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The New York Probate Lawyer Blog has previously discussed cases involving the disqualification of a person from inheriting from a decedent’s estate. Where a person murders another the New York Courts do not permit the murderer to profit from his wrongdoing. The wrongdoer is deemed to lose any inheritance he might receive from the decedent. This basic principal was recently affirmed by Nassau Surrogate Edward McCarty III in the case of Matter of Innocent Demesyeux decided on December 23, 2013 and reported in the New York Law Journal on January 6, 2014. In Demesyeux the Court was faced with the issue of determining whether a mother who killed her children would be disqualified from receiving a share of the wrongful death proceeds resulting from their death. The Court found that the basic principals of equity should prevent the mother from profiting where she apparently had the ability to know that her acts were morally wrong.

Disqualification of a person’s inheritance interests appears in other aspects of New York estate law. Estates, Powers and Trusts Law (“EPTL”) Section 4-1.6 provides that a joint tenant of a bank account forfeits rights of inheritance as to the joint account if convicted of murder in the first or second degree. Also, EPTL Section 4-1.4 provides a number of situations where a parent is disqualified from receiving a distributive share of a child’s estate. For example, under 4-1.4(a)(1) a parent is disqualified if he or she fails or refuses to provide for the child or if the child is abandoned. Similarly, EPTL Section 5-1.2(a)(5) provides that a spouse may lose inheritance rights if he or she abandons the other spouse. Under EPTL 5-1.2(a)(6) such rights may be forfeited if a spouse fails to support the other spouse. There are also instances where in the event a Last Will contains a “no contest” clause a person may forfeit any bequests under the Will if the clause is violated.

New York estate attorneys are aware that estate settlement and distribution often involve many unique and complex issues. The resolution of matters regarding the interests of potential beneficiaries and heirs at law requires the investigation of all facts regarding the decedent and the estate and determining whether and to what extent a Last Will or appropriate estate statutes apply. I have represented many clients including Executors, Administrators and beneficiaries of estates with regard to their responsibilities and entitlements.

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The New York Probate Lawyer Blog contains previous posts concerning the benefits of a Supplemental Needs Trust. Briefly, a Supplemental Needs Trust (“SNT”) is a trust that allows assets to be held for the benefit of a person who is receiving governmental benefits such as Medicaid or social security disability. The maintenance of the trust fund will not interfere with or cause these benefits to be discontinued. The SNT trustee can use the trust to provide additional services or care for the SNT beneficiary over and above those provided by Medicaid or Social Security payments. New York Estates, Powers and Trust Law (“EPTL”) Section 7-1.12 provides the statutory provisions required for a trust to be qualified as a SNT.

As discussed previously, there are many situations in which a SNT can be established. For example, a person can establish a SNT in a Last Will to be funded upon death with the trust assets to be utilized for a person who is incapacitated or otherwise receiving governmental benefits. Another situation where a SNT is common is in connection with an Article 81 Guardianship. Instead of holding a person’s funds under the guardianship where the funds may cause Medicaid or other benefits to be discontinued or where the funds may be required to repay Medicaid claims, the assets can be placed in a Court approved SNT. Recently, in a decision by Nassau County Surrogate Edward McCarty III in Property of Alan Frederick Silverman decided on October 29, 2013 and reported in the New York Law Journal on December 16, 2013, the Court allowed the establishment of a SNT. In this case an incapacitated person for whom a guardian was appointed was the recipient of funds from the estate of his father. The guardian was allowed by the Court to create a SNT and to place the estate assets into the trust thus preserving them for the benefit for the incapacitated person.

I have represented numerous clients where a SNT was established in conjuction with the client’s appointment as the guardian of a person’s property and personal needs. Generally, the Courts are very receptive to creating these trusts since they afford incapacitated and disabled individuals the ability to afford services and care above those provided by governmental benefits.

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Estate taxes are an important aspect of estate planning and estate administration. A New York estate planning attorney typically recognizes that minimizing estate tax is important so that the maximum amount of assets can be passed on to beneficiaries for their benefit. The manner in which an individual provides for tax protection will be reflected in the monetary impact estate taxes will have in estate settlement.

At present the Federal government provides an exemption of up to $5,250,000 before estate taxes are incurred. As noted in prior posts in the New York Probate Lawyer Blog all transfers between spouses are exempt from estate and gift taxes. The value of a decedent’s gross estate for tax purposes is determined by adding all of the assets that he had an interest in at the time of death such as real estate, bank funds, retirement funds, stocks and bonds, business interests, etc.

However, under present law in New York the exemption from New York estate taxes is only $1,000,000. The difference in the exemption amounts between the Federal law ($5,250,000) and New York State law ($1,000,000) created difficulty for estate planning since an estate may be able to be exempt under federal law but incur New York State tax. This problem with a high federal exemption and low state exemption is not confined to New York. In a recent post in by Ashlea Ebeling dated November 1, 2013 entitled “Where Not To Die In 2014: The Changing Wealth Tax Landscape”, the problem of low exemption states is discussed. As pointed out in the post, in 2014 the Federal exemption will increase to $5,340,000.00. Thus, an estate of this size will pay no federal estate tax. However, since New York only has a $1,000,000.00 exemption, an estate of $5,340,000.00 would result in a New York estate tax of $431,600.00.

Recently, a commission appointed by New York Governor Cuomo called the New York State Tax Relief Commission, issued a report in which it recommended that New York State increase its estate tax exemption to the same amount as is allowed under federal law (i.e. $5,250,000.00). According to the report, by raising the exemption amount nearly 90% of all New York estates would be exempt from estate tax. This proposal is expected to be considered for passage in the coming year.

Both Federal and New York State estate taxes are important to consider since they can have a large impact on the amount of estate assets that actually pass to estate beneficiaries. I have worked with many clients in planning their estates and in estate settlement where considering the impact of estate taxes was important and the preparation and filing of estate tax returns was necessary.

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Fiduciaries in New York such as Executors and Administrators are responsible for carrying out their tasks in settling an estate. As discussed in previous posts in the New York Probate Lawyer Blog, the job of a fiduciary includes identifying and collecting a decedent’s assets and paying a decedent’s debts as well as estate administration expenses and income and estate taxes.

While these tasks may be uncomplicated in many instances, each estate presents its own problems and challenges that must be confronted and resolved by the Executor or Administrator. For example, prior to death the decedent may have been a party to a lawsuit as a plaintiff or defendant. Following death, the estate representative must take the place of the decedent as a party to the court action and process the litigation to finality in the best interests of the estate. It may not always be easy for the fiduciary to decide if a settlement of such litigation is more advantageous than a final determination by a court or a jury. A fiduciary needs to be concerned as to whether the estate beneficiaries will find fault as to the course of action taken and attempt to have the fiduciary found liable for any loss or expense incurred.

Also, a fiduciary is responsible for protecting estate property and if he fails to do so this may be found to be a breach of fiduciary duty resulting in a revocation of his court appointment. New York Surrogate’s Court Procedure Act (“SCPA”) Section 711 entitled “Suspension, modification or revocation of letters or removal for disqualification or misconduct”, provides various grounds upon which a fiduciary may be removed from office. For instance, paragraph 2 provides that a fiduciary can be removed if he has “wasted or improperly applied assets of the estate. . . .” In a recent decision by Manhattan Surrogate Nora Anderson dated November 26, 2013 and reported in the New York Law Journal on December 6, 2013 entitled Estate of Katherine E. Freeman, an estate administrator was removed. The Court found that the administrator engaged in serious misconduct that was harmful to the estate including the failure to pay maintenance on the decedent’s cooperative apartment which resulted in the apartment being sold in foreclosure.

Clearly, it is the responsibility of the estate representative to find and protect all of the estate assets. When a fiduciary acts improperly, the Court may surcharge him for the damage that is caused to the estate. I have represented many executors and administrators in Surrogate’s Court proceedings and estate litigation. It is important that the fiduciaries understand and are diligent in performing their fiduciary duties. I have worked closely with my clients in the estate settlement process to help them carry out their fiduciary responsibilities so that the interests of the estate and its beneficiaries are protected.

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Estate Attorneys in New York are familiar with the process by which a Last Will is admitted to probate. Probating a Will essentially involves presenting the Will to the Court for review and having the Court determine that the Will is valid. Once the validity of the Will is established by the Court, an executor is given the authority to carry out the provision of the document.

The probate procedures are set forth in the New York Estates, Powers and Trusts Law and the Surrogate’s Court Procedure Act. The first step is to prepare a petition which contains information regarding the petitioner, the decedent, the Will and the decedent’s assets. The person named in the Will as the Executor is usually the one that prepares the petition. The probate petition must also contain the name and address of the decedent’s distributees (i.e., next of kin). These are the parties, such as a decedent’s spouse, children, parents or more distant relations, who have a right to object to the Will. Such objections would result in a Will contest.

Typically, the distributees will be given an opportunity to sign a Waiver form by which they can indicate that they have no objection to the Will. If a waiver is not signed, the distributees must be served with a Citation. A Citation is like a Summons, which is issued by the Surrogate’s Court and advises the party served to appear in Court on a certain date to essentially tell the Court that the Will should be invalidated. The objecting party is then provided with the opportunity to obtain discovery of relevant documents and to take the testimony of witnesses such as the attorney who drafted the Will and the persons who witnessed the Will signing.

In most cases, the Citation is personally served on or delivered to the party to whom it is directed. However, there are occasions when the decedent’s distributees are either unknown or unable to be located. These cases require that the Citation be served in a different manner. When a distributee is unknown or their whereabouts cannot be determined the Court will require that an affidavit and relevant information be provided demonstrating that a full and diligent search has been performed to identify and/or locate the distributee. Once the Court is satisfied that the due diligence requirement is met, then the Court may allow the Citation to be served by publication in a newspaper in the locality having the greatest chance of being seen by the distributee. In an interesting recent case entitled Last Will of Gladys Maynard decided by Nassau Surrogate Edward W. McCarty III on October 31, 2013 and reported in the New York Law Journal on December 5, 2013, there was an issue regarding the validity of the publication of a Citation. The Court had directed that the Citation be published in a certain newspaper and the attorney for the petitioner requested that the publisher insert the Citation as directed. Unbeknownst to the Court or the attorney, the designated paper was no longer published so the publisher inserted the Citation in a newspaper that had replaced the discontinued paper. The Court found that the publication of the Citation in the different newspaper was a mere irregularity and not sufficient enough to invalidate the service for jurisdictional purposes.

New York Trusts and Estates attorneys regularly deal with issues regarding the service of Citations, affidavits of due diligence and kinship matters. I have represented many clients who were faced with resolving these issues in estate settlement.

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New York Estate Planning can take many forms. One aspect of a plan can involve the creation and use of a trust. There are a number of different types of trusts and benefits that may be obtained from their utilization.

For instance, a Testamentary Trust is created by a Last Will and Testament. The provisions of the trust are part of the Will itself. Testamentary trusts can be used to provide for minimizing estate taxes by taking advantage of the exemption provided by the estate tax law. These types of trusts can also be used for other reasons such as establishing a means to administer and manage trust funds for a minor or for a person who may lack the ability to be responsible for large sums of money. Sometimes there may be the need to create a Supplemental Needs Trust. This type of trust allows a fund to be utilized for the benefit of a person who is receiving government assistance such as Medicaid without disqualifying the recipient from future government payments.

An Inter Vivos Trust is a trust that is set up as a separate document during the lifetime of the creator. A common form of an inter vivos trust is a Living Trust or Grantor Trust. This document can provide many different benefits including the avoidance of probate, estate planning and tax minimization, and a mechanism for property management in the event the creator becomes disabled or incapacitated.

Whenever a trust is created it is important that the trustees are carefully selected so that they will carry out the intentions of the creator and protect the interests of the beneficiaries. Unfortunately, there are many instances where there is controversy between the trustees and beneficiaries. In a recent case entitled “Trust of Frederick Brockway Gleason, Jr.” decided by Manhattan Surrogate Nora Anderson on November 12, 2013 and reported in the New York Law Journal on November 25, 2013, a successor income beneficiary of a trust claimed that a trustee breached its fiduciary duties by allowing the trust principal to be invaded for the benefit of the initial income beneficiary who was her father. The court denied the beneficiary’s request for summary judgment which left the matter open for future litigation and a trial on the merits.

In another interesting case, grandchildren of the late Walt Disney are involved in a court battle regarding a trust. As reported by Joshua Gardner in MailOnline on November 25, 2013 it is alleged that trustees of a trust fund held for Walt Disney’s grandson have been wrongfully withholding payments from the grandson. A court date is scheduled for December 5, 2013.

I have represented many individuals regarding the creation and administration of trusts including testamentary trusts, inter vivos trusts and supplemental needs trusts. All of these instruments can be very helpful in expressing the intention and desires of the creator and may provide tax benefits or protection and asset management for persons such as a minor or those with incapacitating conditions.

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New York Guardianship for an incapacitated person is controlled by Article 81 of the Mental Hygiene Law (“MHL”). As discussed in previous posts, this statute contains the procedure for the appointment of a guardian as well as the powers that may be given to a personal needs guardian and a property management guardian.

Many of the guardian’s powers are clear and routine. For example, MHL Section 81.21 (Powers of a guardian; property management) provides that a guardian can marshall assets, pay bills that are reasonably necessary for maintenance of the incapacitated person and invest guardianship funds. The guardian’s powers are typically delineated in the Order or Judgment appointing the guardian and can vary from case to case depending upon the particular situation.

Guardianship cases may involve either old or young incapacitated persons. In many instances, a Guardianship is utilized for the benefit of an infant or younger individual who has suffered an injury that results in incapacity and has recovered a substantial sum of money in a lawsuit stemming from the events causing the injury. These events include automobile accidents or medical malpractice.

It is rather common that when an infant or child is injured and receives a large money award due to incapacitating injuries, the child continues to reside at home with his parents. Issues then arise as to what extent, if any, the guardianship funds may be utilized for the infant notwithstanding that a parent has a duty to support a minor child. Another issue that appears is to what extent can expenditures for the incapacitated child also result in a benefit for the child’s parents and other members of his household.

In a recent case entitled Matter of Sigal, decided by Judge Gary F. Knobel of the Nassau County Court on November 12, 2013 and reported in the New York Law Journal on November 22, 2013, the Court was faced with some of these issues. The co-guardians – parents of their incapacitated daughter sought reimbursement from guardianship funds for the costs of a bat mitzvah party and authorization to expend guardianship money for the cost of a vacation for their entire family and an aide. The Court reviewed the many applicable factors including a consideration of the preservation of guardianship funds, the financial ability of the parents to personally pay for these expenses and whether the costs were for necessities, treatment or for education. Based upon these factors and others the Court denied the request for reimbursement of the bat mitzvah party expenses but allowed some funds for the vacation. The Court was concerned that the guardians recognize that the guardianship funds were not for family use but must be preserved for the incapacitated person’s needs throughout her life.

I have represented many petitioners and parents in venues such as Manhattan Guardianship and Brooklyn Guardianship. The Courts routinely inquire as to the proper use of guardianship funds so that the interests of the incapacitated person is protected to the maximum extent possible. While some of these types of cases require the establishment of a Supplemental Needs Trust, the Courts will still require that the trustees exercise their fiduciary powers in accordance with these principals.

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As discussed in a number of earlier posts in the New York Probate Lawyer Blog, a decedent’s next of kin (“distributees”) need to be determined in Surrogate’s Court proceedings such as probate and intestate administration.

The estate laws allow significant rights to a decedent’s surviving spouse. Estates, Powers and Trusts Law (“EPTL”) Section 4-1.1(a)(1) provides that in the case of intestacy, a spouse is entitled to receive $50,000.00 and one-half of an estate if a decedent is survived by a spouse and issue (i.e. children) and if there are no issue, the surviving spouse inherits the whole estate.

In many situations, estate disputes may arise as to the interests claimed by a spouse. New York Will lawyers are familiar with EPTL 5-1.1-A which is entitled “Right of election by surviving spouse“. Under this statute a spouse who is disinherited by the decedent can claim an amount that is equivalent to the greater of $50,000.00 or one-third of a decedent’s net estate. However, another part of the EPTL, Section 5-1.2, lists various instances where a spouse may be disqualified from receiving a share of an estate. For example, a divorce or a determination that a marriage was void will terminate spousal rights. Another section of this statute, paragraph (a)(5), provides that a spouse will lose his estate rights if he abandoned the spouse that is deceased and the abandonment continued until the spouse’s death. Paragraph (a)(6) also directs disqualification in certain cases where a surviving spouse fails to support the deceased spouse.

There have been numerous estate litigation cases over the years concerning whether a spouse’s inheritance rights have been terminated under these sections of the law. In a recent case decided by Brooklyn Surrogate Margarita Lopez Torres entitled Estate of Joseph E Nichols dated October 4, 2013 and reported in the New York Law Journal on November 15, 2013, Surrogate Lopez Torres upheld the right of the surviving spouse to claim an elective share of the estate. The Court found that the assertions by the decedent’s children that the spouse abandoned the decedent or failed to provide the required support were not valid and could not provide a basis to disqualify the surviving spouse. The Court dismissed the objections to spouse’s right of election.

The settlement of a New York estate often involves complex issues regarding the determination and status of distributees and their rights to receive a share of a decedent’s estate. Sometimes these issues are resolved through a kinship hearing. In other cases, different proceedings such as the determination of the validity of a spousal right of election may be the process for such review. In all Surrogate Court disputes, it is always helpful to obtain advice and guidance from a qualified estates and trusts lawyer.

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The New York Probate Lawyer Blog has discussed in earlier posts that a New York Last Will must comply with statutory requirements. Estates, Powers and Trusts Law (EPTL) Section 3-2.1 entitled “Execution and attestation of wills; formal requirements” provides many of the rules regarding the signing and form of a Will.

For example, the statute provides that all Wills must be in writing and signed at the end of the document. Also, paragraph (a)(1)(B) states that anything that is added above a testator’s signature after a Will is executed is not to be given any effect. Paragraph (a)(4) requires that there shall be at least two (2) witnesses to the Will and paragraph (a)(3) sets forth that the testator must declare to the witnesses that the paper being signed is his Will.

While this statute and the many court cases interpreting the legal requirements of a Will and its execution may seem very formalistic, the underlying rationale is to insure that a testator’s last wishes and intentions are reflected in a paper that has a high probability of validity. The strict requirements surrounding the form and signing of Last Wills protect both the interests of the testator and the beneficiaries named in the document.

The legal requirements, however, do not prevent the many estate litigation controversies that frequently occur. Will contests are fairly common. In many of these contested Will cases, even though the document may appear to have been properly executed with sufficient witnesses, an objectant may claim that the testator did not have the capacity to make a valid Will, or that the testator was unduly influenced or coerced into signing the Will. These matters are typically dealt with in probate proceedings in the New York Surrogate’s Courts. Estate attorneys generally represent the parties involved such as the person petitioning for probate who is usually the named executor and the potential or actual Will objectants.

The formality of a written document that is witnessed by at least two people creates certainty for the disposition of assets of a decedent. An interesting case was recently reported by Eric Frazier in the Charlotte Observer on October 22, 2013. In an article entitled “Son of late developer Henry Faison suing his firm over Will“, it was reported that Henry Faison, a Charlotte, North Carolina real estate developer, had died just before he was to sign a new Will. Mr. Faison’s new estate plan would have left most of his multi-million dollar estate to a charitable foundation instead of to his company. The decedent’s two sons commenced a lawsuit to try and enforce the terms of the new Will which was not signed before Mr. Faison’s demise.

Mr. Faison’s situation is not uncommon. However, despite circumstances that may indicate that Mr. Faison was intending to change his estate plan, since there is no actual signed and witnessed paper to rely on, it can only be speculated as to whether the decedent may have had a last minute change of heart as to the disposition of his estate. It will be interesting to see how the Courts decide this case and whether any validity is given to an unsigned document.

Having a duly executed Will, Living Will, Health Care Proxy and Power of Attorney is important to preserve the creator’s intentions and eliminate any guesswork and, ultimately, estate settlement litigation, that might ensue in the absence of such documents.

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The estate planning process as well as estate settlement almost always requires a close relationship between a New York Estate Lawyer and a client. When a client is planning an estate and seeking advice regarding the disposition of assets and the naming of beneficiaries, there must be a personal discourse with the attorney advisor. Depending upon each particular circumstance, a testator’s confidential information regarding such matters as divorces, non-marital children and sensitive business issues can be essential to developing an effective estate plan. Typically, the estate planning attorney will inquire of the client as to all information regarding assets and family life and history so that the provisions of documents such as a Last Will or Trust accurately take into consideration the possible effect of the testator’s family circumstances. For example, if the testator was adopted at an early age and has no information regarding his next of kin, an attorney may suggest the use of a Living Trust as a Will substitute. This trust could avoid the need to search for next of kin and to provide such potential heirs with notice of a Surrogate’s Court probate proceeding which would be required if the testator disposed of his estate through a Last Will.

Estate settlement and administration also requires a good working relationship between the fiduciary and the attorney. An Executor, Administrator and Trustee face many issues dealing with asset collection, payment of debts and claims and various tax matters. In some instances, the interests of the fiduciary and the beneficiaries themselves may be at odds or in conflict. Particularly in family situations, the fiduciary may be knowledgeable about and have relationships with family members that can assist legal counsel in resolving disputes without Court intervention. While legal guidance is essential, it is always best if interested parties can resolve differences amicably. In order for an attorney and fiduciary to achieve such results, they must work closely together.

An interesting aspect of the relationship between an estate attorney and a client relates to the well-recognized attorney-client privilege. When a person dies, the attorney-client privilege between the decedent and his life-time attorney generally continues. Thus, an attorney is prohibited from disclosing communications between the attorney and client even after the client dies. However, in New York Civil Practice Law (CPLR) Section 4503(b), the statute creates an exception which provides that “in any action involving the probate, validity or construction of a will, an attorney or his employee shall be required to disclose information as to the preparation, execution or revocation of any will or other relevant instrument, but shall not be allowed to disclose any communication privileged under subdivisions (a) which would tend to disgrace the memory of the decedent“. Therefore, confidential communications can be disclosed when there is a Will Contest.

It is also interesting to note that the Courts have ruled that a fiduciary who represents an estate can waive the decedent’s attorney-client privilege for the estate’s benefit. Moreover, as provided of CPLR 4503(a)(2) communications between an attorney and a personal representative, such as an Executor and Administrator, are generally privileged.

New York Estate Planning and Estate Administration typically require close and confidential communication between an attorney and a client. While it may seem obvious, creating and continuing a strong and trusting relationship between legal counsel and a client is more likely to produce a positive outcome whether in the creation of an estate plan or the settlement of an estate.

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