There can be several reasons why a foreigner would own real estate in New York. She could have purchased it as an investment property, or bought it while she lived in New York. The decedent could have also been waiting for US citizenship approval and died before the nationalization.
Maybe she inherited the property from someone who was a NY resident. For example, Jack’s aunt dies and leaves her NYC condo to him under her will. Jack never sells the property and keeps it as an investment property. Jack, Panama citizen, dies years later. How do Jack’s heirs claim this condo?
Or it could be the case that the decedent inherited the property with a US resident. Example: Maria leaves her Brooklyn home to her grandchildren, Anna and Albert. When Maria dies, Anna and Albert record a new deed showing them as co-owners of the home. Anna is a Russian citizen, while Albert is a US citizen. Anna dies, and her children want to sell the property to get their 50% of the estate. How is this possible?
Step 1: When selling real estate belonging to a foreign decedent, the first item on the to-do list is to review the deed and confirm ownership.
For condos, houses, and buildings located in Manhattan, Queens, Brooklyn, Bronx, and Staten Island, the deed is a public record that can be seen on the ACRIS system online. Co-op units typically cannot be found on ACRIS because there is no deed. In a co-op purchase, the management of the building issues a stock certificate that names the owner. This stock certificate is not recorded for public view, and is a private document between the owner of the co-op unit and the building. But, there are instances when a mortgage is taken out or some other circumstances are present that reveals the ownership documents on ACRIS.
An ACRIS search can quickly tell you or your lawyer the entire situation relating to the property. They can see who owns the real estate, what percentage, and whether any limitations exist (ie life estate). For real estate in Long Island – Nassau and Suffolk County – the process is not this simple. You have to request a copy of the deed from the clerk’s office in person or by mail. If the latter, the deed can take weeks to arrive.
After it is confirmed that the decedent is indeed an owner or partial owner of a NY property or co-op unit, you can move on to the next step.
Step 2: In order to sell real estate owned by a deceased person, an estate must be opened in New York for the foreign decedent.
What if the heirs don’t want to sell and want to keep the property? The answer depends on what type of property it is and whether the decedent had a will. If there is no will, and the asset is a building, house or condo, then a new deed can be made transferring the property to the decedent’s heir-at-law, as a short-term solution. If the property is a co-op unit, then a new deed is not possible. For co-ops in New York, transferring the shares to heirs or beneficiaries is a very difficult task. Most buildings will not approve foreign owners and will not approve an ownership transfer without an estate proceeding.
BUT, keep in mind that even for buildings, houses and condos, a new deed to heirs-at-law is not a real fix. If the parties need or want to sell the asset later on, they will need to start an estate proceeding, which may be more complex given more passage of time and possibly more deceased parties.
Let’s say the parties want to sell. What is the next step? The short answer is: hire an estate lawyer experienced with foreign decedents.
If the decedent lived outside of the US, an estate has to be opened in the county where the real estate is located. You can’t file in Manhattan Surrogate’s Court because you think this court is most prestigious. In other words, choosing where to file an estate is not a personal choice. The court will want to know why this estate is being filed in their county. For NY residents, the court does not need an explanation because the death certificate will show the decedent’s residence as a NY address. But, even here the venue must be proper. When the death certificate is coming from a foreign country or even a different state, the Surrogate’s Court is on high alert – they will need an affidavit explaining why the case is being filed in their county.
If the death certificate shows a Queens address as the decedent’s home, the estate must be filed in Queens County. If the death certificate shows that the deceased lived in the Bronx, and the estate is being filed in Manhattan County, the court will require an affidavit explaining why jurisdiction is proper. A legitimate reason could be that the deceased was renting an apartment in the Bronx, and the only major asset is a condo that he owns in Manhattan. What if the decedent has a house in the Bronx and a condo in New York City, where can his estate be filed? In this case, you have a choice of venue between the Bronx Surrogate’s Court and New York County Surrogate’s Court.
Step 3: A death certificate coming from a foreign country must be the original or a certified copy.
The document must also be apostilled, and in the English language or translated by a certified agency. Furthermore, any document that is produced by a foreign country or that is being signed in a foreign country, must have an apostille attached, or be notarized at the US Consulate office in that country.
Step 4: The estate lawyer must notify NYS tax department that an estate for a foreign decedent is being filed, and ask them to sign a waiver and consent form.
NYS will sign a waiver and consent form on the condition that the lawyer agrees to notify them of estate assets (when known), and to file a tax return if estate tax is due. This step is non-negotiable: NYS tax department must be notified and they must consent, or the estate filing will not move forward.
Step 5: The Consulate General office in New York for the country of citizenship must be notified.
If the decedent is a citizen of another country with assets in NY, or any heirs or beneficiaries are foreigners, then notice must be given that an estate has been filed. For example, Jack is an Israeli citizen, and his sole heir is his daughter Jackie who is a French citizen. Notice must be sent to the Consulate General of Israel of New York, and to the Consulate General of France in New York.
Step 6: Who can be appointed?
Getting a representative appointed by the court to manage and distribute the estate is no easy matter, especially if the decedent or the heirs are foreign. The dilemma that foreign parties with estates in NY run into is finding a person that qualifies to serve as fiduciary. The fiduciary must be a US citizen or a green card holder.
For example, Jack, a Chinese citizen, dies with assets in New York. His daughter Mary is a US citizen, and his son Andrew is a Chinese citizen. These are the only heirs of his estate. In this situation, Mary can serve as administrator of her dad’s estate. Special rules will apply because of Jack’s foreign status, but Mary can serve over the estate.
But, what if all of Jack’s heirs are foreigners. In other words, Mary is also a Chinese citizen. How can the family claim and administer the estate if none of the parties qualify to serve under NY law?
This happens often, and does not call for a panic. When our office receives a call from foreign parties that cannot serve as an executor or administrator because of their citizenship status, we ask the following question: do you know anyone in the US that you trust to serve over the estate? The typical response is “no.” Even when the family does have a friend or family member in the US that qualifies to serve, the person is not interested or has too many fears to get involved in a court matter. In this situation, when the family or beneficiaries cannot serve themselves and have no one they know to help them, the best solution is to have your lawyer become the fiduciary. At Mishiyeva Law, we are always happy to serve as fiduciary over an estate because we know the process like the back of our hand. All bases are covered, and the parties can feel at ease that the assets will be claimed and distributed to them at the earliest chance.
If you cannot serve because of your citizenship status, don’t have anyone that you trust to act as administrator or executor, and don’t have a lawyer to serve for you, then your final resort is a Public Administrator. This should be the last resort and is not recommended if the estate has real assets. Sometimes the appointment of a Public Administrator is unavoidable. It may be because family members fail to come forward to distribute the assets or the heirs are unknown. Oftentimes the heirs appear much later on when the Public Administrator is already appointed and distribution has begun.
Sometimes the Public Administrator appointment can be reversed. If the heirs have an alternative that can serve instead, this is a better choice than allowing the Public Administrator to stay on during the entirety of the estate. Why? Because once a PA gets involved, prepare to lose all control over the estate. If the PA office sees the estate has some assets, then they will refer the matter to an expensive law firm that will handle the estate. You will get no say over anything. You will get a check in the end for your share of the estate, after all legal fees and costs are deducted. The lawyer for the PA will make all decisions regarding the estate – which real estate broker to hire to sell the real estate, which auction house to sell the jewelry, and how much to sell it for. No one will ask for your opinion on things. By consenting to a PA to act over the estate or by not doing anything to prevent this from happening, you basically give up all rights to have a say in how it’s managed, who estate assets are sold to, and which professionals are hired.
When is it too late to remove a Public Administrator?
At Mishiyeva law, we recently had a case in which the decedent died in New York City. His only living heir was his sister, who lived in Ireland and was a citizen of that country.
The sister was not notified of the death because no one had her contact information.
The siblings were seniors and would go months without speaking to one another so the sister did not know anything was amiss when she didn’t hear from her brother. The decedent was renting his apartment. The landlord notified Surrogate’s Court to appoint a Public Administrator so the unit can be emptied out and rented to a paying tenant. When the Public Administrator entered the apartment, they found bank statements showing substantial assets, and so they hired their expensive law firm to administer the estate. The sister found out about her brother’s death a year later. She quickly got in touch with our law firm to remove the Public Administrator over her his estate, and have us appointed instead. The sister was not qualified to serve herself being that she was an Ireland citizen. We got appointed over the estate, claimed the bank accounts, liquidated all assets, and made a distribution to the sister within a few months, all the while keeping in close communication with her.
It’s almost never too late to remove a Public Administrator. The only time it is too late is when all assets are distributed. This is when the Public Administrator will be entitled to fiduciary commissions for administering the estate and legal fees will be due. The best scenario is to remove the Public Administrator before any assets are collected and distributed. In this case, there will be no fiduciary commissions due to the Public Administrator. However, there may be legal fees owed. When legal fees are due to the Public Administrator’s lawyer, it makes more economic sense to pay it from estate assets and move forward with the removal, because the bill will be a lot higher if the Public Administrator stays on until the end of the matter.
In summary, if a Public Administrator has been appointed over your loved one’s estate, then move quickly. Hire your own estate lawyer to get yourself or someone you trust appointed over the estate.
Many times, a Public Administrator learns about an estate that has unknown heirs and makes a petition to the court to be appointed. This is the best time to intercept because there are no commissions and legal fees due. NY Surrogate’s Court prefers to appoint an heir over a stranger to oversee the estate. However, this preference will not apply if the heirs do not agree among themselves who will be appointed. The court will then have no choice but to appoint a Public Administrator over the family members.
For example: Jason petitions the Surrogate’s Court to become administrator over his mother’s estate. His brother Aaron, learns of Jason’s petition and makes a cross-petition to become the administrator. The brothers do not trust each other. Unless one of the brothers is disqualified from serving (i.e. substance abuse issues, felony conviction, fraud history, etc), then the court will not choose between the two since both have equal rights to serve. The brothers will have to agree to become co-administrators. If they refuse to be co-administrators, the court will issue letters of administration to the Public Administrator.
Who cannot be appointed?
To become an executor or administrator of a NY estate, the petitioner must be a US citizen or a permanent resident (ie greencard holder), and cannot be a felon. When signing the petition, the Court explicitly asks you to sign under oath that you are a US citizen or permanent resident and not a felon. Lying on the documents will expose you to perjury.
But what about disqualifying an heir or nominated executor in the will from being appointed? This is a hard task. Besides the above-mentioned disqualifications, NY law spells out who can be disqualified. In short, someone who has substance abuse issues (alcohol, drugs), fraudulent dealings in the past, and other circumstances and details about the person that would render them untrustworthy. A court takes a decedent’s last wishes very seriously and wants to honor them including who the late person names in his /her will to be executor. The allegations to remove an executor or prevent them from being appointed must be serious and backed up with evidence. Not liking that person is not enough. If the allegations are not black and white, the issue can go to trial – where the parties will testify to prove the person is fit or unfit to serve.
We had a case where a decedent named her one grandson as executor of the estate, and named both grandsons as equal beneficiaries. When the nominated executor made his petition to the court to admit the will into probate, litigation ensued by the other grandson (his brother). The brother alleged that our client was an alcoholic and could not be trusted to oversee the estate. The nominated executor did have substance abuse issues in the past but he had been clean and turned his life around for several years. So, the brother could not back up his claims. We fought back and in the end our client was appointed as executor to administer the estate, which he did without issue.
Step 7: Selling the Real Estate
When letters testamentary or letters of administration are issued to a person, that appointed person can now sell the real estate belonging to a foreign decedent.
If the property is a co-op or condo unit, the building’s management will require a lien release to be signed by the NYS tax department. The estate lawyer will submit an application to NYS that details the assets, property description and information on the deceased. The department will issue a waiver unless they see a problem. The waiver takes at least 4 weeks to process. This lien release application can be submitted to NYS only when a contract of sale is fully executed by buyer and seller.
With the issuance of letters testamentary or letters of administration, the fiduciary can hire a real broker to sell the property. The administrator will sign the listing agreement and work closely with the sales agent to sell the property. For estate property, the broker fee should not exceed 5%. With foreign heirs and beneficiaries, the estate lawyer who becomes the fiduciary can take on the role of finding a broker, listing the property, and communicating the offers that come in to the family members or beneficiaries.
For the sale, the administrator has to apply for an Employer Identification Number for the estate. Usually, this process can be completed online within a few minutes. But because the decedent is a foreigner without a social security number, a paper application must be submitted instead which is a longer turnaround time.
If the estate has over $60,000 in assets, the administrator or executor will have to file tax returns. This is one of the major differences between a foreign decedent and a US citizen. US citizen estates are allowed a large exemption value in the millions, while foreign decedent estates can only claim $60,000.00 or less in assets tax free. If the estate assets are over the exemption amount, a federal return has to be filed. Depending on the size of the estate, the fiduciary may even have to file a New York State tax return. Although the tax rate is high for foreign estates, the fiduciary can deduct legal and administrative expenses so that only the net estate is taxed. Deductible expenses include lawyer fees, fiduciary commissions, broker fees, court fees, repairs, and more.
Step 8: Accounting
The last step is Accounting. The fiduciary will prepare an accounting for the beneficiaries detailing what assets she collected, what assets she sold and for how much, and all the necessary and ordinary expenses. The out-of-pocket expenses can include travel, legal fees, court fees, cleaning fees, broker fees, real estate taxes, water and sewer charges, repairs, etc. The parties will review the accounting and if they agree with the numbers, they will sign a document called Receipt & Release in which they accept payment and discharge the executor from any liability. These forms must be notarized and apostilled in the foreign country for acceptance in the US.
At Mishiyeva law, we have lots of experience handling real estate belonging to a foreign decedent or when the beneficiaries are foreign citizens. Call us today to discuss your matter at 646-233-0826.
