{Read in 4 Minutes} As a Trusts and Estates attorney, I help people with all different sizes of Estates. Some of them involve very wealthy people (now deceased) who had millions of dollars in assets and may be subject to the estate tax. However, most of my clients tend to be people of ordinary or even modest means whose Estates represent a lifetime of hard work and smart financial decision-making. However, every now and then, someone comes along with assets in their Estates that are truly very small in nature and may be a candidate for a Voluntary Administration proceeding.
When does this happen? This happens when the assets that are payable through the Estate (either under the terms of a Will or to next-of-kin, if someone dies without a Will) are valued at less than fifty thousand dollars. Or perhaps it is a situation where the vast majority of the deceased’s assets name direct beneficiaries and the beneficiaries will automatically inherit title to those types of assets. Any assets that do not name beneficiaries may fall below this threshold amount.
For example, perhaps a married couple owns everything jointly and has named each other as beneficiaries, either on their life insurance policies or their retirement accounts. However, there is one account in one of the spouses’ names that they had before the marriage and they never bothered to change to a joint account. Upon the death of the spouse that owns that individual asset, it’s going to be necessary to get Letters from the Surrogate’s Court in order to administer the Estate. This is a textbook example of when Voluntary Administration is abundantly helpful. Instead of probating a Will or seeking the appointment of an Administrator, the Court can entertain a Voluntary Administration proceeding (also known as a Small Estate proceeding) to appoint a Voluntary Administrator.
While in general, Surrogate’s Court proceedings in New York are almost always quick and efficient, this proceeding is even more expedited. Applying to become the Voluntary Administrator is itself quite streamlined. In fact, most people don’t even hire an attorney to do it because the fill-in-the-blank forms are available online, and are written so that people can do it without the necessity of an attorney. If the person died with a Will, it’s likely that the Petitioner will still need to bring the original Will down to the Courthouse.
What powers does this Voluntary Administrator have? Well, because it is not a full Estate administration, the powers are by definition limited. However, in our spouses’ example from above, it may fit. The Voluntary Administrator is allowed to collect up to fifty thousand in assets (which the New York State Legislature increased from thirty thousand dollars in 2019). A Voluntary Administrator still sets up an estate account to pay all of the decedent’s funeral costs, and any expenses of administration and debts, as well as pay income taxes and distribute funds out to the beneficiaries.
The filing fee when applying for Voluntary Administration is a real deal. It only costs a dollar. Let me repeat that — one dollar — not a typo! You’ll spend more to ride the subway down to the Courthouse.
So, in many situations, having a Voluntary Administrator may be a quick and easy way for people to get the collection of a small amount of assets accomplished with minimal legal cost and aggravation.
For more information on this topic, please contact me.