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Fiduciary-300x185The Surrogate’s Court Procedure Act (SCPA) Section 103 entitled “Definitions” provides a definition for “Fiduciary” at paragraph 21.  The term includes an expansive list of titles including administrator, executor, guardian, and testamentary trustee.  Someone acting in a fiduciary capacity to another generally means that such person owes certain legal responsibilities to the party for whom they are acting or based upon the parties’ relationship.  Someone who is a Guardian for an incapacitated person in an Article 81 Guardianship, as well as an agent appointed under a Durable Power of Attorney stands in a fiduciary relationship to the person for whom they have accepted responsibility to perform certain tasks or acts.

Responsibilities flow from the authority given to a fiduciary either from the document which defines the manner or scope of the powers and also from the various statutes and rules and guidelines a fiduciary must follow.  For example, an Article 81 Guardian typically derives the extent of authority from the Order and Judgment appointing the Guardian.  Also, Article 81 of the Mental Hygiene Law (MHL) sets out certain powers that a Guardian may possess.  MHL Section 81.20 lists “Duties of Guardian” while section 81.21 sets forth “Powers of guardian; property management” and section 81.22 provides for “Powers of guardian; personal needs.”  Similarly, with respect to the estate laws, Estates, Powers and Trusts Law Section 11-1.1 provides an expansive list of “Fiduciaries’ powers.”

Thus, an executor or administrator in settling an estate needs to be aware of their responsibilities.  Another area which is always a topic of discussion is the fees that can be paid to a fiduciary for acting in such capacity.  These fees, called commissions, are meant to compensate someone for accepting and performing the job as trustee, guardian, administrator or executor.  The SCPA contains a number of sections which set out the manner by which commissions are allowed and computed.  For instance, SCPA Section 2307 sets forth the commissions to be paid to fiduciaries which are not trustees, while SCPA 2309 gives commissions for trustees for trusts created after August 31, 1956.  MHL Section 81.28 gives information as to “compensation of guardian.”

One of the most important benefits from engaging in estate planning and creating a Last Will and Testament is that a testator can select and name an executor and alternate executor.  This is important since the person nominated to act as fiduciary is someone whom the testator trusts and intends to be in charge of settling an estate.  Additionally, by nominating a person to be an executor, the nominee has the right to be appointed as the Preliminary Executor in the event the probate of the Will is delayed due to issues such as a Will contest or locating a decedent’s next of kin.

When a Will is not created and a decedent dies intestate, the appointment of an Administrator is controlled by the estate laws.  New York estate lawyers turn to Surrogate’s Court Procedure Act Section 1001 entitled “Order of priority for granting letters of administration,” to determine which individual has the right to be appointed.  The New York Probate Lawyer Blog contains numerous articles regarding the estate administration process.

As can be expected, the priority for appointment as Administrator is given to a decedent’s surviving spouse, followed by children and then other descendants.  While the statute appears straightforward, its provisions inherently allow for controversy when there is more than one person who has a right to be appointed and the eligible parties do not agree to work together.  This situation is very common when the eligible parties are a number of children since each one has a right to act as Administrator but they do not get along.  Thus, the Surrogate’s Court may be confronted with competing petitions for appointment and allegations that competing parties are not qualified to act for one reason or another.  While a majority of the eligible parties may choose to elect one of the group, the ultimate resolution must be determined by the Court.

shutterstock_1010278675-300x200The administration and settlement of an estate in New York requires that the fiduciary perform many tasks.  Initially, the first hurdle that must be overcome is the actual appointment process.  When a decedent dies leaving a Last Will, the Will must be probated and the Court can appoint an Executor.  Where the decedent dies intestate, a proceeding to appoint an administrator is filed instead of a probate proceeding.  The New York Probate Lawyer Blog contains many posts discussing the probate process and intestate proceedings.  In the event there is a Will contest or Surrogate’s Court litigation regarding the administrator’s appointment, the estate may not have a fiduciary appointment for a period of time.  Applications can be made to the Court for the appointment of a Preliminary Executor or Temporary Administrator.

A Court appointed fiduciary is the only person who has authority to deal with the affairs that are strictly related to the decedent.  The fiduciary can collect assets that are in the decedent’s sole name and pay or compromise debts or claims which relate to the deceased.  Another important aspect of an appointment is that the Administrator or Executor can access the decedent’s safe deposit box and residence.  Taxes are an additional area where a fiduciary is important since he can sign the decedent’s outstanding income tax returns and also any estate tax returns which may need to be prepared and filed.  In fact, an estate representative may become personally liable if he fails to finalize and pay various tax obligations relating to the decedent.

There are other areas where the need for a fiduciary is essential.  For example, a number of recent Court decisions provide excellent examples of the essential role a duly appointed executor or administrator play in estate settlementKew Gardens Dev. Corp. v. Butcher involved a Brooklyn estate and was decided by Brooklyn Surrogate Margarita Lopez Torres on May 13, 2021.  In Kew Gardens a dispute arose concerning the ownership of certain real estate and the various rights which the parties held pursuant to a certain deed and inheritance status.  The relevant portion of the case for our reference is that the Court held that the duly appointed Executor who had received letters testamentary was the only person who had the legal authority to convey the decedent’s interest in the property.  The Court also stated that this exclusive right did not diminish over time.

shutterstock_74680495-2-300x200Disputes regarding estates occur all the time.  These matters play out in the New York Surrogate’s Courts which is the primary forum where a decedent’s estate issues are determined.  Estate lawyers in New York are familiar with all types of cases ranging from Will contests to the appointment of an administrator in the event of intestacy.  A recent internet search disclosed that a prevalent area of dispute involves siblings.  In fact, according to a reference to research performed by Ameriprise, 70% of the conflicts between siblings are related to their parents.

When it comes to estates, siblings may have conflicts over many things.  For example, a brother or sister may feel that they were treated unfairly in a parent’s Last Will especially if their bequest was small or they were disinherited.  In these types of cases a parent may have had good reasons to treat their children differently – one child may be well-off and another may need the extra support to survive.  It is not uncommon for a child to be estranged.  I represented a named executor in upholding the validity of a Will where a disinherited child filed objections to probate even though the child had virtually no contact with the decedent for decades.

On the other hand, a sibling may have very legitimate complaints where another sibling appears to have taken advantage of an older and ill parent to unduly influence the creation of a new estate plan in his favor.  Undue influence is always difficult to prove but facts which show a decedent’s susceptibility and opportunity for wrongdoing often lead to estate litigation.  Sometimes a sibling may arrange for a transfer of a parent’s assets even before death.  These situations often result in the commencement of an Article 81 Guardianship proceeding to have a Court supervise the parent’s assets during his lifetime and prevent improper transfers or dissipation.  The New York Probate Lawyer Blog contains many articles discussing Guardianships.

shutterstock_199873709-300x200Executors and Administrators of a New York estate bear a great responsibility with regard to their handling of a decedent’s affairs.  From the surface it appears rather straightforward that the estate fiduciary needs to identify a decedent’s assets and arrange for their collection.  Similarly, debts and expenses must be found and satisfied.  The New York Probate Lawyer Blog contains numerous posts discussing trust and estate matters.

However, the administration of an estate requires that the fiduciary thoroughly investigate a decedent’s personal affairs in order to achieve a complete estate settlement.  For example, determining basic facts regarding a person’s kinship may be difficult where a decedent has lost or avoided all contact with family members for decades.  While the decedent may not have wanted anything to do with his family members, a nominated executor will need to dig into the history of the next of kin so that the jurisdiction of the probate proceeding can be completed.  As an estate lawyer, I have been involved in many cases where more information about kinship is learned than was ever known by the decedent.

Similarly, the fiduciary of an estate may need to deal with issues that have plagued a decedent for years and which he refused or could not resolve.  It is not uncommon where a person dies and owns a business that the partners or co-owners could not get along or were antagonistic toward each other.  The fiduciary is compelled to find a resolution to such problems since the estate’s interest in the business asset needs to be protected and placed into some proper form so it can be transferred to beneficiaries under a Last Will or to intestate heirs.

shutterstock_96626983-300x300Estate and gift taxes have effects that may vary widely depending on the value of an estate and the place where you live.  When a person engages in estate planning, the tax consequences are always considered.  Like most taxes, estate and gift taxes are imposed by various states and by the Federal government.  Estate lawyers in New York can assist their clients with these matters.

During recent years, most individuals have not had to worry about paying estate or gift taxes.  At present the exemption for Federal estate tax is $11.7 million per individual.  Even in a highly taxed state like New York, the individual exemption is presently $5,930,000.00.  There are various strategies to diminish the impact of these taxes.  Provisions in Last Wills can utilize trusts and other methods to defray taxes.

What is important to realize is that the step-up in basis is really an income tax concept.  Basis, from an accounting standpoint, is the cost of an item.  This cost or basis is used to determine the taxable gain, typically a capital gain, which is incurred when an asset is sold.  As an example, if you purchased a house for $1,000.00 (the basis) (ignoring any additional costs or depreciation), and then sold the house for $2,000.00, the gain would be $1,000.00.  This gain would be the amount subject to tax.

Fiduciary-300x185There are various types of fiduciary appointments granted by the New York State Surrogate’s Court.  The Court may appoint an Executor and issue Letters Testamentary.  This occurs in connection with the probate of a Last Will and Testament.  If the decedent dies intestate, the Court appoints an Administrator and issues Letters of Administration.  The New York Probate Lawyer Blog has published many articles discussing the probate and administration process.

Sometimes when the Court proceedings for the probate of a Will or an intestate administration proceeding is delayed, the Surrogate might appoint a Preliminary Executor or Temporary Administrator.  This may occur where there is a Will Contest or Kinship cannot be determined without a kinship hearing.

An important aspect of any fiduciary appointment is the extent of powers granted to the fiduciary by the Court.  Essentially, the fiduciary can only perform those functions which the Court or the estate laws allow.  Estates, Powers and Trusts Law Section 11-1.1 entitled “Fiduciaries’ powers” lists many types of authority which an Administrator or Executor might possess, such as the power to sell assets, invest assets, pay expenses, collect income and engage in litigation on behalf of an estate.  However, in many instances, the Court Decree appointing the fiduciary may restrict or limit the authority.

shutterstock_635914376-300x144The estate laws in New York are comprised of a variety of statutes which set forth the right of individuals regarding estate inheritance.  Some of these more well-known rules relate to a decedent’s surviving spouse.  For example, as estate lawyers are aware, a surviving spouse cannot be completely disinherited.  Estates, Powers & Trusts Law Section 5-1.1A entitled “Right of election by surviving spouse” mandates that a spouse is entitled to receive essentially one-third (1/3) of a decedent’s net estate.  An interesting aspect of the statute is that it includes assets referred to as testamentary substitutes in the calculation.  Such assets are in the form of joint ownership or pay on death items which are outside of the probate or intestate administration estate.

While a spouse cannot be disinherited, another estate statute allows a spouse to be disqualified entirely from receiving any estate interest.  EPTL Section 5-1.2 entitled “Disqualification as surviving spouse” mandates that a spouse can lose inheritance if, among other provisions, the surviving spouse abandoned the decedent.  It should be recognized that abandonment is not easily proved and that a mere consensual separation of spouses, even if for many years, typically would not result in a disqualification.  The New York Probate Lawyer Blog has posted numerous articles regarding spousal rights and estate inheritance.  Executors and Administrators should be aware of these provisions.

A spouse is not the only family member who may lose rights through disqualification.  EPTL Section 4-1.4 entitled “Disqualification of parent to take intestate share” provides details as to the loss of a parent’s portion of an estate.  It should be remembered that under the laws of intestacy provided by EPTL 4-1.1 (“Descent and distribution of a decedent’s estate”), a parent inherits an estate where there is no surviving spouse or children or their descendants.  The statute states that if a parent does not provide for a child, i.e., support the child, or abandons the child while the child is under age 21, then the parent forfeits the inheritance.  The statute is focused on the intentional actions of a parent rather than a parent where, through no fault, cannot provide support.

shutterstock_74680495-2-300x200Contesting a Last Will in New York is a complex and difficult endeavor.  The problem initially encountered, of course, is that the decedent is not available to explain exactly what occurred in connection with the preparation and execution of a Will.  As a result, the facts and evidence need to be obtained and gleaned from outside sources such as witnesses and various documents and records.  In most cases, the process is cumbersome and very time consuming.  New York estate lawyers assist clients with the relevant Surrogate’s Court procedures and statutes contained in the Estates, Powers and Trusts Law.  The New York Probate Lawyer Blog contains many articles about Will contests.

When a Will is drafted by an attorney and an attorney supervises the signing ceremony, there are certain presumptions of due execution which greatly advance the probate of the document.  A recent decision by Ulster County Surrogate Sara McGinty on January 6, 2021, in a case entitled Estate of Linich, shows that a contestant has a heavy burden to invalidate a Will.

In Linich, the decedent changed his Will to benefit his business agent and friend.  A prior Will had benefited the decedent’s niece who filed objections to the probate of the later Will.  The typical objections to probate are lack of due execution, lack of testamentary capacity and undue influence.  Fraud, duress and forgery sometimes are also asserted.

Probate-300x201Preparing a New York Last Will is essential in order to dispose of assets in an orderly manner.  A Will allows a testator to provide for bequests and devises of his personal property and real estate interests according to his intentions and desires.

Beneficiaries can be named and each one designated with an appropriate estate share.  The beneficiaries can be family members, friends or institutions such as charities.  Also, the dispositions can be outright or through a testamentary trust which may provide long term or specific oversight.  Executors can be selected as well as trustees and guardians for minor children.

Estates, Powers and Trusts Law Section 3-2.1 entitled “Execution and attestation of wills; formal requirements” sets forth the requirements for Will execution.  The legal mandates such as the need for two witnesses and the publication of the document must be followed with precision or the validity of the Will may be placed at risk.  The New York Probate Lawyer Blog contains numerous articles regarding Surrogate’s Court litigation and Will contests.

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