In New York State, the expenses of the estate during the administration process are typically paid from the estate’s assets, not from the personal funds of the executor or administrator. These expenses include things like:
- Funeral expenses – Often paid early in the process to settle the decedent’s affairs.
- Debts of the decedent – This includes outstanding bills, loans, mortgages, and credit card debts.
- Taxes – Both federal and state estate taxes (if applicable), income taxes, and other relevant taxes.
- Executor’s or Administrator’s fees – If the court allows, the executor or administrator can be compensated for their role, based on a statutory schedule.
- Attorney’s fees – Legal costs for the administration process, such as probate and estate settlement services.
- Accounting fees – For the preparation and filing of the estate’s accounting and tax returns.
Who pays for these expenses?
- The fiduciary pays for the expenses of the estate with the estate assets. There are two types of fiduciaries: the executor and the administrator.
- The executor is the fiduciary appointedin a probate proceeding. An administrator is the fiduciary appointed in and administration proceeding.
- The expenses that occur in an estate are the estate’s finances, including debts and the expenses.
- Estate funds cover all these costs, and the estate’s assets are used to pay them.
The estate is responsible for paying these expenses first before distributing any remaining assets to beneficiaries. If there aren’t enough assets to cover all expenses, the estate may have to be settled according to priority rules (debts must be paid before beneficiaries receive their share).
Order of Payment Priority (in New York):
- Funeral expenses.
- Administration expenses (such as executor’s fees, attorney’s fees).
- Debts and taxes owed by the decedent.
- Beneficiaries.
If the estate doesn’t have enough funds to cover all debts and expenses, creditors may receive partial payment or may not be paid in full, according to the priority rules set by New York law. The estate will not distribute assets to beneficiaries until all these liabilities are settled.
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