Recovering unclaimed funds in the custody of NYS, which are held in the name of a deceased individual is often a difficult and complicated process. While we can speculate as to the reasons why the process has become overburdensome, we will instead demonstrate a classic example below, and provide some important characteristics about the process. In preview, unless the amount to be collected is significant, or alternative creative options for recovery are available, abandoning the claim and keeping your sanity is a reasonable decision. Maybe it’s not a speculation as to why the most logical choice made available by NYS is to relinquish your claim and let the State keep your money.
It had been over 5 years since Dad died when you found his name in New York State’s Unclaimed Property database. As far as you had known, everything had been cleaned up. At the time of his death, there had been no real property and he’d lived out his final days in assisted living. Any accounts in his name had one of his kids registered as a joint owner or beneficiary, so settling his affairs had been simple enough with no need for probate. Curious as to what this could amount to, you initiate the claim as his next-of-kin. Several weeks later, you receive a letter from the Comptroller’s Office. It turns out that Dad had 20 shares of MetLife stock and some dividends that had accrued from the stockholding. All in, the claim amounted to about $1,600 - not too shabby. Among the list of items in the letter the state is requiring before releasing Dad’s money is currently dated Letters of Administration – a completely foreign term – and that obtaining this will require contacting the Surrogate’s Court in the county where he had last resided. Already, the initial luster of the found money is wearing off as you project the time you’ll have to find so you can dig into this.
Unsurprisingly, a large number of deceased claims go unfinished in light of the amount of work involved. But why does it have to be so difficult to collect accounts for a deceased parent? It didn’t used to be. At least not always. In the past, small estate affidavits were accepted by New York State Office of Unclaimed Funds (NYSOUF) on a far wider scale. This is a simple form which authorizes the transfer of the deceased individual’s assets directly to another individual(s), effectively bypassing the need to petition a court. In recent years, Fletcher has observed a major uptick in the frequency of Letters of Voluntary Administration being required prior to the release of a decedent’s unclaimed funds. This translates to a lot more people opting to abandon a claim they had started for a deceased relative (decedent) and the money remaining with the state, forever.
By nature, a deceased claim is more involved and will almost always unfold over multiple steps. The steps required will vary depending on how much money is at stake. If it is determined that the total value of a decedent’s account(s) does not exceed $50,000, then the claim is within the threshold of what is considered a small estate in New York. If so, then the term Voluntary Administration will almost certainly come up in NYSOUF’S subsequent list of requirements needed to complete the claim. A Voluntary Administration (Voluntary) is the term for a small estate proceeding within the New York court system.
Before discussing the Voluntary at length, it’s worth noting that in select circumstances, the unclaimed assets may be eligible for release by way of a Small Estate Affidavit. Examples of when this may be an option is when the claimant is a surviving spouse or when the claimant acts as a creditor seeking reimbursement for funeral expenses, they came out-of-pocket for; but the acceptance of these alternate options is not uniformly offered.
So, if a Voluntary is in the cards NYSOUF has dealt you, there are some important distinctions to understand that make this process very different from the use of a small estate affidavit. First off, while the latter is used to transfer a decedent’s property directly to another person, a Voluntary Administration formally establishes an estate in the decedent’s name. This means that at the point when the claim is approved, the funds will not be issued directly to the individual acting as the claimant, but instead to the decedent’s estate. Because the estate is a separate entity, this requires a bank account to be opened in the name of said estate, and opening a bank account requires a Tax ID Number (EIN) for the estate which needs to be applied for and issued by the IRS. (The EIN is also needed by NYSOUF prior to releasing the funds to the estate). This tends to catch a lot of claimants off guard. Even after they have taken the trouble to obtain a Certificate of Voluntary Administration from the respective Surrogate’s Court and gotten an EIN, many are still confused when they receive a check payable to an estate rather than themself.
Another major point is that a Voluntary Administration requires the petitioning – and ultimately the approval – of the court. In New York State, all estate matters are overseen by the Surrogate’s Court. Each of New York’s 57 counties has their own. The appropriate Surrogate’s Court to petition for a Voluntary Administration would generally correspond with the county the decedent resided in. This is an important detail, as the place of residence is not always consistent with the place of death. If Aunt Jean resided in Westchester County but happened to die at a hospital in the Bronx, the claimant would be petitioning the Westchester County Surrogate’s Court as opposed to that of the Bronx.
In theory, doing a Voluntary Administration is DIY friendly. The court fee is only $1 and the necessary forms comprising the petition can be found online. The link below offers an overview of the process provided by nycourt.gov:
https://www.nycourts.gov/courthelp/WhenSomeoneDies/smallEstate.shtml
While the Voluntary Administration is used in all 57 New York counties for dealing with small estates, there are nuances that may fluctuate from county to county that can make getting it right on the first go around tricky. For example, most of the county Surrogate’s courts will require a Family Tree Affidavit, which lays out the descendants or “distributees” of the decedent. However, there are a number of counties that insist that this particular form is not executed by the petitioner, but instead by a disinterested third party – which would be someone who does not stand to inherit from the estate. Depending on how much time has lapsed since the decedent’s death, many counties will expect an Affidavit of Delay to be included with the petition and other prescribed forms. If possible, visiting the court or speaking with a clerk is useful.
Things can get extra complicated if the decedent had a surviving spouse who died subsequently. Let’s say that you need a Voluntary to collect some accounts belonging to Dad, but Mom died a few years after he did. What typically happens in these instances, assuming the petitioner is a child and that neither parents had estate proceedings, is that he/she will need to become appointed as the Voluntary Administrator for the post-deceasing spouse first – Mom, in this instance. New York State inheritance law guarantees the first $50,000 of a decedent’s estate to go to the surviving spouse, which would make Mom’s estate the distributee. So after, and only after, you are appointed as the Voluntary Administrator for Mom’s estate can you petition to become the Voluntary Administrator for. Fletcher has seen this numerous times. The work is doubled and of course the time of the claim’s resolution is extended accordingly.
Some other points worth mentioning:
- An affidavit attesting that the petitioner has never been convicted of a felony is one of the required documents in the Voluntary petition. In the event of a past felony, the petitioner is disqualified from eligibility to be appointed as the Administrator.
- A paid funeral bill is a required document. This is a requirement of basic due diligence for the court to rule out the most common of estate creditors. Most funeral directors are happy to provide this. Some only hold onto records for 7 years or so. In the event they cannot produce the paid invoice, most will confirm in writing they have no records of outstanding debts from the decedent’s funeral.
- While the filing fee is only $1, that’s basically where any perceived generosity from the court ends. Envelopes and postage are required for the petitioner’s certificates and the distributees’ waivers that the court will need to mail out. So, if you’ve personally come in to the court to hand deliver your petition without postage, there will likely be a return visit in your future.
Fletcher sees a lot of Voluntaries as a biproduct of our recovery service. It is important to note that we are not lawyers, nor are we offering legal advice. But we are intimately familiar with what goes into a successful Voluntary petition, and can offer some guidance in navigating the process and avoiding many of the pitfalls. And while the court system can be rigid, we have found some room for creativity where others would have probably thrown their hands up and called it a day. Fletcher has can also help in locating missing distributees, whose unknown whereabouts will stop a petition dead in its tracks until the individual has been located. But given the volume of work that goes into a Voluntary, the amount of money at stake is a consideration. And if the state is requiring a Voluntary to collect $300 of a relative’s money, walking away probably isn’t the wrong decision.