January 18, 2016
By: Ryan T. Emery
If your loved one has passed away without leaving a Will, you will now find yourself in the murky area of Voluntary Estate Administration. If someone passes with a Will, there is a “probate” of that Will. If there is no Will, then a qualified person must petition the Surrogate’s Court to be appointed the Administrator of the Estate.
Who can Petition the Court to be Administrator?
The Surrogate’s Court Procedure Act provides the order of priorities for who can be granted the Letters of Administration. Letters of Administration must be granted to the persons who are distributees of the decedent (if eligible to serve) and then can qualify in the following order:
A distributee is an individual who is entitled to receive a share of the decedent’s (the person who has passed away) Estate according to New York State law.
Who Does New York State Say Should Receive the Estate?
The New York State Law provides for the order of distribution for an individual who passes away without a Will. This order, generally speaking, is as follows:
This order of distribution continues. The term by representation means that if a parent has passed away, a child stands in their shoes. For example, your mother was to receive a one-third interest then you and your siblings would share your mother’s one-third interest in the estate of the decedent.
What About the Liabilities?
Keep in mind that the individual who is appointed Administrator of the Estate has an equal duty to both the distributees of the Estate and the creditors of the Estate. The Administrator is thus counseled to gather all the assets, determine what debts need to be paid before any distribution is paid of Estate assets. This is why term “net estate” is used above.
Any Property not Part of the Estate?
A sometimes overlooked aspect of estate administration is that New York law permits certain exemptions for the benefit of the family. This law provides that there are certain assets that immediately pass (at least in theory) to the surviving spouse or to children under the age of 21 before they are determined to be part of the “Estate”. These assets include housekeeping utensils, musical instruments, jewelry (unless disposed of by Will), clothing, household furnishings, appliances and electronic devices, not to exceed $20,000 in value. Another exemption provides for farm animals and farm equipment not exceeding $20,000 in value. Also included is a motor vehicle not exceeding $25,000 in value and cash or cash equivalents not exceeding the value of $25,000. This is a very important statute and should be considered when administering an Estate (especially if there are many creditors).
Also note that jointly held assets such as joint real estate and most joint bank accounts automatically vest in the surviving joint tenant and are thus not consider part of the “Estate”. This is also true for any asset with a beneficiary designation such as life insurance or a retirement account.
Isn’t There an Easier Way?
The easiest way to handle this situation is to have a properly drafted Will that can be submitted for probate. Of course, if that is not possible or it is too late, one possible method that should be investigated would be the use of a Small Administration proceeding. This process simplifies the petition for administration but can only be used if the decedent’s assets do not include any real property and have a total value of under $30,000.
If your situation appears to qualify for a Small Administration, this process avoids some of the formalities of petitioning the Surrogate’s Court for appointment of Letters of Administration and also only requires a smaller filing fee. There is no waiting period required for this after the decedent has passed away. This is a straight forward application that requires a copy of the death certificate and filing an affidavit with the Surrogate’s Court. Voluntary Administrator is not required to provide a bond. When using this proceeding, it important that the affidavit filed clearly identifies the assets that will need to be administrated as the Certificate of Appointment as Voluntary Administrator will be very specific to those assets listed in the affidavit.
While this it is a very difficult situation to be in when a loved one has passed way without a Will, carefully following the groundwork laid out under New York State law and the Surrogate’s Court website will be very helpful in getting through this process.