New York Probate Lawyer Blog

A New York Fiduciary such as an Executor or Administrator is appointed by the Surrogate's Court after a person has died. As discussed in many posts in the New York Probate Lawyer Blog, an Executor is appointed as an estate representative when a Last Will has been probated. The Executor is typically nominated or named in the Last Will. Sometimes the Court may need to appoint an estate representative who is not named in the Will. In such case, the title of the appointee is Administrator c.t.a.

An Administrator c.t.a. should not be confused with the typical appointment of an Administrator which occurs when a person dies intestate or without a Will. In these situations, the decedent's distributees are entitled to be appointed in accordance with the statutory priority set forth in Surrogate's Court Procedure Act ("SCPA") Section 1001.

As talked about in prior posts, an estate fiduciary has many duties and obligations. At the core of a fiduciary's responsibilities is to determine and collect the decedent's assets, pay debts, expenses and taxes and distribute the net estate to the Estate Beneficiaries. In order to facilitate these functions an Executor and Administrator has many powers. Many of these powers are listed in New York Estates, Powers and Trusts Law ("EPTL") Section 11-1.1 entitled "Fiduciaries: Powers, Duties and Limitations". For example, this statute authorizes a fiduciary to invest estate assets, maintain insurance, collect rents, sell property and make repairs to property.

All fiduciaries accept the fact that they have a great deal of responsibility. Depending upon the size and complexity of an estate, acting as a fiduciary can be a very time consuming job. Many of the tasks that need to be performed can be facilitated by a New York Estate Lawyer. When representing a New York Fiduciary, I routinely help a client collect estate assets and determine debts and obligations that need to be paid. However, there is no substitution for actual involvement and hands-on functions in Estate Settlement by the personal representative. Such obligations may be particularly demanding when the fiduciary lives out of state or in a foreign country. Out-of-State fiduciaries cannot provide a substitute for the many of the jobs they must perform.

A fiduciary cannot delegate his authority to someone else. He cannot give a Power of Attorney to anyone to perform the jobs that he is required to do. Thus, if a closing for the sale of real estate is to occur, the fiduciary is the only person with the authority to sign the deed and other transfer papers. The Executor or Administrator must either attend the closing or arrange to have all the necessary papers signed prior to the closing date and delivered when the deed is transferred. The fiduciary must also sign the Contract of Sale.

The prohibition against a fiduciary delegating his authority was recently recognized by the Court in Garmon v. County of Rockland, a case decided by U.S. District Court Judge Andrew Carter on February 11, 2013 and reported in New York Law Journal on February 22, 2013. In Garmon, the decedent had been arrested and died in police custody. Thereafter, the decedent's daughter was appointed by the Surrogate's Court as the Administrator of his estate. The daughter then executed a Power of Attorney in favor of the decedent's father who then started a lawsuit to recover for the wrongful death of the decedent. The Court, however, dismissed the father's lawsuit finding that the father was not the Estate Administrator and, therefore, did not have the authority to act on behalf of the decedent's estate. Moreover, the Court found that the Power of Attorney was ineffectual since the daughter, as Administrator, could not delegate her duties regarding Estate Administration.

I have represented many Estate Executors and Administrators and assisted them with performing the various tasks associated with their responsibilities as a fiduciary. While a New York Estate Attorney cannot act in the place and stead of his client, I try to facilitate and expedite the Estate Settlement process so that my clients can fulfill their jobs as efficiently as possible.

Continue reading "New York Administrators and Executors Cannot Delegate Their Authority to Others" »

New York Court proceedings involving Incapacitated Persons require careful scrutiny by the Court. When a person who lacks capacity is a party to a legal action such as a defendant or respondent, it is imperative that such person's rights are protected since their ability to defend themselves is impaired.

In the typical Guardianship Proceeding under Article 81 of the Mental Hygiene Law ("MHL"), the Court will appoint either a Court Evaluator or an attorney to represent the Alleged Incapacitated Person ("AIP"). Sometimes the Court will appoint both an attorney and a Court Evaluator. MHL Section 81.10 entitled "Counsel" sets forth the circumstances in which an attorney will be appointed by the Court for the AIP. MHL 81.09 entitled "Appointment of Court Evaluator," discusses such appointment. While a Court Evaluator does not act as the attorney for an AIP, the Evaluator will interact with the AIP and perform an investigation for the Court and can, among other duties, determine whether the Court should be informed to appoint an attorney for the AIP. All in all, the MHL statutes provide for a number of avenues to insure that the AIP is protected in the Court proceedings.

Serious issues arise, however, when a person who is suffering from an incapacity becomes involved in Court proceedings that are not covered by the MHL. For example, it is not uncommon for such a person to be ill and hospitalized or affected by dementia or Alzheimer's disease. Due to these types of circumstances, a person may forget, or be unable, to pay bills such as their rent or mortgage. Non-payment of these items will eventually result in lawsuits for eviction or foreclosure. Unfortunately, someone who is sued by a landlord or mortgage company may have no one around to help them or to seek the appointment of an Article 81 Guardian. In such cases the impaired person is completely vulnerable and often unable to defend themselves in an ordinary eviction or foreclosure action. In these cases if the Court is aware of a person's disability the Court has the authority to appoint a limited guardian to protect a person's interest in the particular lawsuit. Section 1201 of the New York Civil Practice Law and Rules allows a Court to appoint a Guardian ad Litem for an adult person who is "incapable of adequately prosecuting or defending his rights."

In many instances the Court may be unaware of a person's condition since the person, due to lack of understanding or ability, merely defaults and does not appear before the Court to represent his interests. In a recent case entitled Financial Freedom Acquisition LLC v. Evelyn L. Jackson, the Honorable Charles J. Markey (Supreme Court, Queens County), in a decision dated December 24, 2012 and reported in a New York Law Journal on January 29, 2013, dismissed a foreclosure lawsuit against an individual who had been in a nursing home at the time of the Summons and Complaint were allegedly served on her. After an extensive investigation by the Court appointed Guardian ad Litem, the Court found that the property owner lacked the mental capacity to understand the Court papers and it was questionable whether the Court papers were properly served upon the homeowner in the nursing home.

As a New York Guardianship Attorney, I have represented many clients involved in Article 81 proceedings. Sometimes, these proceedings are precipitated by other Court actions such as landlord/tenant evictions or foreclosure lawsuits that require the appointment of a Guardian to help protect the rights of an AIP. In these matters, it may be that multiple Court actions are occurring at the same time and quick action is needed so that an AIP's home is not lost through no fault of their own.

Continue reading "New York Incapacitated Persons Must Be Given Proper Legal Notice" »

Estate litigation in New York can involve many types of issues. One area of dispute often concerns the rights various individuals may have in a decedent's Estate or Trust. For example, the New York Probate Lawyer Blog has discussed in previous posts issues concerning the determination of a decedent's next of kin or distributees. Kinship Hearings may be required by a Court to decide these issues which often relate to relatives such as cousins or more distant relatives whose relationship may be difficult to establish.

Persons interested in an estate may sometimes challenge the status of a surviving spouse. Questions may arise as to whether a marriage or divorce occurred, particularly where such proceedings occur in a foreign country and record keeping may be poor and valid proof of marriage and divorce proceedings may be difficult to obtain.

Litigation in estates may also arise where a person is either adopted by a decedent or where the decedent gave a child up for adoption and surrendered his parental rights. New York Estates, Powers and Trusts Law Section 2-1.3(a) provides that adopted children have the same inheritance rights as natural children. The statute, however, allows a person to avoid this result by expressing "a contrary intention". Thus, a person who prepares a Last Will or Trust can specifically exclude adopted children, or any other child for that matter, since there is no requirement in New York preventing a person from completely disinheriting a child, natural or otherwise.

In a sort of reverse situation where a parent gives up a child for adoption, New York Domestic Relations Law 117(b) provides, generally, that after an adoption is complete the adoptive child loses his rights of inheritance from his birth parents. Thus, except in certain specific instances, the adoptive child no longer will have any statutory inheritance rights with regard to the family of the biological parents. While these rules may appear on their face to be able to be applied without much confusion, the dynamics of family interaction and monetary considerations often create complicated issues for the Surrogate's Courts to decide.

An interesting example of the interaction of the New York adoptive rights statutes was recently presented in the Estate of John Svenningsen, which was decided by the New York Appellate Division, Second Department on February 6, 2013. and reported in the New York Law Journal on February 8, 2013. In Svenningsen, the decedent ("John") and his wife "Christine" adopted a child from China about one year before John died. The couple then commenced proceedings to formalize the adoption in Family Court, Westchester County and these proceedings were finalized after John died. John and Christine had other natural children. The documents that were involved in the Court dispute concerned various Trusts and John's Last Will. The Will was probated after John died and the adopted daughter ("Emily") was identified in the Probate Petition by Christine as one of John's children.

More than 7 years after the adoption and six years after the Will was admitted to probate, Christine surrendered her parental rights to Emily who was then adopted by another couple. When Emily's new parents discovered by searching court records that John's estate was valued at more than $250 million dollars, they sought an accounting from John's estate Executors and Trustees. The fiduciaries, however, refused to provide an accounting and claimed that Emily had lost her rights to inherit under John's Trusts and Estate pursuant to DRL 117 due to her adoption out of John's family. Both the Surrogate and the Appellate Court found though that Emily's right to benefit from John's Estate and Trusts were not lost by her adoption and that the fiduciaries were required to provide her with an accounting of her share of the Estate and Trust funds.

One interesting aspect of this case is that Emily's new adoptive parents were able to discover the large amount of funds available in John's estate by researching the Court records. There are many cases in the Surrogate's Court concerning Probate, Administration and Accounting proceedings where I have located valuable information to benefit a client by searching the Court records.

Continue reading "New York Estates Include Rights of Adopted Children" »

The New York Estate Settlement process may require that an Estate Tax Return be filed for a decedent's estate. Not all estates are required to file returns or pay an estate tax. In New York, the estate value threshold for having to file the return is $1,000,000. The Federal requirement is equivalent to the exclusion amount which for 2013 is a gross value of $5,250,000.

Even in an estate that is required to file a return, no estate tax may be due on account of various deductions such as the marital or charitable deduction or because of debts or liens such as mortgages or other claims. The gross estate value of an estate is comprised of all of the decedent's assets that are considered under the tax laws to be includable for estate tax purposes. These items include assets that were owned by the decedent in his name alone at death such as bank accounts, brokerage accounts, real estate, etc. The gross estate also includes assets owned by the decedent that were held jointly with a right of survivorship, and other items where there is a named beneficiary such as life insurance, retirement accounts (i.e., IRA's or 401K's) and Totten Trusts.

The New York Probate Lawyer Blog has previously discussed that assets owned in a decedent's own name typically are administered by an Executor or Administrator as part of the administration estate. Property that has named beneficiaries or joint owners is transferred automatically to such beneficiary/joint owner upon the decedent's death and is not subject to estate administration.

Regardless of the nature of the assets, where an estate is subject to estate tax, the tax must be paid due to the inclusion of such item for tax purposes. The issue that is always presented is what source is responsible for the payment of the estate tax - is it the decedent's administration estate or is payment the responsibility of the beneficiary or joint owner who received the property. Of course, like many answers in the legal world, the response is "it depends."

In the first instance, the tax laws generally require that the estate fiduciary (i.e. Executor or Administrator) is responsible for paying the tax.

It is a common practice that a provision in a decedent's Last Will provides that all of the decedent's estate taxes be paid from the decedent's administration estate which is the property owned by the decedent in his own name and passing under the Will. Such a provision would exempt from the payment of the tax any beneficiary of property passing outside of the Will such as insurance or jointly held assets. This result may not be fair to the persons who are beneficiaries under the Will since they are required to pay the estate taxes allocable to the assets passing to the other outside beneficiaries.

In order to avoid an unintended burden of estate taxes being placed on unsuspecting beneficiaries, a New York Estate Attorney will examine a client's entire portfolio of assets and discuss the tax issues with a client so that estate taxes can be properly allocated.

The basic law in New York is that each asset is to share its allocable portion of estate taxes. These principals are set forth in New York Estates, Powers and Trusts Law Section 2-1.8 entitled "Apportionment of Federal and State Estate or Other Death Taxes; Fiduciary to Collect Taxes from Property Taxed and Transferees Thereof". Therefore, if there is no specific direction in a Last Will or other instrument that changes this allocation, all of the outside beneficiaries must contribute their allocable share of estate taxes. EPTL Section 2-1.8 even allows the Surrogate to direct such persons to pay their share of the tax.

Estate Administration can be a very complex process. Calculating the amount of estate taxes that may be payable and determining the persons that are ultimately responsible for such payment adds even more responsibility to the job which each Executor and Trustee is required to perform. Since Estate fiduciaries are responsible for the proper payment of estate tax it is important that they obtain guidance from Estate Lawyers and tax professionals so that the interests of the estate and all beneficiaries are protected.

Continue reading "New York Joint Assets May Have to Pay A Share of Estate Taxes" »