Under the estate laws in New York, a person named in a will as an executor has certain “fiduciary duties.” A fiduciary duty is essentially the requirement to act in the best interest of another party. The fiduciary duty owed by an executor is the duty to act in the best interests of the estate and all beneficiaries to the estate. The fiduciary duty imposed on an executor requires that the executor always put the interests of the estate above his or her own self interests.

In addition, though, an executor has a duty to find and manage the assets of the estate in the best interests of the estate and, ultimately, the beneficiaries. That typically includes taking “reasonable” steps to preserve or maximize the value of estate assets. A 2014 opinion in the Surrogate’s Court in Kings County addressed that specific issue.

In Matter of Mahler, 2009-1485/B, Richard Mahler was the named executor of the estate of Margaret Van Cortlandt Billmyer. Among the estate’s assets was real property, which Mahler contracted to sell to a personal acquaintance for the purchase price of $670,000. Three days after the closing on the sale of the property, the buyer, Basile, sold the property for $1.3 million.

Adelphi University, an heir to the estate, contested the accounting of the estate and the New York State Attorney General joined in the action, asking the court to find that Mahler had breached his duty to act in the best interests of the estate. The petitioners asked the court for $630,000 in damages—the difference between the sales price to Basile and Basile’s revenue three days later.

Fiduciary

In response to the legal action filed against him, Mahler contended that the property was run-down and needed extensive repairs. Adelphi and the Attorney General’s office alleged, however, that Mahler had failed to obtain any comps (prices for comparable properties in the area) and that he had taken no action to determine the actual fair market value of the real estate.

When questioned by the court, Mahler could provide no explanation for the difference in value over the three day period. The court concluded that the petitioners had met their burden to show that Mahler had breached his fiduciary duty to exercise diligence and care when selling the property. In its opinion, in fact, the court found Mahler “utterly devoid” or the required care to be exercised by a fiduciary. The court concluded that a $630,000 surcharge assessed against Mahler was appropriate.

The opinion rendered by the Surrogate’s Court demonstrates the importance of seeking experienced legal counsel when you’ve been named executor or administrator of an estate. At the Law Office of Bonnie Lawston, we offer comprehensive counsel to executors, administrators and personal representatives, helping you avoid any potential fiduciary challenges.

Contact the Law Office of Bonnie Lawston

At the Law Office of Bonnie Lawston, we focus our estate administration practice on estates subject to probate in Nassau County and Suffolk County on Long Island. Contact our office online or call us at 631-425-7299 or 24/7 at 855-479-4700 to set up a free initial consultation.  Our attorneys and staff can enforce the applicable laws of New York State and require the executor, administrator or trustee to maximize your inheritance and protect your rights.   Call us for a free consultation and deferred legal fees.