Detailed Answer
When a person dies in New York, their estate must go through a process to settle debts, taxes and administrative fees before any assets pass to beneficiaries. The remaining assets—known as the “residue”—reflect what’s left after all obligations are paid. Below is a step-by-step overview under New York law.
- Compile an Inventory and Appraisal
The executor or administrator prepares a detailed inventory of all assets—including real estate, bank accounts, investments, personal property and digital assets. New York’s Surrogate’s Court Procedure Act requires a formal inventory filed with the court (SCPA 2101). SCPA 2101 - Give Notice to Creditors
Within two months of probate or administration, executors must publish a notice to creditors in a designated local newspaper (SCPA 1802). This alerts claimants to present claims by a specified deadline. SCPA 1802 - Receive and Review Claims
Creditors submit claims, which the executor files with the court (SCPA 1803). The executor reviews each claim for validity and negotiates any disputes. Claims can be allowed or disallowed, and disallowed claims may be litigated in Surrogate’s Court (SCPA 1804). SCPA 1803 | SCPA 1804 - Pay Administrative Expenses and Taxes
Before paying debts, the executor pays funeral expenses, court costs, attorney and accounting fees. Federal and state estate taxes (if applicable) and New York State inheritance tax must be calculated and paid from estate funds (EPTL 11-1.1 defines “estate”). EPTL 11-1.1 - Settle Validated Debts
Once administrative expenses and taxes are paid, the executor pays approved creditor claims. Priority follows state law: secured mortgages, unpaid taxes, then general unsecured debts. Keep proof of payment for each claim. - Calculate the Residue
Subtract the total of all paid debts, taxes and fees from the total estate value. The resulting balance is the residue. This figure determines what assets or funds remain for distribution under the will or New York’s intestacy rules.
Disclaimer: This article provides general information on New York estate administration and does not constitute legal advice. Always consult a licensed New York attorney for guidance tailored to your situation.
Helpful Hints
- Maintain clear records: Track valuations, invoices and receipts in one organized folder.
- Use professional appraisers: Accurate valuations prevent disputes with beneficiaries or the IRS.
- Monitor deadlines: Missing creditor notice or tax-filing deadlines can expose you to liability.
- Communicate with beneficiaries: Keep heirs informed to reduce misunderstandings.
- Seek specialized help: Consult a New York probate attorney or accountant for complex estates.