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House-Keys-300x200A New York estate may have many different types of assets.  These may include bank accounts, brokerage accounts, real estate, and retirement funds.  Each of these items can present various issues for an executor or administrator.  The estate fiduciary has an obligation to collect and protect estate assets.  The failure to do so can be a breach of fiduciary duty.  The New York Probate Lawyer Blog has published many articles discussing estate settlement and the responsibilities of administrators and executors.

One asset which may have unique complexities is a cooperative apartment.  A cooperative apartment, particularly in the New York City area, is a very common type of residence owned by a decedent.  A cooperative apartment is not real estate.  The ownership interest is personal property in the form of stock in the cooperative corporation.  This interest allows the owner to become a lessee under a proprietary lease where the cooperative corporation is the lessor or, in other words, the landlord.  As a result, the estate fiduciary, just like the decedent, must comply with the rules and regulations of the co-op with regard to all aspects of the apartment.

One of the main issues that a fiduciary may face is in connection with the sale of an apartment.  Most co-ops require approval of any transfer or sale by the cooperative Board of Directors.  The prospective purchaser must apply to the Board for approval.  In New York, the Courts allow a tremendous amount of discretion to a co-op in approving or rejecting a sale.  The Board is not even required to provide any specific reasons if it decides to reject an application from a prospective purchaser.  In the absence of some type of discrimination, an estate fiduciary is at the mercy of a co-op board in trying to sell an apartment.  This can be very frustrating, particularly when the estate is being charged monthly for maintenance fees and mortgage payments.  The sale of residential real estate or a condominium apartment does not require approval from a third party.

shutterstock_635914376-300x144One of the aspects involved with administering an estate in New York is the identification and collection of estate assets.  A decedent may have owned bank accounts, security investments, real estate or business interests.  In many cases, it is rather easy for an executor or administrator to obtain information regarding assets.  A decedent may have various records at home or at a business office.  Also, bank statements or other information may be received in a decedent’s mail.  Another source of information are items contained in a decedent’s income tax returns such as the names of banks or financial institutions which paid interest income or dividends.  If the decedent had an accountant, this person may be in possession of asset information.

One problem that is faced in many estates is that a decedent may have transferred assets prior to death.  When this occurs, it may be difficult to determine the identity of these assets.  Also, once the assets can be identified, issues arise as to whether such transfers were valid or should be revoked due to lack of capacity or undue influence.

The New York Probate Lawyer Blog has published many articles concerning the discovery of assets belonging to a decedent.  An administrator in an intestate estate or an executor in a probate situation can utilize the process provided by Surrogate’s Court Procedure Act 2103, entitled “Proceeding by fiduciary to discover property withheld or obtain information”.  This statute allows the estate fiduciary to commence a proceeding to discover possible estate assets held by third parties and to have the Surrogate’s Court determine whether the assets should be found to be part of a decedent’s estate.

Fiduciary-300x185The essence of administering any estate begins with the appointment of an estate fiduciary.  Estate settlement cannot occur without a party who is legally authorized to act.  There are many variables which come into play regarding fiduciary appointment.

In some cases, the decedent left a Last Will and Testament.  This document typically names a person who is to be appointed as the executor.  There may be designations of successor or alternate executors, as well.  When a person dies intestate, without a Will, the provisions of Surrogate’s Court Procedure Act Section 1001 entitled “Order of priority for granting letters of administration,” sets forth the individuals who have the priority right for appointment as an estate administrator.  In the vast majority of matters, there is someone who is either designated in a Will or otherwise has a right pursuant to the estate statutes to be appointed, who will petition the Surrogate’s Court for the authority to act as the estate fiduciary.  In fact, it is not uncommon for there to be estate litigation among competing parties for appointment.  These disputes can be based upon claims that the applicant is unfit or unqualified for appointment or that there are competing documents which the Court should consider in making the appointment.

Once in a while, there are estates where there is no one either qualified, authorized or willing to step forward to initiate estate settlement proceedings.  These matters typically occur where the decedent did not leave a Will and there are no known next of kin who have the authority to commence a proceeding for the appointment of a fiduciary.  There may also be situations where all of the named parties in a Will are deceased or their whereabouts are unknown.  The usual result in these cases is that a Public Administrator is notified.  A Public Administrator is a county official whose role is to administer estates where there is no one either qualified or willing to do so.  The Public Administrator engages its own attorneys who handle the proceedings in the Surrogate’s Court.

shutterstock_204507106-300x254The administration of a New York estate can involve many different aspects relating to the decedent’s lifetime affairs.  For example, after the Court appoints an executor or administrator, issues relating to a business may need to be resolved.  The business may have been in the form of a corporation or other entity such as a limited liability company or partnership.  There may be litigation or claims between the decedent’s estate and other business owners.

Over the years, questions arose as to the extent to which the Surrogate’s Court had the jurisdiction to resolve disputes and issues relating to such matters.  It is now well established that all such issues can be dealt with by the Surrogate.  The Court generally looks to see whether the issue affects the administration or interests of an estate.  If a nexus is found, the Surrogate will usually accept jurisdiction.

Utilizing a broad approach facilitates estate settlement.  It is more efficient to have one Court oversee the many diverse issues affecting an estate and the interests of the beneficiaries.

rendered-300x107Part of the estate planning process involves the creation and execution of advance directives.  These documents include a Power of Attorney, Living Will, Health Care Proxy and Living Trust.  One of the primary goals of these papers is for the creator to provide specific instructions for property management and personal care in the event he is unable to handle such matters due to incapacity or other circumstances.  In Article 81 Guardianship proceedings, the Guardianship Court will look to see if there are any advance directives in place.  If so, the Court may dispense with the appointment of a Guardian.  However, even where advance directives exist, Mental Hygiene Law Section 81.29 authorizes the Court to revoke advance directives if it finds wrongdoing such as undue influence.  The New York Probate Lawyer Blog has published many articles regarding advance directives.

One advance directive, a Power of Attorney, allows a person to make various property management decisions as an agent for the person who creates the documents.  These property matters are listed in the power and include the authority to handle real estate transactions, banking transactions, insurance transactions and business operating transactions.  The creator may choose which areas to grant authority and can modify the manner in which the authority is to be exercised.  There can be one agent or multiple agents who can act separately or together depending upon the written instructions.

As can be expected, the use of a power of attorney is sometimes abused and agents may take advantage of their power for their own benefit.  Courts tend to be very cautious regarding these matters and there tends to be a great deal of litigation in the Surrogate’s Court and the Guardianship Court concerning the proper exercise a power of attorney.

accounting-300x199The estate settlement process in New York can be viewed as having three parts.  At the outset, there are proceedings for the appointment of an estate fiduciary.  If a decedent dies with a Last Will and Testament, then a probate case is filed in the Surrogate’s Court.  When there is no Will, a decedent is deemed to have died intestate and a proceeding for letters of administration is commenced.  Both probate and intestate administration matters may be very complicated and take a great deal of time to complete.  Issues concerning will contests and kinship determination involve extensive estate litigation.  The New York Probate Lawyer Blog contains many articles discussing probate, intestacy and Surrogate’s Court matters.

The second part of estate settlement involves the actual administrative acts to complete the estate.  These include identification and collection of assets and reviewing and finalizing debts and claims.  Also, a fiduciary may need to prepare and file tax returns concerning income tax and estate tax.  Sometimes there are litigation issues relating to the decedent’s creditors or business affairs.

Finally, in order to close the estate, a fiduciary must provide the estate beneficiaries with an accounting of his actions.  An accounting contains all the information regarding the amounts collected and disbursed during the administrative period.  Most estates are settled informally.  This means that the beneficiaries receive an accounting and sign a release form without the necessity of a formal accounting proceeding in the Surrogate’s Court.  However, there are times when a formal Court accounting case is required.  During the accounting proceeding, the Court may consider many different types of issues and objections.  These can range from objections regarding expenditures by the fiduciary to kinship issues and matters regarding claims by a third party.  In effect, the accounting proceeding is the vehicle by which all estate matters can be concluded so that a final distribution can be made to beneficiaries and an estate can be closed.

shutterstock_94407685-300x200A lot of time and effort may be expended with regard to creating an estate plan.  Documents such as a Last Will and Testament, Living Trust, Health Care Proxy, and Power of Attorney require that the creator consider the various provisions and persons to be named as beneficiaries, agents or fiduciaries.  Additionally, the papers must be executed in a manner so that they are to be effective when needed.

With regard to a Will, execution requirements are delineated in Estates, Powers and Trusts Law Section 3-2.1 entitled “Execution and attestation of wills; formal requirements.”  The New York Probate Lawyer Blog has published many articles discussing the various aspects of Will execution along with issues such as probate and Will contests.

After a Will has been effectively executed, it may be necessary to have it changed or revoked.  Additionally, after the death of a decedent, issues may arise as to whether the Will was revoked and, therefore, should not be admitted to probate.  There are some provisions in the New York estate laws which deal with these matters.  EPTL 3-4.1 entitled “Revocation of wills; effect on codicils” provides a number of rules.  The statute begins a by providing that a Will can be revoked or altered, provided a testator intends to do so, by the execution of another Will.  There is also a provision which provides that a revocation can occur through acts such as tearing, burning, obliteration or mutilation.

shutterstock_635914376-300x144The appointment of an Article 81 Guardian in New York is a serious process.  Each case begins with the preparation of a Verified Petition which provides details regarding the condition and circumstances of an alleged incapacitated person (AIP).  The Court needs to be informed about the person’s family, assets and overall ability to handle activities of daily living.  Additionally, information regarding the petitioner and his relationship with the AIP is important.

Also, the petition must provide details regarding any advance directives such as a power of attorney, living trust or health care proxy.  The Article 81 statute provides a number of provisions to insure that the Court is fully informed and that the rights of the AIP are protected.  There is always a concern that a Guardianship may be used to take advantage of someone who cannot protect their own interests.  Mental Hygiene Law (MHL) Section 81.09 entitled “Appointment of court evaluator” details the process for the designation of such person.  Essentially, a court evaluator is someone chosen by the Court to investigate the factual background of the Guardianship case as an impartial observer.  After the investigation is completed there is a report presented to the Court for review along with various recommendations.  The recommendations relate to whether a Guardian should be appointed and, if so, who should be appointed.  MHL 81.09 provides a long list of the Evaluator’s duties which includes interviewing the petitioner and other persons involved in the case.  Also, the Evaluator explains to the AIP the possible consequences and the nature of the Guardianship proceeding.

Although the personal medical records of an AIP may be privileged and not disclosed in a hearing, the Evaluator may obtain permission from the Court to review these items.

shutterstock_434643370-300x225Time and again, the New York Probate Lawyer Blog has published articles discussing the manner in which the issue of kinship can affect estate administration.  The reason kinship is important is because in both probate and intestate estate cases, the Court must receive complete information regarding a decedent’s distributees.

The probate process necessitates full kinship information because a decedent’s distributees have a right to be notified about a Last Will and Testament being filed with the Surrogate’s Court for admission to probate.  Distributees can either execute a Waiver and Consent form or they must be served with a Probate Citation.  If the distributees feel that the propounded Will is invalid, they can file objections.  Objections to probate can be based upon improper execution, lack of testamentary capacity, undue influence, fraud or other grounds.  If the Will is not admitted to probate, the distributees would inherit the estate.

In intestate matters, kinship is essential since the decedent’s distributees are the individuals who have a right to receive a share of the estate.  Also, a distributee has the right to be appointed as an estate administrator.

Estate-Administration-300x200There are many issues associated with the settlement of a New York estate.  In many cases it is not clear as to who is the authorized or designated person entitled to administer an estate.  If a decedent left a Last Will and Testament, the document typically nominates an Executor to handle estate affairs.  When a decedent dies intestate without a Will, usually the next of kin step forward and take action to receive letters of administration.

However, there are frequent situations when there is no Will and no one takes any action to begin estate settlement.  In these cases, a Public Administrator accepts the role of handling an estate.  A Public Administrator is a government official whose job it is to administer the estates of people where there is no one either willing or eligible to do so.  Each county has its own separate official.

When an estate is un-administered for a period of time, it may be subjected to adverse consequences.  For example, taxes may go unpaid and there may be penalties and interest charges.  Mortgages may be delinquent and a foreclosure can occur.  One of the duties of an estate fiduciary is to collect and protect assets.  Also, an estate administrator, like a Public Administrator, needs to determine the identity of a decedent’s distributees (next of kin) so that a proper distribution of estate funds can be made.  All of the aspects of finalizing an estate can become very involved.

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