPTL 3-2.1. (Generally, signed at the end and in the presence of or acknowledged to two witnesses that it is his will who also sign with their addresses.) These wills are only valid if made by a person serving in or with the armed forces of the US while in actual military service during a war or armed conflict or by a mariner at sea. The will becomes invalid one year following the discharge of the person serving in the armed forces or one year after the person with the armed forces ceases to accompany the service member. For a mariner at sea the will becomes invalid three years after the making of the will.

Other Specific proceedings - SCPA provides other specific proceedings for various circumstances such as the proceeding to compel production of a will outlined (SCPA 1401) or a proceeding for construction or interpretation of a clause in the will. (SCPA 1420)

Preliminary Letters - SCPA 1412 - Procedure for application by the nominated executor when it is anticipated that there will be a delay in the probate proceeding usually due to a will contest or difficulty in locating distributees. The petitioner may make an application for preliminary letters after the filing of the probate petition and upon a showing of need. The petitioner must satisfy the court of the need for preliminary letters and much of the same notice and other requirements must be complied with in order for the court to grant preliminary letters. If granted by the court the preliminary executor can proceed to act, usually with the same powers of the executor, except that he cannot make any distributions from the estate to either named beneficiaries or distributees, nor can he sell property specifically disposed of under the will without the consent of the beneficiary. Generally he is expected to marshal the assets but not dispose of them. The court can place other restrictions on the powers of the preliminary executor. Preliminary letters are revoked when full letters testamentary are issued.

Ancillary Probate or Administration Proceedings - SCPA Article16 Foreign Estates and EPTL 3-5.1 - Proceeding for administration of a non-New York State domiciliary who died leaving real or personal property in New York or having a cause of action in New York. The court's subject matter jurisdiction is based upon the decedent's property located here or a cause of action for wrongful death against a New York domiciliary. The primary administration of the decedent's estate occurs in the state where he was domiciled. The proper venue for the New York proceeding is the county in which the property is located or the domicile of the defendant in the wrongful death action. (SCPA 206) An ancillary proceeding is needed because foreign fiduciaries do not have the power to act in New York. The proceeding is for domiciliaries of foreign countries as well as other states. In practice these proceedings are almost exclusively used for real property because personal property can be moved. Of note is that copies of required documents issued by the foreign jurisdiction, which must be presented to the New York court, must be authenticated or exemplified as provided in CPLR 4540 and 4542. Certified copies are not accepted. Additionally, the Department of Taxation and Finance is always a party that must be served with notice of the proceeding.

If an estate is valued at no more than $20,000 of personal property, SCPA Article 13 may be used to administer the estate through a proceeding called Voluntary Administration. This procedurecan be used even if the decedent had a will and the $20,000 limit does not include real property and non-testamentary assets such as joint bank accounts, life insurance policies or pensions exceeding the $20,000 limit.

Additionally, the $20,000 does not include the $56,000 of exempt property listed in EPTL 5-3.1 as set off property for the decedent's spouse or children under age 21.
All totaled, the decedent could have $76,000 worth of certain personal property and any real property and the Voluntary Administration procedure can still be used. Note that if additional property is discovered during the proceeding, the court must be informed and a full administration proceeding must be commenced.

This procedure should be used if it can be used as the filing fee is $1.00 and the court will not look favorably upon an attorney who charges a fee to bring a full administration proceeding when the voluntary proceeding was appropriate.

The procedure is commenced by the filing of a death certificate and an affidavit, rather than a petition, and must be made by the spouse or distributees in the order of priority set forth in SCPA 1303. Certain other persons may be eligible. (SCPA 1303) The court will then mail notice to the interested parties and give the voluntary administrator copies of a court issued certificate as authority to act. No bond is required of the voluntary administrator and he is not paid for his services. He is nonetheless a fiduciary and has the same responsibilities as the executor or administrator in a full proceeding despite some restrictions on his powers.

Note that if there is a will, it must be filed with the court and the voluntary administration proceeding must then be commenced by filing the affidavit within 30 days of the filing of the will. The will is not probated and the executor named in the will is the first person in order of priority to act as voluntary administrator.

After payments of debts, the balance of the estate is distributed to the distributees as per EPTL 4-1.1 or pursuant to the will which is "valid on its face". Presumably "valid on its face" means that it is signed and attested to by two witnesses.

To settle the voluntary administration, the administrator files a statement called a Report and Account. Form included in materials.

An accounting is the procedure wherein the executor or administrator discloses the assets he has marshaled and what he has done with those assets such as paid debt or made distributions. The executor or administrator does this when he is winding up the estate. There are three ways in which to do this.

Informal Accounting Upon Receipts and Releases - This is the most common method of settling an estate. Executors and administrators will provide an accounting to all interested parties and obtain receipts and releases from those parties acknowledging what they have received and releasing the fiduciary from liability. Receipts and releases can be used for a partial distribution, as well as a final distribution. Often the attorney will keep the original receipts and releases in the file, as there is no requirement that they be filed with the court. However, the attorney may want to file them with the court for safekeeping so that he can close out his file and store it. Alternatively, the attorney may record the receipts and releases pursuant to SCPA 2202. In that case, the receipt and release must be acknowledged and there is a fee for recording the document. One of the benefits of recording the receipts and releases as opposed to filing them is that there is a presumption of the contents of the document and its due execution. (SCPA 2202)

Decree Upon Filing Instruments Approving Account - SCPA 2203 - In this procedure the administrator or executor petitions the court stating the names and addresses of all those interested in the estate and showing that all estate taxes have been paid, or that none are due, that he has accounted and made full disclosure to all interested parties who would be required to be served with process under SCPA 2210 and prays for a decree releasing and discharging him. The fiduciary must also show that his letters have not been revoked nor has he been removed as fiduciary, that the time for creditors to present claims as fixed pursuant to published notice has expired, and that all known debts of the decedent and administration expenses have been paid. Additionally, acknowledged receipts and releases must be filed with the court from all those who would be served with process under SCPA 2210. This may include creditors, sureties, the attorney general, distributees, devisees, trustees of any trust created in the will, and guardians of minors. There is a filing fee based upon the amount being accounted for that must be paid. Since the fiduciary is praying to be released and discharged from any further liability to any interested party, this procedure can only be used for a final accounting.

Formal Voluntary Accounting - SCPA 2208 & 2210 - This procedure is often used when the parties cannot agree to settlement of the estate or there are issues that require the court's intervention. The fiduciary presents his account and petitions the court praying that his account be judicially settled and that all necessary and proper parties be required to show cause why settlement should not be had. The necessary and proper parties who must be served are listed in SCPA 2210 and are the same in the proceeding pursuant to section 2203. The petition can be made either seven months after the date original letters were issued or when the time for the presentation of claims as fixed by a published notice has passed. The fiduciary must also submit an affidavit appended to the account stating that, to the best of his knowledge and belief, the account contains a true statement of all receipts and disbursements and that he does not know of any error or omission in the account which would prejudice any creditor or any other person interested in the estate. (SCPA 2209) On the return date the court will take the account, hear testimony and make whatever orders or decrees are required. Any party may examine the fiduciary under oath and may file objections to the account.

Note that any interested party can petition the court to compel an accounting or the court can do so on its own motion. (SCPA 2205) The procedure is much like a formal accounting and the fiduciary may petition and account as provided in SCPA 2208. Generally, once an account is settled the court will issue a decree directly the proper distribution of the balance of the estate assets and the fiduciary will be discharged of his duties.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Copyright © 2008 by Joan S. Arbiter, Attorney at Law, P.C. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.

Foundations of Estate Administration

Note: this written material was presented at a National Business Institute Seminar on Estate Administration on May 17, 2007