New York Estate Planning & Elder Law Blog
AN IMPORTANT AND SOMETIMES THANKLESS JOB
There are times in life when we all will have to do or engage in a thankless job. One such time is when a close friend or a family member asks you to be the executor of their estate. The difference between an executor and an administrator of an estate is small but noteworthy. An executor is someone who is appointed by the terms of the will itself to administer the estate. If there is a trust document to convey property to heirs, they are then known as trustee.
An administrator is the title for the person who appointed to administer the estate by the Court when someone dies intestate, or without a will, or when the appointed executor refuses or cannot complete the task. In either event the probate Court Judge must approve of the selection. A recent survey by U.S. Trust found that three-quarters of high net worth individuals choose a family member or close and trusted friend to be the executor of their estate and two-thirds of the same people chose a friend to be the trustee for their testamentary trust. The process is started when the executor presents the will and a death certificate to the Surrogate Court in the County in which the deceased resided. The Court then issues letters testamentary to the executor, which is when the hard work begins.
It is entirely possible for you to pick an attorney or some similar third party to serve in the role as an executor or administrator. With respect to trustees, it is much more common to find a professional trustee or corporation or financial institution to act as the trustee than an individual, although their fiduciary obligations are the same. The executor must ensure that the terms of the will are complied with, while the administrator sees to it that the state’s intestacy laws were complied with.
Their job is to collect and collate all bills and taxes that are due and owing, make an inventory of all material assets, both in terms of their value and their likelihood to be of sentimental value to the heirs, collect any debts owed to the estate, such as earned, but unpaid wages and life insurance policies. After an accurate accounting the estate must then pay the heirs in accordance with the terms of the will and dole out specific items noted in the will to the heirs.
It is in this part of the job that the executor faces their most thankless task. Passing out the antique cuckoo clock that Uncle Howard got in Germany while stationed there during a tour in the Air Force may rile up Howard’s son or daughter, even more so than mistakenly giving out the wrong amount of money to the son or daughter. One of the peeved heirs may end up filing a lawsuit against the executor and if the Court determines that they failed to comply with the terms of the will, they may be liable to pay the difference out of their pocket.
Some wills waive the requirement that the executor have a bond to administer their estate, when the will is silent the Court may waive this requirement. It is always best to purchase a bond, as it acts as an insurance policy to financially protect the executor in the event any such mistakes are made. The law requires that the administrator of an intestate estate obtain a bond, unless all of the heirs and estate creditors agree to waive or forgo this requirement.