Probate in New York-Duties of Executors

DUTIES OF EXECUTORS
BY
MICHAEL J. LOMBARDO, ESQ.

For the period of administration of the estate, the Executors are entitled to possession and control of all the assets of the estate. It is their duty to protect and preserve the assets and also to see that the assets are invested in a prudent manner. This duty is owed to both the creditors and the beneficiaries of the estate.

The following outlines in more detail some of the responsibilities of the Executors:

1. Collection of Assets. The Executors have the responsibility of locating and gathering all assets of the estate. Once the assets are collected, valuations should be determined for tax and planning purposes.

2. Management of Assets. Management of the assets includes investment of the assets in prudent forms of investment. A further and important consideration is liquidity management. The Executors may be required to sell assets on behalf of the estate to meet cash requirements as they arise, if the cash available to the estate is not otherwise sufficient. Cash requirements for the estate include the payment of creditors, the payment of expenses of administration, the payment of taxes, and, in certain circumstances, providing for estate income to be available for beneficiaries.

3. Tax Returns. Another stage in the administration of the estate is the filing of various tax returns which may be required by law to be filed for the estate. The most common returns are income tax returns and estate tax returns.

(a) Income Tax Returns. The Executors are responsible for filing a final personal income tax return. This can be a joint return, if applicable. The return should be filed by April 15 in the year following the date of death. Additionally, if it is expected that the estate will receive income in excess of $600.00 per year, Federal and state fiduciary income tax returns must also be filed. This generally must be accomplished by the 15th day of the fourth month following the close of the estate's fiscal year. The estate's fiscal year has not yet been established.

(b) Estate Tax Returns. If the gross estate exceeds $12,920,000 (in 2023), a Federal estate tax return must be filed with the Internal Revenue Service and a New York State estate tax return must be filed with the State Tax Department. If the gross estate exceeds $6,580,000 (for decedent's dying on or after January 1, 2023 and on or before December 31, 2023), a New York State estate tax return must be filed with the State Tax Department. It may be necessary to file a copy with the Surrogate's Court. The filing of a Federal estate tax return and/or New York State estate tax return may be required or desirable even if it is expected that no Federal and/or New York estate tax is due.

4. Inventory of Assets. Within 9 months after the date of issuance of Letters Testamentary, the Executors must file an inventory of assets of the decedent's estate. This includes assets which were in the decedent's individual name as well as those which were jointly owned.

In preparing the inventory, it is necessary to itemize any real property; any tangible personal property, such as jewelry, art, coin collections, furniture, and automobiles; any bank accounts, whether checking, savings, certificates of deposit, or other cash accounts; any intangible personal property such as stocks, bonds, mortgages and notes receivable; any insurance proceeds payable, and any other receivables. In addition to a description of the assets, it is necessary to give a fair market value at date of death for each asset.

5. Distribution of Estate to Beneficiaries. The beneficiaries of the estate must be determined and the distributive shares, after deduction of any taxes attributable to that share, calculated. Distribution of the estate assets other than specific bequests is made to the recipients entitled, sometimes by distributing the assets in kind and other times by selling those assets and converting them into cash, and then distributing the cash. This is usually accomplished just prior to closing of the estate. Specific bequests are generally distributed early in the estate administration.

6. Estate Records. It will be necessary during the estate administration for the Executors to maintain an accounting of the receipts and expenditures of the estate for use in preparing necessary returns and such final or other accounting as may be appropriate. In some cases, there will have to be an accounting submitted to the Court. In any event, it is important to keep accurate records of all receipts and disbursements.

7. Closing the Estate. The last stage of the estate administration is the closing of the estate. In order to accomplish this estate closing, it is necessary to report to the court on all of the legally significant activities which occurred in the estate and to furnish evidence that the creditors have been paid, and that the remaining property has been distributed. This is normally done after completion of the Federal Estate Tax audit, but under certain circumstances the estate may be closed earlier. Sometimes, the Executors are formally discharged by the Court. However, since this frequently entails unnecessary filing fees and other expenses, when circumstances permit, the formal discharge is omitted.

CAUTION: THIS ARTICLE IS INTENDED TO PRESENT GENERAL INFORMATION AND IS NOT INTENDED TO BE A SUBSTITUTE FOR CONSULTATION WITH LEGAL COUNSEL.

IRS CIRCULAR 230 Disclosure: To ensure compliance with requirements imposed by the IRS, please be aware that any U.S. federal tax advice contained in this communication (including any attachments or enclosures) is not intended or written to be used and cannot be used for the purpose of (i) avoiding penalties that may be imposed under the Internal Revenue Code or (ii) promoting, marketing or recommending to any other person any transaction or matter addressed herein.

Last Update: January 1, 2023

DUTIES OF EXECUTORS BY MICHAEL J. LOMBARDO, ESQ.

DUTIES OF EXECUTORS
BY
MICHAEL J. LOMBARDO, ESQ.