Executor’s Duties Before Receiving Letters
February 03, 2017
A nominated executor is obliged to secure estate assets even before the issuance of letters testamentary, or preliminary letters testamentary (see Matter of Schultz, 104 AD3d 1146 [4th Dept. 2013]). Courts have recognized that “an executor’s duties are derived from the will itself, not from the letters issued by the Surrogate” (Estate of Skelly, 284 AD2d 336 [2d Dept. 2001]). Thus, as we have noted in a prior post, executors have been subject to surcharge for a loss sustained to estate property in the period between the decedent’s death and the executor’s receipt of letters from the Surrogate’s Court (see, e.g., Matter of Donner, 82 NY2d 574  [surcharging nominated executors for investment losses based on date of death values]; Matter of Kranzle, N.Y.L.J. 11/7/1991 p. 28, col. 1 [Sur Ct, Suffolk Co.] [surcharging nominated executor for interest and penalties on taxes due several months after decedent’s death, but before the probate proceeding commenced]).
Decisions addressing a nominated executor’s obligations in respect of estate assets before formal appointment by the Court usually arise from the fiduciary’s failure to act. A recent case, however, addressed the nominated executor’s obligations not in the context of an omission, but, instead, involved the fiduciary’s expenditure of funds to safeguard property that ended up not being estate property (Matter of Timpano (Brough), 2016 NY Slip Op 51770(U) [Sur Ct, Oneida Co.]). Although the nominated executor’s actions may have been misdirected, the Surrogate permitted an allowance from the estate for these expenses as the actions were undertaken in good faith and, further, the Court cited the need to avoid deterring other nominated executors from taking immediate measures to safeguard estate property.
In Estate of Skelly, supra, the fiduciary was notified at the decedent’s funeral in May 1995 that she had been named executor. It was undisputed that she failed to probate the will until November 1996, over one year after decedent’s death. During that time, decedent’s real property, which was bequeathed under the will, was vandalized and damaged. The person to whom the property was bequeathed sought damages for the loss.
The Surrogate denied the executor’s motion for summary judgment dismissing the objections, and the Second Department affirmed. Even though title to the real property may have vested with the objectant on the death of the decedent, the Second Department found “there are issues of fact as to whether the [executor] failed to assess the assets of the estate and neglected to preserve the premises prior to probate.” (Skelly, 284 AD2d at 337).
In Timpano, the decedent’s sister, Georgianna, lived in a mobile home in Florida across the street from one in which decedent resided. Decedent died in April 2010 survived by his three children, Mark, Kelly and Robert. His will named Georgianna as executor.
Probate of decedent’s will was delayed by SCPA 1404 examinations and, following the testimony of one attesting witness, Georgianna withdrew her probate petition. Ultimately, the Oneida County Chief Fiscal Officer (the “CFO”) was appointed as administrator of the estate.
Believing decedent owned the mobile home in which he lived, beginning in April 2010 (the month of decedent’s death), Georgianna used her personal funds to pay lot rent to avoid confiscation of the mobile home and its contents. She further paid for electrical service to run the air conditioning to avoid mold and mildew so as to further protect the mobile home and decedent’s possessions therein. At no time did any of decedent’s children object to her covering these expenses.
In January 2011, decedent’s son Robert informed Georgianna that he had searched the title to the mobile home and found that his name was on the title. Upon learning this, Georgianna removed the decedent’s possessions from the mobile home and placed them in storage. She further stopped paying lot rent and electric bills.
When the CFO submitted its final accounting, decedent’s daughter Kelly objected to Georgianna being reimbursed for the expenses for lot rent and electric service. Kelly testified in support of her objections and, significantly, acknowledged that she too believed the mobile home was estate property before being told otherwise in January 2011
The Surrogate found Georgianna’s actions following decedent’s death evidenced her understanding that a nominated executor has an obligation to secure assets of an estate prior to formal appointment, citing Schultz, supra. Even though the will was not ultimately admitted to probate, the Surrogate noted, “Georgianna would have had no basis to anticipate this outcome when she acted to preserve decedent’s assets throughout 2010 and into early 2011.”
The Surrogate recognized that Kelly’s claim that if the estate did not own the property, it could not be responsible for related expenses, is true in a technical sense. The Surrogate, however, noted that to rule in Kelly’s favor would ignore the circumstances of the case.
After reviewing the cases holding that an individual who expends personal funds in good faith in furtherance of her fiduciary responsibilities is entitled to reimbursement, the Surrogate found Georgianna acted in good faith and should be entitled to reimbursement from the estate. The Court reinforced its decision by reference to the following policy consideration: “to sustain the objections would be to instill a chilling effect on the work of nominated executors who are tasked with preserving an asset believed in good faith…to belong to the estate” (Timpano, supra).
 The Court directed that part of the expenses be charged against Robert’s share of the estate.