Q: I am the Executor of my mom’s estate and am getting ready to distribute the assets. I was just going to divide the money equally between myself and my siblings. Is that a good idea?
A: Absolutely not. As an Executor (or Administrator) of an estate you have a duty to account to the beneficiaries of the estate. You have this duty no matter what the will may say. This accounting does not have to be overly formal, however, it should include at a minimum a statement of what was collected, what was paid out itemized by each item paid, what is left in the account and the proposed division of the assets. In the alternative, you could provide every estate account statement and a copy of your check register. If you plan on taking a commission for serving as Executor, that must also be calculated in the accounting. In addition, a reserve fund is also recommended in the event there is a debt or expense that arises after the distributions are made.
Before you distribute any funds, you should also obtain a signed and notarized release from each beneficiary of the estate. This release should state that the beneficiaries accept your accounting as final, waive their right to a formal accounting in the Surrogate’s Court, approve the payment of the commission, will refund the estate if any valid debts are found after distribution, and release you from all liability. Executors of estates have liability for actions taken on behalf of the estate for six years from the date he or she ceases acting. Not the date of appointment. This is a long time and family dynamics can change over such a long period.
The last thing an Executor wants to do is distribute all of the funds without providing an accounting and getting a release to find out that there is a creditor that has to be paid and there are no funds left in the estate. Or worse, a year later, one of your siblings compels you to account in the Surrogate’s Court alleging that you did something wrong as Executor. You would have no funds left in the estate to hire an attorney to file the accounting with the Court, you are spending your inheritance to defend yourself, and your sibling has plenty of money to pursue the litigation. If you provided a sufficient accounting and obtained a release you would have a defense to having to account in the court. While you would have to answer the petition filed, most likely the demand to account would be dismissed and the court action would be over.
In all estate matters, no matter how simple it may seem, you want to provide a full accounting and obtain a release from each beneficiary of the estate. This accounting should be prepared by an estate administration attorney familiar with the level of detail required to ensure that you are given a full and final release from each estate beneficiary prior to distributing the funds in the estate.
- Nancy Burner, Esq. and Kera Reed, Esq.