{Read in 5 Minutes} As a Trusts and Estates attorney, I often represent people who have an interest in the Estate of a deceased person. Whether my client is a creditor or beneficiary of the Estate, or more usually, it is the person who was running the show, the Executor, or the Administrator.
In the past, I have written a lot of articles about Executors. These include articles about what they must do as far as identifying the assets of the Estate, whether it is an honor or a curse to serve as the Executor, and even how to remove an Executor if they breach their fiduciary duty. However, while I talked a lot about Administrators, I don’t have an article explaining simply what an Administrator is, so I thought I’d correct that with this one.
An Administrator is the fiduciary of an Estate. Similar to an Executor, they are the person making all decisions related to the Estate. They collect assets, communicate with creditors and beneficiaries, handle any litigation related to the Estate, sell any real property of the Estate, if necessary, etc. However, there are a few key differences between an Executor and an Administrator that I will highlight here.
1. Title: While the functions of an Executor or an Administrator are similar, they have different titles. This is part of the unique vocabulary to this particular area of law. An Executor is appointed when nominated by a deceased person in their Last Will and Testament, whereas an Administrator has the right to serve as the Administrator simply because they are among the closest next-of-kin. Like Executors, Administrators must petition the Surrogate’s Court to receive Letters before commencing their duties.
2. Surety Bond: In general, a bond is an insurance policy that protects the creditors and beneficiaries of the Estate. If the Executor or an Administrator steals the assets of the Estate, the insurance company will provide funds to reimburse the loss.
It’s rare (but not unheard of) for the Court to require an Executor to post a bond. Why? Because the Will nominates the Executor, and most Wills waive any requirement that the Executor file a bond.
When you have an Administrator, by definition, the person has died intestate and there is no writing and no waiver: the Administrator must post a bond (unless all interested parties agree to forego one). This can be an added expense to the Estate and might cause some real delay if the Administrator has problems obtaining a bond, either because of bad credit, criminal history, or both.
When you’re dealing with Administrators, there may be some infighting among the family members concerning who is going to serve as the Administrator. For example, if Dad dies without a Will and is survived by three adult children, all of them are potentially eligible to receive Letters of Administration and serve as the Administrator. What happens when the three of them don’t get along? What can the Court do? The Court can appoint just one of them if they can agree. The Court can also appoint multiple of them, and hopefully, it doesn’t lead to further litigation, or the Court can appoint the Public Administrator.
The lack of a nominated Executor can lead to problems and a whole lot of fighting, which can generate some intense emotions.
3. Limitations on certain activities absent Court approval. Often, when the Surrogate’s Court appoints an Administrator, the Court may place limitations on Letters of Administration. Very often, this is a limitation on the sale of real property, and will often require a second proceeding to remove any restrictions if the Estate needs to liquidate real estate, etc.
By the way, I’m not suggesting that an Administrator cannot do an incredibly thorough and diligent job administering an Estate like an Executor would be able to. Just like Executors, Administrators can either do a good job or a bad job. In fact, there are some people who decide that they may not even need a Will because they understand both who would inherit their assets and who has priority to serve as the Administrator. People may be perfectly fine with that arrangement and decide to not write a Will, knowing that the Court will appoint someone as an Administrator.
For more information on this topic, please contact me.