Legal Question in Wills and Trusts in New York
Subject: Distribution of Residuary Estate Money
The Executor (now removed by the court) gave away $40,000 cash from the residuary estate, that was to pay all expenses of the estate, to non-beneficiaries before the debts of the estate were vacated. She then claimed the estate to be bankrupt and that she could do whatever she wanted with this money because she was to inherit the residuary estate after all estate expenses were paid. What is NY state law regarding distribution of estate assets . . . how they are to be distributed and when?
Thank you, Successor Executor
2 Answers from Attorneys
No, debts to creditors are paid first.
Normally, estate obligations like debts, taxes and similar charges come off the top, as do the administration expenses like probate fees and commissions. Next specific bequests are paid, and then the residuary is distributed. I have not seen the Will which may have had differences from the usual. An Executor has a fiduciary duty to carry out the terms of the Will according to law. If this is not done, the Executor can be surcharged and removed. This is a response to an Internet question and the reply is not intended to be legal advice or as creating an attorney-client relationship.
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