The executor or administrator of an estate has a duty to “marshal”—or collect—all of the decedent’s assets so the assets can be distributed to the appropriate heirs. Usually, this is a simple process. However, sometimes executors and administrators face obstacles in identifying the assets in an estate, where the assets are located and how to obtain possession of the assets. It is important to know the tools available to overcome obstacles in collecting and preserving the decedent’s assets in order to protect the beneficiaries of the estate and avoid liability.

Typically, the executor or administrator (the “fiduciary”) petitions the Court and is issued “letters testamentary” (if the decedent had a will) or “letters of administration” (if the decedent did not have a will). Upon request, the Court will issue a certified copy of the letters which authorizes the fiduciary to access the decedent’s assets, including bank and brokerage accounts, and obtain various documents or information which may become necessary during the administration of the estate (such as tax records, DMV records, etc.).

However, this process may not work where the assets are possessed by someone else, either due to mistake, fraud or theft. For example, a fiduciary might learn that a piece of jewelry disposed of under the decedent’s will is being held by someone else who claims that the decedent gave them the jewelry. Another example is where the decedent’s family suspects that the decedent had funds deposited under a different name. For example, perhaps the decedent deposited funds into a corporate account for which the decedent has no apparent signing authority. Since banks usually follow strict security policies, the bank will likely refuse to release information without a court order. The fiduciary must also be aware of possible criminal conduct where the decedent was elderly and/or sick and vulnerable to theft or fraud.

More often than not, especially where fraud is suspected, merely asking the property holder for information or to deliver the property will not suffice. The fiduciary has a duty to investigate circumstances until he/she reasonably believes that the property does not belong to the decedent. If a fiduciary believes that certain property belongs to the decedent but is possessed or controlled by someone else, the fiduciary must take reasonable steps to obtain that property.

The New York Surrogate’s Court Procedure Act provides for a procedure by which a fiduciary can petition the Court for action with respect to property which she knows or suspects belongs to the decedent. The fiduciary can initially base her petition upon information and belief so solid proof is not necessarily required.

In granting or resolving the fiduciary’s petition, the Court may:

• Order an examination (deposition) of the person holding the property or having information about the property. This is often a good “first step”, especially where the fiduciary is not sure of the ownership status of the property and needs information from someone else (who will be deposed) to confirm whether the decedent owned the property at the time of death.
• Issue an “order to show cause” requiring the person alleged to have the decedent’s property to establish that the person is entitled to possess that property. If the fiduciary is able to present sufficient evidence that the property likely belonged to the decedent, the Court may place the burden on the person holding the property to establish otherwise.
• Hold a trial as to a contested issue of title/ownership of property. Where there is a dispute as to ownership (for example, where the property holder claims the decedent gifted or transferred the property to him before the death), a trial is necessary to determine whether an ownership claim is true.
• Issue a decree directing the delivery of the property or the value of the property to the fiduciary, or imposition of a trust upon the proceeds of property. For example, if it becomes clear that an individual sold the decedent’s property and stole the sale proceeds, the Court can direct that the funds be transferred to the fiduciary. Of course, other remedies—such as pressing criminal charges—may also be prudent in situations involving theft or fraud.

Fiduciaries have to take great care in marshaling assets because they could be liable if they did not satisfy their duties under the law. If problems arise, a qualified attorney can assist.

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This post does not constitute legal advice or establish an attorney-client relationship.