New York Probate Lawyer Blog

New York Estate Planning Lawyers are often asked by their clients about making gifts to family members or friends or charities. When considering a gift there are a number of items that should be part of a list of basic considerations.

1. It is important to identify the person to whom the gift is to be made. While this seems rather basic, it is not always easy to provide a gift to the person to whom you want to benefit. For example, if you desire to make a gift to a grandchild or other person who is a minor, some alternative method such as a trust or a Uniform Gift to Minors Act account may be needed since the minor cannot receive the asset in his or her own right. It may be that the donor of the gift may not want to make a gift that is in a trust or a restricted account and may feel comfortable just providing funds outright to a minor's parent with the confidence that the parent will use the gift solely for the minor's benefit.

A similar situation may arise where an individual desires to gift assets to a person who is disabled or incapacitated. Such situations may require the establishment of a Supplemental Needs Trust to protect the governmental benefits received by the intended donee.

2. Another consideration is the financial effect that the gift may have on the donor and the donee. Thought should be given as to whether the donor can afford to make the gift and whether the loss of the asset will affect the donor's standard of living or future retirement planning. As to the donee, it should be determined whether receipt of the asset might increase the donee's income tax bracket or create complications regarding the donee's estate plan by exceeding federal or state exemptions. Additionally, the donee's physical condition may be a factor since it would not be beneficial to provide assets to a person whose medical costs may skyrocket, especially where those costs might be paid by government programs such as Medicaid.

3. Of course, the gift tax impact of any gift is always important. This is especially true at present since the current Federal tax laws allow a combined estate and gift tax exemption of just over $5,000,000. In view of the uncertainty of the future of this exemption after December 31, 2012, many high net worth individuals are looking to use up their exemption by gifting assets having a value of up to $5,000,000 before the end of the year.

While such a planning step appears to be beneficial, there are certain circumstances where the gifting of assets can be troublesome. A recent article in Forbes on November 19, 2012 by Peter J. Reilly, "IRS Position on Wandry Decision Makes 2012 Gifting More Difficult", provides an excellent discussion of some mine-fields. As reported in the article, the IRS has announced its non-acquiesence to a Tax Court memorandum opinion which essentially allowed a donor, through a formula clause, to modify his gift percentage interests of a family LLC after the IRS had revalued same.

In the event the IRS revalues a gift after an audit, the possibility exists that the $5,000,000 exemption gift is determined to really be a $7,000,000 gift resulting in thousands of dollars of unintended gift taxes being due.

As in all estate and trust and estate planning contexts, it is necessary to consider both the practical and tax implications of asset transfers and the manner in which such dispositions are made, whether by a gift, a Last Will and Testament and a Trust. Discussions with other family members and advisors such estate planning lawyers and accountants is the best method to avoid unintended results.

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The New York Probate Lawyer Blog has posted many items concerning Estate Litigation. Litigation in New York Estates in common in the context of a Will Contest where a distributee (next of kin) such as a child is either completely excluded from the Will or left a bequest that is less than expected. Other typical situations are where a Will disposes of an estate to unrelated third parties such as a caretaker or friend. Allegations concerning undue influence, lack of testamentary capacity or duress usually result from such occurrences. Where a Will is contested, the focus is not only on the decedent but also on the witnesses to the Will and the attorney draftsperson who can testify and shed light on the circumstances surrounding the creation of the estate plan and the Will execution process.

However, not all estate disputes concern bequests that emanate from a Will after death. Many times controversy surrounds inter vivos or lifetime gifts that are made by a decedent. Such gifts can be subject to attack based upon similar grounds of lack of capacity. Often, the lifetime gifts appear inconsistent with, and actually can destroy, an estate plan that the decedent set forth in a Last Will or Living Trust document.

Gift litigation can take place in different forms. Sometimes, prior to a person's death, an Article 81 Guardianship proceeding may be commenced due to a person's incapacity. Section 81.29 of the New York Mental Hygiene Law gives the Court the power to revoke transfers that were made by an incapacitated person. In situations that come to light after a decedent's death, an estate fiduciary, such as Executor or Administrator, can seek to recover assets for the estate where the life-time transfer appears to be improper. Proceedings for the turn-over of assets are provided in New York Surrogate's Court Procedure Act Section 2103.

An estate fiduciary has the responsibility to attempt to marshal and collect all of the assets that rightfully belong to the decedent. Demonstrating that a person lacked the capacity to make a certain lifetime gift is not easy. An example of the difficulty in prevailing with such a claim is shown in the recent case of Estate of Magda Cordell McHale, decided by Surrogate Barbara Howe of Erie County on September 28, 2012 and reported in the New York Law Journal on October 9, 2012.

In McHale, a beneficiary under the decedent's Last Will objected to the fiduciary accounting due to the failure to include certain charitable gifts the decedent made shortly before her death. After a hearing the Court concluded that the decedent had both the "intent" and "capacity" to make the pre-death gift.

Cases such as McHale present many difficult issues involving estate settlement and fiduciary responsibility. I have represented individual family members who have felt that such pre-death gifts were the result of undue influence. I have similarly defended individuals who have received pre-death gifts where assertions have been made that such gifts were the result of undue influence. In all cases, it is important to review the history of the decedent, the expressions of intent that may have been made and the relationships been the various parties in order to have a full and clear picture about the proprietary of the disputed transfer.

Continue reading "New York Gifts Made Prior to Death Are Often the Subject of After Death Disputes" »

New York Guardianship proceedings can be found to be an appropriate remedy in varied situations. Typically, the Article 81 Guardianship is associated with an elderly person suffering from an illness such as dementia or Alzheimer's disease or a person who has suffered a severe physical event such as a stroke or heart attack. These situations are a garden variety basis for the appointment of a Guardian for property management and personal needs.

New York Guardianship attorneys, however, are familiar with the many other situations in which a Guardian may be needed. For example, in many instances, younger individuals may be incapacitated due to mental or physical disabilities that are birth related. In these situations, a Guardian may be necessitated not only for personal needs but also to handle monetary awards or funds the person may be entitled to due to a settlement from a lawsuit. The Guardianship Court is often asked to allow the establishment of a Supplemental Needs Trust to hold these funds so that the incapacitated person does not lose the benefit of governmental programs such as Social Security Disability or Medicaid.

Many guardianship cases also involve issues relating to the housing of the person who is incapacitated. Such person may live in a rental apartment or even own a cooperative apartment. Due to the person's incapacity, the rent or maintenance due on the apartment may go unpaid and subject the person to possible eviction or termination of their leasehold interest.

Other events that may result in eviction proceedings or lease terminations are where the tenant creates a nuisance by engaging in loud or abusive conduct or exhibits Collyers Syndrome which is the excessive hoarding and accumulation of items in the apartment. These activities create a climate where both the incapacitated individual and other tenants in the building are at risk.

When a person is exhibiting the above described behavior, the building management may commence eviction proceedings or, sometimes, contact Adult Protective Services of the New York City Human Resources Administration to intervene. APS will attempt to provide the tenant with assistance, if possible.

A Manhattan Guardianship lawyer, Queens Guardianship lawyer or Brooklyn Guardianship lawyer who represents a family member attempting to obtain appointment as a Guardian,
can ask the Guardianship Judge to issue a stay or injunction to stop the eviction proceedings of the incapacitated person until a Guardian has been appointed. Such relief is usually granted by the Court.

The New York Probate Lawyer Blog has discussed in previous posts that a Guardian will be appointed by the Court if the Court determines by "clear and convincing evidence" that a person is incapacitated. New York Mental Hygiene Law ("MHL") section 81.02. When a Court is considering the case, it will review the ability of the person to manage activities of daily living such as "money management", "grooming", and "housing". MHL section 81.03 (h). Therefore, when a person fails to pay rent or creates a nuisance or dangerous condition in an apartment, such activity is evidence of incapacity.

I have represented many clients who have petitioned to be Guardians in situations where their friends or relatives are on the verge of eviction or lease termination due to failure to pay rent or creating a nuisance condition. In these cases, quick action and Court filings are often needed to obtain a stay of the eviction and prevent the loss of the incapacitated person's apartment. Once appointed, a Guardian is usually able to pay the back rent or correct the nuisance condition so that the apartment which is the incapacitated person's home can be retained.

Continue reading "New York Article 81 Guardianship Proceedings Can Arise in Housing Proceedings" »

The New York Probate of a Last Will can be relatively smooth depending upon many factors. Of course, everyone has heard stories of feuds over a decedent's estate and Will Contests that are both lengthy and costly. However, for the most part, the probating of a Will is not controversial.

Essentially, the probate process is the validating of the Will by the Court so that the terms of a Will regarding the disposition of the estate are authorized by the Surrogate's Court. The Executors or Trustees who may be named in the Will are issued Letters Testamentary or Letters of Trusteeship by the Court. These fiduciaries are then empowered to handle estate or trust affairs.

The Probate Proceeding requires the filing of a petition with the Court along with other papers such as affidavits from attesting witnesses and possibly Waives and Consents from other interested parties. Sometimes, the Court must issue a Citation to be served on interested parties who do not voluntarily consent to the probate of the Will. The Surrogate's Court Citation is like a Summons and provides a Court date for the parties to appear in Court and advise the Court as to their intentions. The Citation is served on the parties either personally or sometimes by mail.

The New York Probate Lawyer Blog has provided many posts regarding various aspects of probate. The preparation of a clear and complete estate plan which includes a Last Will is the first and, maybe, the most important step in facilitating an easy probate proceeding. Problems often arise when a decedent's Will has provisions that are unclear or ambiguous. The execution of a number of different Wills over a short period of time where beneficiary shares are drastically changed also leads to post-death disputes and Will Objections based upon lack of testamentary capacity and undue influence.

Of course, there is no guaranteed method of leaving a Last Will and avoiding a potential Will Contest or Estate Litigation. There are, however, some strategies that can lessen the likelihood of fighting. Many Wills contain an In Terrorem Clause or no-contest clause that provides that anyone who attempts to challenge the validity of the Will is to forfeit their inheritance if they are unsuccessful. Also, the creation of a Living Trust can avoid the probate process entirely although these trusts are subject to Court challenge.

The Estates, Powers and Trusts Law and Surrogate's Court Procedure Act provide many provisions regarding the creation, execution and interpretation of Wills and the procedures to probate and challenge a testamentary document such as a Will.

Experienced New York Estate Lawyers are familiar with the laws regarding estate administration. It is essential that persons who are nominated as Executors in a Will or beneficiaries or other interested persons obtain advice as to the steps to follow in a probate matter and the likelihood that they may or may not be successful regarding their desired outcome.

Continue reading "New York Probate Can Be Simple or Complex" »

Estate litigation occurs on a daily basis in Manhattan, Brooklyn, Nassau and other New York Surrogate's Courts in counties across the state. The variety of the issues that are the subject of dispute often appear to be endless and usually present rather interesting problems. New York estate lawyers confront many complex issues and provide assistance to their clients in attempting to resolve these matters that can disrupt and delay estate settlement.

Estate court cases occur throughout the United States and it is helpful to review a few current controversies since the situations presented can easily relate to a New York decedent.

In one recent incident a Missouri attorney has been accused of murdering her father in a very unusual manner. As reported in an article by Martha Neil posted on October 2, 2012 in the ABA journal.com, the attorney apparently shot her father, but after he survived being shot, the attorney used a forged health care proxy to have life saving treatment for him discontinued.

Under Section 2981 of the New York Public Health Law a person can appoint a health care agent by preparing a Health Care Proxy. The statute, along with companion statutory provisions, contains many specific provisions regarding the process to create the proxy. For example, it must be "signed and dated by the adult in the presence of two adult witnesses who shall also sign the proxy." PHL sec 2981 2(a).

It should be recognized that a Health Care Proxy relates to health care decisions. In New York an individual can also appoint an agent to make financial or property decisions. However, to do so a different document called a Power of Attorney must be prepared and executed in accordance with the statutory rules beginning at New York General Obligations Law section 5-1501.

New York estate planning lawyers typically discuss with clients the benefits of having a Health Care Proxy and Power of Attorney as part of their estate and financial planning papers. As can be seen from the case of the Missouri attorney and her father, it is also important to select as an agent a person that can be trusted and will act in the principal's best interest.

A different set of circumstances was recently reported regarding a father who sued his daughter when she questioned his handling of her trust. As reported by Barbara Ross and Bill Hutchinson in an article in the New York Daily News on October 23, 2012 a Manhattan attorney sued his daughter for libel after she filed a request with the Manhattan Surrogate's Court to have him provide an accounting of her trust.

New York estate and Surrogate's Court laws provide that all fiduciaries, whether they are Executors, Administrators or Trustees, are obligated to provide an accounting of their activities. The Court can require a fiduciary to account and a beneficiary can request that the fiduciary be compelled to account. Surrogate's Court accounting proceedings can be very complicated since the fiduciary may have had many financial transactions over many years and the advice of estate attorneys and also accountants is generally very helpful.

I have represented many clients in connection with fiduciary accounting proceedings including individuals who are preparing and filing accounting papers and beneficiaries who are reviewing the accountings. When an interested party disapproves of the actions of the fiduciary, the common procedure is to file objections to the accounting with the Court and the interested party may fully investigate all financial transactions and present the objections to the Court at a hearing.

Continue reading "Estate Litigation in New York Can Involve Many Different Issues" »